Market Talk
– The dollar was pinned near recent lows against other currencies on Tuesday, as markets looked ahead to ADP labour data due later on Wednesday and U.S. non-farm payroll figures due on Friday for a guide to the rates outlook.
– Safe haven currencies have benefited from the US dollar’s softness and decline in the 10-year yield as a sign of disappointment in economic growth and the rise of the Delta variant of COVID-19 aiding safe havens.
– New Zealand’s jobless rate unexpectedly fell to 4% in the last quarter, its lowest since December 2019, and the kiwi jumped 0.5% to a one-month high of 0.7056 in anticipation of a New Zealand rate hike within weeks.
– The euro was a touch lower at 1.1860, having lost momentum after hitting a one-month high of 1.1909 on Friday. Sterling was steady ahead of a Thursday BOE meeting, buying 1.3927 with traders eying the $1.40 mark should policymakers sound hawkish about tapering bond purchases or hiking rates.
– Gold edged high on Wednesday morning in Asia on the back of a weak US dollar. The yellow metal was stuck in a narrow range as investors await the latest U.S. jobs data that could influence the timeline of when the Federal Reserve cuts back on its asset purchase programme.
Chart Focus USD/JPY
Key Points
1. Buy USD/JPY recommendation.
2. Buy USD/JPY at 109.00. Stop at 108.80 and target at 109.35
3. Rise of the Delta variant and expectations of taper are both likely to benefit the US dollar.
4. Price may have turned the corner and both Stochastic and MACD are hinting of a bullish price trend ahead.
Fundamental Comments
1. Rise of the Delta variant is likely to aid the US dollar.
2. Expectation of US tapering is likely to aid the US dollar.
Technical Comments
1. Price has moved above the 20EMA after hitting a low at 108.85, which is a hint of a possible price low having formed.
2. Stochastic is rising and MACD is rising after a bullish crossover.
Key Levels
| Support | 109.00 | 108.80 | 108.35 |
| Resistance | 109.35 | 109.65 | 109.95 |
Technical Overview
USD/CAD – Yesterday, we had a buy recommendation at 1.2505 which was filled when price reached a low of 1.2495. Our view remains unchanged as both MACD and 20EMA remains bullish and are hinting of a bullish price trend ahead despite Stochastic having reached the overbought zone and turning down. We would recommend shifting stop higher to 1.2485 while keeping profit target unchanged at 1.2600.
| Support | 1.2510 | 1.2490 | 1.2450 |
| Resistance | 1.2545 | 1.2570 | 1.2615 |
EUR/USD – Price had reached a high of 1.1908 on Friday but had ended Friday near the low of the day at 1.1851. Yesterday, price was supported by the 20EMA at 1.1850 and if this support continues to hold, price is likely to move up to test the previous high of 1.1908 again over the next 2-3 days. MACD has stayed above the zero line, keeping the bullish trend intact. Stochastic is rising. Both momentum indicators are hinting of a bullish price trend ahead.
| Support | 1.1845 | 1.1805 | 1.1765 |
| Resistance | 1.1875 | 1.1905 | 1.1940 |
GBP/USD – We had a buy recommendation on this pair on Monday at 1.3890 which was filled as price declined to a low of 1.3869. Stochastic is rising towards the oversold zone. MACD has a bullish crossover and is rising. 20EMA has turned bullish. Our bullish view remains intact. We would recommend lifting stop higher to cost at 1.3890 while keeping profit target at 1.3980.
| Support | 1.3905 | 1.3865 | 1.3825 |
| Resistance | 1.3945 | 1.3985 | 1.4005 |
XAU/USD – Price had reached a high on Thursday of $1832.58. On Monday, we saw price declined to $1807.60 before a rally to $1819.40. The high was also the Fibonacci 62% correction point of the decline from Thursday’s high of $1832.58 to the low of $1807.60. As long as price stays below $1819.40, we are looking at a decline to $1798 or $1788 in the next few days ahead. MACD and 20EMA are both flat and neutral while Stochastic is near to the overbought zone.
| Support | 1807.60 | 1793.35 | 1784.55 |
| Resistance | 1819.40 | 1825.75 | 1832.50 |
NZD/USD – Price broke above 0.7025 on the back of a strong economic data and is likely to head higher towards the previous high of 0.7105 in the next few days ahead. Stochastic is inside the overbought zone but is likely to stay in the overbought zone for a prolong period of time as 20EMA is hinting of a strong bullish price trend head. MACD is also bullish and has a steep gradient, hinting of a strong bullish trend.
| Support | 0.7050 | 0.7025 | 0.6995 |
| Resistance | 0.7080 | 0.7110 | 0.7140 |