Market Talk
– The dollar was up on Thursday morning in Asia, after minutes of last month’s Federal Reserve meeting suggested policy makers were mostly in agreement that a taper would start this year on the U.S. central bank’s quantitative easing program.
– In minutes of their July 27-28 meeting released overnight, Fed officials saw the potential to ease bond-buying stimulus this year if the economy continues to improve as expected, although the condition of “substantial further progress” toward maximum employment had not yet been met.
– A reduction in debt purchases is typically positive for the dollar as it means the Fed will not be flooding the financial system with cash, sending the Euro to a nine-month low against the US dollar at 1.1665.
– Australian employment data released earlier in the day showed that employment change was 2,200 and unemployment rate was 4.6% for July. While the data was better than expected, the Aussie dollar sank as the number of daily COVID-19 cases in the country has hit a fresh record.
– Gold help steady after the release of the U.S. Federal Reserve’s July policy meeting minutes showed most officials agreed they could start reducing the pace of bond-buying this year due to progress on inflation and unemployment goals.
Chart Focus XAU/USD – Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1782.00. Stop at 1791.00 and profit target at $1766.00
3. A move towards tapering and spread of the Delta variant are both supportive of the US dollar against gold
4. Price had met a resistance and is turning lower with MACD and 20EMA supporting the hint of a bearish price trend ahead.
Fundamental Comments
1. A move towards tapering by the Federal Reserve by the end of 2021 is not good news for gold.
2. Worries over the spread of Delta variant are supporting the US dollar as a safe haven status.
Technical Comments
1. Price had met a resistance and had fallen below its 20EMA which could be a hint of a bearish price trend ahead.
2. Both Stochastic and MACD are turning down after reaching their extreme, which is a hint of a bearish price trend ahead.
Key Levels
| Support | 1774.30 | 1764.40 | 1756.65 |
| Resistance | 1782.25 | 1795.70 | 1805.70 |
Technical Overview
USD/JPY – We had a sell recommendation at 109.65 on Tuesday and yesterday we had recommended keeping stop at 110.00 and profit target at 108.75. Unfortunately, our stop was triggered and we are out with a 35 pips loss. We remain bearish for 109.10 unless price goes above 110.35 as Stochastic is already in the overbought zone and MACD is turning down from its extreme point.
| Support | 109.95 | 109.60 | 109.10 |
| Resistance | 110.30 | 110.55 | 110.80 |
EUR/USD – We saw a bounce up to 1.1742 overnight but the bounce was capped by the 20EMA and price had broken below the support at 1.1701 to 1.1665 this morning. Stochastic is already in the oversold extreme and MACD could also be turning around from its extreme. However, 20EMA is pointing lower with a steep slope, which is a hint of a strong bearish price trend. If price stays below 1.1710, we are likely to see the decline continues to 1.1600 over the next few days.
| Support | 1.1665 | 1.1635 | 1.1600 |
| Resistance | 1.1700 | 1.1735 | 1.1780 |
GBP/USD – Price made another low at the point of writing at 1.3702, which was below the Fibonacci 62% correction point. This decline may not be the correction but a bear trend. Price could be heading towards the previous low at 1.3570 in the next few days ahead. 20EMA is pointing down with a steep slope, which is a hint of a strong bearish price trend. MACD is bearish and Stochastic is in the oversold zone.
| Support | 1.3670 | 1.3625 | 1.3570 |
| Resistance | 1.3710 | 1.3760 | 1.3790 |
USD/CHF – After rallying from the low of 0.9098, price has come up against a strong resistance point. On the 4-hourly chart, a bearish Engulfing candlestick price pattern may have formed, which is a hint of a bearish price trend ahead. If price is capped below 0.9210, we are likely to see a decline to 0.9100 or 0.9060 in the next few days. Stochastic is in the overbought zone and MACD is turning down from its extreme but 20EMA has turned bullish.
| Support | 0.9170 | 0.9145 | 0.9095 |
| Resistance | 0.9210 | 0.9240 | 0.9275 |
AUD/USD – We had a sell recommendation on this pair yesterday at 0.7295. Unfortunately price only reached a high of 0.7269 and our entry order was not filled. However, our view remains bearish and we are looking at a price decline to Fibonacci 161.8% projection price target at 0.7150. MACD and 20EMA are both bearish and hinting of a bearish price trend. Stochastic is in the oversold zone.
| Support | 0.7165 | 0.7135 | 0.7100 |
| Resistance | 0.7195 | 0.7235 | 0.7270 |