Market Talk
– The US dollar advanced against its peers overnight, bolstered by safe-haven demand, as investors fretted about Afghanistan, a slowing Chinese economy and the rapid spread of the Delta coronavirus variant which forced some lockdowns.
– A much sharper decline than expected in Tuesday’s U.S. retail sales curbed gains in the dollar, but that was offset by the higher-than-forecast rise in industrial production, which accelerated the greenback’s gains.
– The dollar hit a nine-month high against the euro at 1.1701 and the risk-averse mood help to knock down Sterling to a three-week low against the dollar at 1.3717. The safe-haven Japanese yen was down against a firm dollar to 109.56 yen.
– The kiwi, heavily sold on Tuesday, declined further this morning to a nine-month trough at 0.6868 after RNBZ kept its interest rate unchanged at 0.25%. RBNZ was forced to postpone its plans to hike interest rates as New Zealand went into lockdown following the first local COVID-19 infection in six months.
– Gold was up on Wednesday morning in Asia as investors turned towards the safe-haven yellow metal as increasing concerns about the latest COVID-19 outbreaks decreased their risk appetite. Worries over Afghanistan and a slowing Chinese economy also add to the risk off mentality.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation.
2. Sell AUD/USD at 0.7295. Stop at 0.7330 and profit target at 0.7235
3. A slowing Chinese economy, the rapid spread of the Delta variant and strong US data have led to a strong US dollar.
4. Price is likely to be capped by strong resistance point with MACD and 20EMA hinting of a bearish price trend ahead.
Fundamental Comments
1. A slowing Chinese economy and the rapid spread of the Delta variant in Australia is weighing on the Aussie dollar.
2. A strong industrial production data is aiding the US dollar.
Technical Comments
1. Price is likely to be capped by the 20EMA as well as the Fibonacci 38% correction point.
2. MACD and 20EMA are both hinting of a bearish price trend.
Key Levels
| Support | 0.7235 | 0.7200 | 0.7165 |
| Resistance | 0.7270 | 0.7310 | 0.7340 |
Technical Overview
USD/JPY – Yesterday, we had a sell recommendation at 109.65 and price reached a high of 109.67 this morning. Our order was filled. MACD remains bearish and 20EMA is pointing lower. Both MACD and 20EMA support our bearish view. Stochastic is still rising from the oversold zone and is hinting of more upsides ahead. We would recommend keeping stop at 110.00 and profit target at 108.75.
| Support | 109.10 | 108.70 | 108.50 |
| Resistance | 109.65 | 109.95 | 110.30 |
EUR/USD – We had a buy recommendation on this pair on Monday which was filled at 1.1765. Yesterday, we had recommended placing stop at 1.1735 and profit target at 1.1830. Unfortunately, our stop was triggered and we lost 35 pips on this trade. Price had reached a low of 1.1701and if price can stay above this low, we think there is likely to be a rebound higher to 1.1800 in the next few days ahead. Stochastic is still declining and both MACD and 20EMA are hinting of a bearish price trend ahead.
| Support | 1.1700 | 1.1665 | 1.1630 |
| Resistance | 1.1735 | 1.1780 | 1.1810 |
GBP/USD – Price made another low overnight at 1.3717, which was just below the Fibonacci 62% correction point. MACD remains bearish and is hinting of a bearish price trend. Similarly 20EMA is pointing down with a steep slope which is a hint of a strong bearish price trend ahead. Stochastic is in the oversold zone and could be turning up. If price can hold above the overnight low, we have a chance of a rally to 1.3880 in the next few days but a move below the overnight low is likely to send price to 1.3570.
| Support | 1.3715 | 1.3670 | 1.3625 |
| Resistance | 1.3760 | 1.3790 | 1.3830 |
XAU/USD – Price managed to move up to $1795.50 overnight, closing the gap at $1793.70. However, MACD is warning with divergence. MACD also has a bearish crossover and is moving lower. Stochastic is turning down from the overbought zone. 20EMA is bullish and is hinting of a bullish price trend ahead. Price will need to hold above the 20EMA line at $1778 to maintain the bullish trend.
| Support | 1783.65 | 1770.90 | 1758.10 |
| Resistance | 1795.50 | 1805.70 | 1819.40 |
NZD/USD – Price broke below the Triangle chart pattern on Tuesday and this morning, price broke below the Fibonacci 161.8% projection price target at 0.6895 to reach a low of 0.6868. Stochastic is turning up from the oversold extreme and MACD is also turning up from its extreme low. However, 20EMA is hinting of a strong bearish trend. We may see a price correction to 0.7000 in the next 24 hours to unwind the oversold market condition but the trend is likely to be bearish.
| Support | 0.6895 | 0.6865 | 0.6830 |
| Resistance | 0.6935 | 0.6970 | 0.7005 |