Market Talk
– The dollar was up on Thursday morning in Asia, as hawkish comments from U.S. Federal Reserve’s officials led markets to bring forward the likely timing of a policy tightening which boosted the greenback against its peers.
– US data on Wednesday were mixed data where a surprisingly weak ADP report on private hiring clashed with the strongest ever reading for U.S. services. The greenback’s rally came after Fed Vice Chair Richard Clarida said conditions for an interest rate hike could be met in late 2022, setting the stage for a move in early 2023.
– The euro was down at 1.1837, having recoiled from a top of 1.1899 overnight and marking another failure to crack resistance around 1.1910. The greenback also bounced to 109.51 yen, from a trough of 108.71 on Wednesday, negating what had been a bearish break on the downside.
– Bank of England is much nearer to tapering and could expand on timing at a policy meeting later on Thursday. That outlook helped the pound rally early in the year, though it has gone largely sideways on the last couple of months. It was last pinned near support at 1.3884, having repeatedly failed to clear resistance above 1.3980.
– Gold gave up early gains as comments from a top U.S. Federal Reserve official and record U.S. services industry activity data shifted concerns back to the Federal Reserve potentially easing asset purchases later in the year.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.7020.Stop at 0.6995 and target at 0.7085
3. Current interest rate differential is in the Kiwi dollar favour and RBNZ is also expected to raise rate before the Federal Reserve, which is likely to aid the Kiwi.
4. Price is likely to be supported at a strong support zone with MACD hinting of a bullish trend.
Fundamental Comments
1. Reserve bank of New Zealand is expected to raise rate before the Federal Reserve.
2. Interest rate differential is in the Kiwi favour.
Technical Comments
1. Price is likely to find strong support at a previous resistance turned support line as well as the 20EMA line.
2. MACD remains bullish and is hinting of a bullish price trend after a bullish crossover.
Key Levels
| Support | 0.7020 | 0.6990 | 0.6955 |
| Resistance | 0.7055 | 0.7085 | 0.7105 |
Technical Overview
USD/JPY – Yesterday, we had a buy recommendation on this pair at 109.00 but unfortunately, price dipped below our stop at 108.80 before the rally higher. We are out with a loss of 20 pips on this trade. Stochastic is rising and is near to the overbought zone but 20EMA remains bullish and is hinting of a strong bullish price trend. MACD remains bearish but its fast line had moved above the zero line.
| Support | 109.50 | 109.05 | 108.70 |
| Resistance | 109.85 | 110.25 | 110.60 |
EUR/USD – Price declined below a strong support at 1.1850 overnight and could be heading lower to 1.1750 in the next few days ahead. Stochastic continues to decline and is now near to the oversold zone but MACD has turned bearish and is hinting of a bearish price trend. 20EMA has a steep negative slope which is a hint of a strong bearish price trend. Only a move above 1.1850 would negate our bearish view for the next few days.
| Support | 1.1820 | 1.1785 | 1.1750 |
| Resistance | 1.1850 | 1.1880 | 1.1910 |
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 moving towards the oversold zone. MACD his flat and is neutral. 20EMA has turned bearish but our bullish view remains intact. We would recommend lifting stop higher to cost at 1.3890 while keeping profit target at 1.3980.
| Support | 1.3865 | 1.3820 | 1.3785 |
| Resistance | 1.3905 | 1.3945 | 1.3985 |
XAU/USD – Price spiked up to $1831.70 overnight but the overnight high was below the previous week high at $1832.58. Stochastic continues to move lower towards the oversold zone. MACD is flat and neutral at the moment. However 20EMA has turned bearish and is likely to cap price rally at $1813. We remain bearish and are looking at a decline to $1798 or $1788 in the next few days.
| Support | 1805.68 | 1793.35 | 1784.55 |
| Resistance | 1814.80 | 1825.75 | 1832.50 |
USD/CAD – We had a buy recommendation at 1.2505 on Tuesday 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 moving lower. For today, we would recommend keeping stop at 1.2485 and profit target at 1.2600.
| Support | 1.2520 | 1.2485 | 1.2450 |
| Resistance | 1.2550 | 1.2575 | 1.2610 |