Market Talk
– The U.S. dollar held steady against major currencies on Monday after posting its biggest weekly gain in more than a month, as traders closed short positions ahead of a Federal Reserve policy meeting this week.
– The Fed has repeatedly said that near-term price surges will not metastasize into lasting inflation, an assertion reflected in the University of Michigan’s Consumer Sentiment report released on Friday, which showed inflation expectations easing from last month’s spike.
– The greenback was trading little changed at 1.2107 against the euro in Asia, after touching an almost one-month top of $1.2093 on Friday night, amid caution ahead of the Fed meeting that runs two days to Wednesday.
– The British pound changed hands at $1.4113, near the lower end of its trading range over the past month, ahead of British Prime Minister Boris Johnson’s announcement on Monday on whether its planned lifting of coronavirus restrictions can go ahead as scheduled on June 21.
– Gold prices slipped on Monday to their lowest in more than a week, weighed down by a stronger dollar, while investors awaited cues from the Federal Reserve policy meeting this week with recent spikes in U.S. consumer prices seen as a temporary blip.
Chart Focus NZD/USD
Key Points
1. Sell NZD/USD recommendation
2. Sell NZD/USD at 0.7160. Stop at 0.7195 and target at 0.7115
3. Short covering and inflation fear have aid the US dollar.
4. Price is likely to be capped by a strong resistance and MACD is hinting of a bearish price trend.
Fundamental Comments
1. Short covering of US dollar has raised demand for US dollar.
2. Inflation fear have kept the US dollar bid
Technical Comments
1. Price is likely to be capped by a previous support turned resistance line as well as the 20EMA.
2. MACD remains bearish and is hinting of a bearish price trend ahead.
Key Levels
| Support | 0.7115 | 0.7070 | 0.7025 |
| Resistance | 0.7165 | 0.7200 | 0.7235 |
Technical Overview
USD/JPY – We had a sell order on Wednesday which was filled at 109.55 when price rallied to a high of 109.67. Our view remained unchanged but indicators are indicating price may have bottom. We recommend keeping stop at 109.95 and profit target at 108.75 for another day. MACD and 20EMA has turned bullish while Stochastic is moving higher towards the overbought zone.
| Support | 109.65 | 109.30 | 108.95 |
| Resistance | 109.95 | 110.35 | 110.75 |
EUR/USD – Price broke below 1.2140 last Friday and declined to a low of 1.2092. Price is currently close to last Friday’s low and we think price is likely to break this support. We think the decline is likely to continue lower to 1.2050 over the next 48 hours. MACD and 20EMA are both hinting of a bearish price trend. Stochastic is close to the oversold extreme and hinting the downside could be limited.
| Support | 1.2080 | 1.2050 | 1.2010 |
| Resistance | 1.2115 | 1.2145 | 1.2190 |
GBP/USD – Price reached a high of 1.4185 on Friday morning but had declined to a low of 1.4095 by the close of trading on Friday night. We think price is likely to continue its decline to test the support at 1.4070. A break of this support is likely to lead price lower to 1.4005. Ability to hold above this support is likely to send price back to 1.4200 again. We favour the downside
| Support | 1.4070 | 1.4035 | 1.3990 |
| Resistance | 1.4120 | 1.4150 | 1.4200 |
XAU/USD – We had a buy call on Friday at $1895 but our stop was triggered at $1887. We lost $8 on this trade. Price reached a low of $1860 this morning and looks likely to test the previous low support at 1854.70. A break of this low would be bearish but if price can stay above this support, the bullish trend is still intact. Stochastic is near to the oversold zone and MACD may be forming a divergence warning. Both indicators are hinting that price may not break support at $1854.70.
| Support | 1854.70 | 1845.50 | 1829.55 |
| Resistance | 1866.40 | 1874.20 | 1884.25 |
USD/CAD – Price broke above 1.2130 on Friday night to reach a high of 1.2171. MACD and 20EMA are both bullish and hinting of a bullish price trend ahead. Stochastic is near to the overbought zone at the moment. However, we think the uptrend can continue towards 1.2195, which is the Fibonacci 161.8% of the previous price rally. Support is at 1.2130.
| Support | 1.2145 | 1.2105 | 1.2070 |
| Resistance | 1.2175 | 1.2200 | 1.2245 |