Market Talk
– The US dollar was up on Wednesday morning in Asia against its major peers ahead of inflation data that could push the Fed into actions, boosted by a strong labour data from Friday and Federal Reserve’s officials’ hints that asset tapering could begin soon.
– Although Fed Chairman Jerome Powell has maintained that inflationary pressure is likely to be temporary but some of his colleagues had hinted that asset purchase tapering is on the cards and last week’s strong U.S. jobs data adds to tapering expectations.
– Six straight sessions of gains against the euro sent the common currency to its lowest since late March overnight at 1.1720 in early Asia trade with the year’s low of 1.1704 within range. The yen, which has dropped for five consecutive sessions against the dollar, fell marginally to 110.65 per dollar in early trade, its lowest since mid-July.
– A measure of consumer sentiment in Australia slid to a one-year low as lockdowns in major cities weigh on the Aussie dollar. The continuous uptick in COVID-19 cases, with Australia extending a lockdown in Melbourne, continues to weigh on the Aussie dollar
– Gold was up on Wednesday morning in Asia despite a stronger US dollar and rising bond yields. Despite the rally, Gold is still $60 below last Friday’s closing due to an overextended decline on Monday on lower market liquidity due to a Singapore holiday.
Chart Focus NZD/USD
Key Points
1. Sell NZD/USD recommendation.
2. Sell NZD/USD at 0.7010. Stop at 0.7030 and profit target at 0.6950
3. US dollar is boosted by a strong labour data, expectation of a Fed tapering as well as the continuous uptick in global COVID-19 cases.
4. Price is capped by the 20EMA which is hinting of a bearish price trend similar to MACD bearish trend hint.
Fundamental Comments
1. US dollar is boosted by a strong labour data and expectation of a Fed tapering.
2. The continuous uptick in COVID-19 cases globally is also keeping the safe haven US dollar strong.
Technical Comments
1. Price is capped by the 20EMA which is also hinting of a bearish price trend.
2. MACD remains bearish and is hinting of a bearish price trend ahead.
Key Levels
| Support | 0.6970 | 0.6940 | 0.6895 |
| Resistance | 0.7015 | 0.7055 | 0.7090 |
Technical Overview
USD/JPY – We have seen a rally to 110.75 this morning and this high was accompanied by a divergence warning from MACD. Stochastic is also in the overbought zone. However, 20EMA is pointing up with a steep slope which is a hint of a strong bullish price trend. We remains cautious of a possible price high. The next resistance lies at 110.95.
| Support | 110.60 | 110.30 | 110.00 |
| Resistance | 110.95 | 111.20 | 111.50 |
EUR/USD – Price is approaching 2021’s low of 1.1702 and a break of this support is likely to target 1.1600. However, MACD is starting to warn with divergence of a possible price low. Stochastic is also in the oversold zone and is hinting of a limited downside. 20EMA is pointing lower with a steep gradient, which is a hint of a strong bearish price trend. We will need to watch the support for clue to the next direction for this pair.
| Support | 1.1700 | 1.1655 | 1.1620 |
| Resistance | 1.1735 | 1.1775 | 1.1810 |
GBP/USD – Price had declined to a low of 1.3819. This is near to the Fibonacci 38% of the rally from 1.3571 to 1.3982 at 1.3825.Stochastic is in the oversold zone at the moment but MACD remains bearish and is hinting of a bearish price trend. 20EMA is pointing down with a steep slope, which is a hint of a strong bearish price trend. The next resistance lies at 1.3850 while support lies at 1.3775. We are expecting price to stay within this range.
| Support | 1.3820 | 1.3790 | 1.3735 |
| Resistance | 1.3855 | 1.3890 | 1.3930 |
XAU/USD – Price had declined to a low of $1697.37 on Monday and a bounce up had remained below the gap high of $1764.55. As long as price remains below this gap, the trend is bearish. Yesterday, we had a test to the downside with price establishing a low of $1717.55. If price can hold this level, it is likely to test the 20EMA resistance at $1746.60. Both 20EMA and MACD remain bearish. Stochastic is neutral.
| Support | 1728.05 | 1717.55 | 1704.90 |
| Resistance | 1737.80 | 1752.50 | 1764.55 |
GBP/JPY – Yesterday, we had a buy recommendation at 152.60 but this was not filled as price only declined to a low of 152.61. Our view remains unchanged and we are looking for a move to 153.50. Both 20EMA and MACD remain bullish and is hinting of a bullish price trend. Stochastic is in the middle of its range but with a bullish crossover, which is also a bullish hint.
| Support | 152.95 | 152.55 | 152.15 |
| Resistance | 153.30 | 153.70 | 154.05 |