FX Commentary – US Dollar At Multi-Month Peaks Ahead of NFP

Market Talk
– The dollar hit a fresh 15-month high versus the yen and hovered near multi-month peaks against other major peers on Thursday morning, on concern over the spread of the Delta coronavirus variant and ahead of a key U.S. jobs report that could offer clues on when the Federal Reserve will start to pare back stimulus.

– The dollar has gained about 3% against a basket of currencies this month, partly in the wake of the Fed’s stance at a meeting early this month. Traders are looking to Friday’s U.S. nonfarm payrolls report for confirmation of a shift in monetary policy.

– U.S. private payrolls increased more than expected in June by 692,000 jobs against expectation of 600,000 as companies rushed to boost production and services amid a rapidly reopening economy. However, data for May was revised lower to show 886,000 jobs added instead of the initially reported 978,000.

– The euro was down against the dollar to 1.1849. Earlier, the euro dropped to a 4-1/2-month low of 1.1845. Against the yen, the dollar was firmer at 111.09 yen. It rose to 111.12, the highest since late March last year. Sterling slipped to 1.3798, edging toward a recent two-month low of 1.3786.

– Gold prices edged higher on Thursday, as the benchmark 10-year U.S. Treasury yield slipped as low as 1.4630% in Asia before edging up to 1.4747%, with investors looking ahead to a key U.S. jobs report due on Friday for clues on what it might mean for US monetary policy.

Chart Focus XAG/USD- Silver
Key Points
1. Buy Silver recommendation.
2. Buy Silver $26.10. Stop at $25.85 and target at $26.75.
3. A decline in Treasury yield and strong US economic data are both bolstering expectation of a economic recovery which is likely to aid Silver.
4. Price may have made a bottom and momentum indicators are both hinting of a bullish price trend ahead.

Fundamental Comments
1. A decline in 10-year Treasury yield is weighing on the US dollar.
2. Strong consumer confidence and increase in private payroll are both bolstering expectations for strong economic growth in the second quarter which is likely to aid Silver.

Technical Comments
1. Price may have made a Double Bottoms chart pattern and has moved above the 20EMA, hinting of a bullish price trend ahead.
2. MACD has turned bullish while Stochastic continues to rise up towards the overbought zone. Both indicators are hinting of a bullish price trend.

Key Levels


Technical Overview
USD/JPY – We had a sell recommendation at 110.75 on Tuesday which was filled. Yesterday we had lowered stop to 110.85 while keeping profit target at 110.10. Unfortunately, price moved above our stop and we are out with a 10 pips loss. Price has reached a 15-month high and we are expecting the rally to continue higher to 111.70. Stochastic continues to move higher and MACD remains bullish. 20EMA is also bullish and hinting of a bullish price trend ahead.


EUR/USD – Price has broken the support at 1.1910 on Tuesday and had reached a low of 1.1845 at the point of writing. The decline may be over and we are awaiting confirmation of a bottom. MACD has not had a bullish crossover as yet. Stochastic is still inside the oversold zone and has not moved above the oversold zone as yet. 20EMA continues to be bearish. The next support lies at 1.1705 but we do not think price will move directly to this support.


GBP/USD – Price had broken below the support at 1.3860 on Tuesday and the decline reached a low of 1.3798 overnight. We were expecting price to test the previous low of 1.3786 but we are unsure if last night’s low was the end of the decline. While MACD had a divergence warning, Stochastic is weak and 20EMA is hinting of a bearish price trend ahead. We would prefer to wait for further confirmations.


XAU/USD – We had a sell recommendation at $1763 yesterday but price had risen above our stop at $1773.50 this morning. We are out of this position with a loss of $9.50. Price has broken above a down trending line and could be heading higher to $1786. Stochastic is rising and is not near to the overbought zone and hinting there could be more upsides. MACD and 20EMA are both bullish. MACD also had a divergence warning of a possible price low yesterday.


NZD/USD – Price was capped below 0.7025 yesterday and we saw a decline to 0.6964 overnight. There was a divergence warning from MACD when price hit the low but price is still showing weakness as indicated by MACD indicator which remains bearish. However, Stochastic is rising from the oversold zone. If price is unable to move above 0.7000, we are likely to see another decline to test the low of 0.6964 again in the next 48 hours.


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