Market Talk
– The US dollar fell against a basket of its major peers, with the euro getting a boost as investors flocked to the safety of bonds overnight with 10-year U.S. Treasury yields reaching as low as 1.250% overnight, levels not seen since February 2021.
– Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose unexpectedly in the previous week, an indication that the labour market recovery from the COVID-19 pandemic continues to be choppy.
– Bonds have rallied while stocks took a hammering worldwide amid growing concerns the fast-spreading Delta variant of COVID-19 could derail an economic revival that is already showing pockets of weakness as investors turned cautious about the global economic recovery.
– The safe haven yen hovered near a one-month high at 109.53 per dollar hit in the previous trading session. Risk-sensitive currencies including the Australian and New Zealand dollars languished near multi-month lows.
– Gold, another safe haven asset, was on track for its best weekly performance since end-May, as a weak US dollar made bullion less expensive, while a drop in U.S. Treasury yields also offered support to the yellow metal.
Chart Focus USD/CHF
Key Points
1. Sell USD/CHF recommendation.
2. Sell USD/CHF at 0.9190. Stop at 0.9220 and target at 0.9130.
3. A declining Treasury yield as well as risk aversion is likely to aid the safe haven Swiss francs.
4. Price is likely to be capped by a strong resistance point and MACD is hinting of a bearish price trend.
Fundamental Comments
1. A declining Treasury yield is likely to drag the US dollar lower.
2. Risk aversion is likely to aid the safe haven Swiss francs
Technical Comments
1. Price is likely to be capped by a strong previous support turned resistance point as well as the 20EMA and Fibonacci 50% correction point.
2. MACD remains bearish and is hinting of a bearish price trend ahead.
Key Levels
| Support | 0.9130 | 0.9090 | 0.9050 |
| Resistance | 0.9160 | 0.9195 | 0.9220 |
Technical Overview
USD/JPY – Price may have hit a temporary low at 109.52 last night. We are likely to see a price movement towards the 20EMA at 110.30 or the previous support turned resistance point at 110.40 as Stochastic is deep in the oversold zone and is hinting of a price rally ahead. MACD and 20EMA both remain bearish. We are expecting another decline to 109.15 from the resistance zone.
| Support | 109.85 | 109.50 | 109.15 |
| Resistance | 110.15 | 110.40 | 110.90 |
EUR/USD – From the low of 1.1781, we saw a price rally overnight to 1.1867. MACD remains bearish but there could be a possible divergence forming. We may not to see a move to 1.1705 but instead; we may see a corrective rally to 1.1885 again before the downtrend resumes. Stochastic is rising but MACD remains bearish. 20EMA is flat and neutral at the moment.
| Support | 1.1805 | 1.1780 | 1.1740 |
| Resistance | 1.1840 | 1.1885 | 1.1915 |
GBP/USD – We saw a decline to a low of 1.3741 overnight and that was followed by a rally to almost 1.3800 this morning. The rally was also capped by the 20EMA line, which is hinting of a bearish price trend. MACD remains bearish. Stochastic is rising but the gradient is weak. Stochastic is hinting of a weak rally. We think price is likely to be capped at 1.3800 and we are likely to see another test of 1.3730 in the next 48 hours.
| Support | 1.3755 | 1.3695 | 1.3660 |
| Resistance | 1.3790 | 1.3840 | 1.3875 |
XAU/USD – We had a sell call on this pair yesterday which was wrong. We lost $9 on this trade. Price reached a high of $1818.25 last night but this high was accompanied by a divergence warning from the MACD indicator as well as the Stochastic indicator. Stochastic is also moving lower. 20EMA is currently flat and neutral at the moment. We would prefer to wait for further confirmation on this pair.
| Support | 1794.55 | 1782.65 | 1771.90 |
| Resistance | 1807.65 | 1818.25 | 1825.10 |
XAG/USD – Price reached a high of $26.76 on Tuesday and has been declining. This morning, the decline reached a low of $25.77. We think the low may be near as Stochastic is into the oversold zone for a second time. MACD is likely to have a bullish crossover, which could be a hint of a possible price rally ahead. Only 20EMA is hinting of a bearish price trend at the moment.
| Support | 25.75 | 25.50 | 25.15 |
| Resistance | 26.00 | 26.20 | 26.45 |