Market Talk
– The dollar was up on Thursday morning in Asia, just below an 11-week high versus major peers on Thursday as traders attempted to navigate conflicting signals from Federal Reserve officials on the timing of a withdrawal of monetary stimulus.
– The U.S. currency got some support overnight as US manufacturing PMI came in at better-than-expected 62.6 in June, but services PMI was lower than expected at 64.8.
– The Canadian dollar strengthened overnight to 1.2250 against the US dollar as oil prices jumped to their highest in more than two years due to tightening market as travel picks up in Europe and North America.
– The yen weakened as far as 111.11 per dollar for the first time in 15 months on Thursday, while the euro was little changed at 1.1922 compared to the previous session, when it rose as high as 1.1970 for the first time in a week.
– Gold was down on Thursday morning in Asia as the greenback strengthen after two Fed officials said that a period of high inflation in the United States could last longer than anticipated, a day after Fed Chair Jerome Powell played down rising price pressures
Chart Focus Sell XAU/USD – Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1782.90. Stop at $1795 and profit target at $1760.50
3. A strong set of US data and a higher 10-year Treasury yield are both keeping the US dollar strong.
4. A strong price resistance and bearish momentum are both hinting of a bearish price trend ahead.
Fundamental Comments
1. A recovery in the benchmark 10-year Treasury yield after talk-up by two Fed officials on inflation is likely to aid US dollar strength.
2. Strong US data overnight also contributed to a stronger US dollar.
Technical Comments
1. Price was capped by the 20EMA and a previous high and both are likely to cap any price rally.
2. Stochastic and MACD are both turning down and hinting of a bearish price trend ahead.
Key Levels
| Support | 1772.90 | 1760.70 | 1749.20 |
| Resistance | 1787.95 | 1797.05 | 1806.30 |
Technical Overview
USD/JPY – Price has broken above the previous high of 110.82 on Tuesday and could be on its way to 111.50 over the next few days ahead. Price reached a high of 111.12 last night and if price could stay above the 20EMA support at 110.65, our bullish view for 111.50 remains intact. However, a move below 110.20 could negate our bullish view. Stochastic is turning down from the overbought zone but MACD and 20EMA both remains bullish.
| Support | 110.65 | 110.25 | 109.90 |
| Resistance | 111.10 | 111.40 | 111.70 |
EUR/USD – Price moved to a high of 1.1969 overnight but Stochastic has reached the overbought zone and is turning down which is hinting of a possible price high at 1.1969. MACD is now flat and neutral around the zero line. 20EMA is also flat at the moment. If price is unable to move above 1.1970, it is likely to head lower to 1.1847 again over the next few days head.
| Support | 1.1925 | 1.1885 | 1.1845 |
| Resistance | 1.1970 | 1.2005 | 1.2040 |
GBP/USD – Price reached a high of 1.4001 overnight which is the Fibonacci 61.8% correction point of the decline from 1.4132 to the low of 1.3786. If price is unable to move above 1.4000, it is likely to head lower to 1.3860 again. Above 1.4000, price is likely to test the high of 1.4132 again. Stochastic is turning down from the overbought zone but MACD remains bullish. 20EMA is also bullish.
| Support | 1.3950 | 1.3915 | 1.3860 |
| Resistance | 1.4005 | 1.4065 | 1.4110 |
USD/CAD – We had a buy call on this pair yesterday at 1.2300. Unfortunately, price moved to a low of 1.2250, triggering our stop at 1.2270. We lost 30 pips on this trade. Our view remains unchanged from yesterday on this pair as Stochastic is still rising after bottoming in the oversold zone. MACD remains bearish but is turning up and could move above the zero line soon. 20EMA remains bearish.
| Support | 1.2290 | 1.2245 | 1.2205 |
| Resistance | 1.2340 | 1.2370 | 1.2405 |
AUD/USD – We had a buy call on Monday at 0.7480 which was filled when price declined to a low of 0.7476. Yesterday, we had recommended placing stop at 0.7480 and profit target at 0.7580. Yesterday, price exceeded our profit target and we are out with a 100 pips profit. A Spinning Top is hinting of a possible price high. Stochastic is also into the overbought zone. However both Stochastic and MACD remain bullish.
| Support | 0.7565 | 0.7525 | 0.7470 |
| Resistance | 0.7595 | 0.7635 | 0.7675 |