Market Talk
– The safe-haven US dollar slipped from a 9 -1/2-month high as risk appetite improved with equities gaining and benchmark Treasury yields higher. However, the greenback remained supported by concerns that the Delta coronavirus variant could derail global economic recovery just as central banks begin to reverse pandemic-era stimulus.
– The dollar has also been buoyed by speculation the Fed could start to ease back on asset purchases this year, but a delay would not necessarily dent the US currency as the continuing spread of COVID-19 globally is likely to boost the greenback as a safe haven.
– The yen, another safe haven, was largely unchanged at 109.83 per dollar, consolidating in the center of the trading range of the past one and a half month. The euro was almost flat at 1.1697, off Friday’s nine and a half month trough of 1.1664.
– The Australian dollar remained close to Friday’s nine-and-a-half-month low of 0.7106. Around 60% of Australia’s population remains under lockdown as COVID-19 infections remain at record levels. Across the Tasman Sea, New Zealand also continues to deal with its latest COVID-19 outbreak.
– Gold was up on Monday morning in Asia, but remained near multi-month low as growing concerns over a global economic slowdown due to a spike in COVID-19 infections underpinning the safe-haven yellow metal.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation.
2. Buy USD/CAD at 1.2760. Stop at 1.2725 and profit target at 1.2895.
3. Concerns over Delta variant and falling crude oil prices are likely to boost the US dollar.
4. Price is likely to be supported by a strong support and MACD is hinting of a bullish price trend.
Fundamental Comments
1. Persistent anxiety over surging cases of the Delta coronavirus variant is likely to keep risk in check and boost the safe haven US dollar.
2. A 9% fall in the crude oil price is likely to weigh on the Canadian dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA and the Fibonacci 50% correction point.
2. MACD remains bullish and is hinting of a bullish price trend.
Key Levels
| Support | 1.2760 | 1.2725 | 1.2675 |
| Resistance | 1.2800 | 1.2845 | 1.2895 |
Technical Overview
USD/JPY – We had remained bearish for 109.10 but price has moved higher to 109.95 on Friday. Stochastic has a bullish crossover and is moving higher. MACD has also turned bullish and is hinting of a bullish price trend with an likely bullish crossover imminent. 20EMA has turned flat and neutral. A move above 110.25 will negate our bearish view and call for a rally to 110.80
| Support | 109.50 | 109.10 | 108.70 |
| Resistance | 109.95 | 110.30 | 110.80 |
EUR/USD – Price has moved above 1.1710 this morning and our bearish view for 1.1600 is negated. Price is now likely to continue its rally to 1.1805 in the next couple of days. Stochastic has moved up from the oversold zone and continues to move higher but MACD has not turned bullish as yet. However, price has moved above the 20EMA, which is now hinting of a bullish price trend.
| Support | 1.1700 | 1.1655 | 1.1635 |
| Resistance | 1.1740 | 1.1780 | 1.1810 |
GBP/USD – Price reached a low of 1.3602 last Friday and we have been a bounce to 1.3667 at the point of this writing. 20EMA resistance at 1.3675 is likely to cap the rally. While Stochastic is rising from the oversold zone, MACD remains firmly bearish. 20EMA is also hinting of a bearish price trend. We think price is likely to make another push to test the previous low of 1.3570 in the next 1-2 days to complete this decline.
| Support | 1.3640 | 1.3600 | 1.3570 |
| Resistance | 1.3675 | 1.3715 | 1.3765 |
XAU/USD – We are likely to see a price consolidation for the next 24-36 hours until price breaks out range at $1795.50 and 1770.70 Stochastic is rising but MACD is flat and neutral at the moment. 20EMA is also flat and is hinting of a sideways consolidation. Watch the breakout of the high at $1795.50 or 1770.70 for breakout clue for the next directional move.
| Support | 1782.25 | 1770.70 | 1764.40 |
| Resistance | 1795.50 | 1805.70 | 1814.75 |
NZD/USD – We had a sell recommendation on this pair at 0.6895 on Friday but our entry order was not filled. Price is likely to consolidate towards 0.6895, which is the Fibonacci 38% of the decline from 0.7046 to the low of 0.6805. Stochastic may be rising from the oversold zone but MACD remains firmly bearish. 20EMA is also bearish and hinting of a bearish price trend ahead.
| Support | 0.6805 | 0.6775 | 0.6735 |
| Resistance | 0.6855 | 0.6895 | 0.6935 |