Market Talk
– The U.S. dollar began the week on Monday under gentle pressure, after a second consecutive month of softer-than-expected U.S. jobs data reversed its recent attempts at a rally, as focus shifted to inflation figures and a European Central Bank meeting.
– Nonfarm payrolls increased by 559,000 jobs last month, helped by higher COVID-19 vaccination rates, but that was below the consensus forecast for 650,000 jobs added in May as the pandemic eased, but not as much as expected, tempering expectations the Federal Reserve will tighten monetary policy sooner, rather than later.
– The euro bought 1.2165 against the greenback; below the three-week low of 1.2104 it had struck on Friday with focus on whether the European Central Bank will adjust the pace of its bond buying programme at its meeting later this week.
– The Australian and New Zealand dollars were back above 77 cents and 72 cents, respectively, and the dollar was back beneath 110 Japanese yen, last traded at 109.61 yen while the British pound stood at 1.4142.
– Gold held a gain after U.S. jobs data missed expectations, easing concern that a strong economic recovery was running hot enough to require early tapering of policy support rebound would stoke inflation and see a potential dial back in stimulus.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.2165. Stop at 1.2205 and target at 1.2065.
3. A rise in wages and expectation of ECB keeping its pace of bond buying are likely to aid the US dollar.
4. Price is capped by its 20EMA and Fibonacci correction point with MACD bearish is a sign of a bearish price trend ahead.
Fundamental Comments
1. A rise in wages despite lower than expected hiring could be a sign of inflation in the making and is likely to aid the US dollar.
2. Expectation that European Central Bank will avoid adjusting the pace of its bond buying is likely aid the US dollar.
Technical Comments
1. Price was capped by the 20EMA and Fibonacci 50% correction which is a sign of a bearish trend.
2. MACD remains bearish and is hinting of a bearish price trend ahead.
Key Levels
| Support | 1.2145 | 1.2090 | 1.2050 |
| Resistance | 1.2185 | 1.2215 | 1.2250 |
Technical Overview
USD/JPY – A divergence warning from the MACD and Stochastic indicator had warned of a possible high on Friday. We saw a decline on Friday to a low of 109.35 which was just above the support at 109.30. Price will have to break below this support to continue its trend lower to 108.60. Inability to move below 109.30 could result in a move back to 110.30. Watch the reaction at 109.30.
| Support | 109.30 | 108.95 | 108.55 |
| Resistance | 109.60 | 109.95 | 110.35 |
XAG/USD – Last Friday, we had a sell call at $27.60. Price went up to a high of $27.84, filling our entry order. Our view remains changed. We would recommend keeping stop at $27.95 and profit target at $26.76. Stochastic may be turning down from the middle of its range. MACD remains bearish with both its lines below the zero line. 20EMA is also hinting of a bearish price trend.
| Support | 27.45 | 27.00 | 26.70 |
| Resistance | 27.80 | 28.20 | 28.55 |
GBP/USD – Price had rallied on Friday back to the previous high near to 1.4200. Despite the price rally, we remain bearish and are looking for 1.4005 in the next few days head. Price has declined to 1.4120 at the point of writing and both MACD and Stochastic are hinting of a bearish price trend. Stochastic is likely to have a bearish crossover which is also a hint of a bearish price trend ahead.
| Support | 1.4115 | 1.4070 | 1.4040 |
| Resistance | 1.4145 | 1.4205 | 1.4250 |
XAU/USD – We were expecting a rally to $1880 on Friday and price rallied above our expectation to a high of $1891.70. However, our view remains unchanged and bearish. We think $1891.70 is the high and price is likely to decline to $1840 over the next few days. 20EMA and MACD remain bearish and are hinting of a bearish price trend. However, Stochastic is in the oversold zone.
| Support | 1880.00 | 1866.25 | 1854.50 |
| Resistance | 1892.25 | 1902.90 | 1916.45 |
USD/CAD – Price had moved higher to 1.2132 on Friday but by late Friday night, price had declined to a low of 1.2067. We have seen a move above 1.2100 this morning and we think the rally is likely to continue higher towards Friday’s morning high of 1.2133 again in the next 48 hours. Stochastic is rising and has yet to reach the overbought zone. MACD is rising and 20EMA has turned bullish, hinting of a bullish price trend ahead.
| Support | 1.2095 | 1.2065 | 1.2010 |
| Resistance | 1.2135 | 1.2175 | 1.2205 |