Market Talk
– The dollar was up on Wednesday morning in Asia, after easing overnight, as markets set aside concerns that the spread of the Delta coronavirus variant could derail a global economic recovery, after U.S. Food and Drug Administration on Monday granted full approval to the COVID-19 vaccine developed by Pfizer and BioNTech.
– Concerns about the global spread of COVID-19, the Delta variant particularly, had reduced investors’ bets that the Fed will announce a timeline for both asset tapering and interest rate hikes at its’ annual Jackson Hole symposium, taking place from Aug. 26 to 28, leading to the greenback’s decline.
– Against the euro, the dollar slipped to 1.1747 on Wednesday, after touching a one-week low of 1.1765 overnight. The greenback edged up to 109.82 yen, another safe-haven currency, but remained around the middle of the trading range since early July.
– Risk-related currencies have benefited from rising commodity prices as the US dollar weakened, with the Canadian dollar strengthening to 1.2577 overnight. The Aussie dollar was roughly flat at 0.7254 after climbing as high as 0.7271 on Tuesday, which was a one-week high.
– Gold consolidated around $1,800 despite a stronger US dollar as investors bet the recent surge in COVID-19 cases could steer the U.S. Federal Reserve away from announcing at its Jackson Hole symposium that it plans to taper its economic support.
Chart Focus XAG/USD – Silver
Key Points
1. Buy Silver recommendation.
2. Buy Silver at $23.60. Stop at $23.35 and profit target at $24.35
3. An increase in risk appetite as a result of vaccine and reduced expectation of a taper are both likely to weigh on the US dollar
4. Price is likely to be supported by the 20EMA with both 20EMA and MACD hinting of a bullish price trend ahead.
Fundamental Comments
1. Reduced expectation of a taper by the Federal Reserve has weakened the US dollar.
2. Risk appetite has increased with the approval vaccine which is likely to counter the spread of the Delta variant which has increased risk appetite.
Technical Comments
1. Price is likely to be supported by the 20EMA which is also hinting of a bullish price trend ahead.
2. MACD remains bullish and is hinting of a bullish price trend.
Key Levels
| Support | 23.55 | 23.25 | 22.95 |
| Resistance | 23.95 | 24.40 | 24.85 |
Technical Overview
USD/JPY – Price broke below the range support at 109.50 overnight but there was no follow through. Instead, price has recovered and has gone back into the range again. We think the consolidation is likely to continue at least for today. We would still recommend taking trades in the direction of the breakout of either range. MACD and 20EMA are neutral. Stochastic is near to the oversold zone and is rising.
| Support | 109.40 | 109.10 | 108.70 |
| Resistance | 109.85 | 110.30 | 110.80 |
EUR/USD – Price has moved above 1.1710 on Monday and negated our bearish trend. We were expecting price to test the overhead resistance at 1.1805 but for the past 2 days, the movement had been small with price capped by the previous low turned resistance line at 1.1765. Stochastic is turning down from the overbought zone but MACD is still bullish. 20EMA is also bullish and supporting price.
| Support | 1.1725 | 1.1700 | 1.1665 |
| Resistance | 1.1765 | 1.1805 | 1.1840 |
GBP/USD – Our view remains the same as yesterday. We think price may have reached a low at 1.3602 last Friday. Price has moved above the 20EMA to a high of 1.3747 and we think the rally is likely to continue higher to 1.3795. Stochastic has reached the overbought zone but MACD is still bullish. 20EMA is also bullish and hinting of a bullish trend. A price move below 1.3655 would negate our bullish view for the next couple of days.
| Support | 1.3705 | 1.3665 | 1.3630 |
| Resistance | 1.3750 | 1.3790 | 1.3840 |
XAU/USD – Price broke above $1795.50 on Monday and had rallied to a high of $1809.30 on Tuesday. This morning we saw price declined to the 20EMA support point at $1791.55. We think this decline is just a price correction. Price, if it is supported by the 20EMA line, will likely continue its rally to $1831.70 over the next few days. Stochastic is moving down from the overbought zone but both MACD and 20EMA are both bullish and hinting of a bullish price trend.
| Support | 1791.55 | 1782.25 | 1770.70 |
| Resistance | 1802.70 | 1814.75 | 1827.55 |
USD/CHF – We had a sell recommendation at 0.9145 yesterday and this was filled when price reached a high of 0.9152. MACD remains bearish with both its lines below the zero line. MACD is hinting of a bearish trend but 20EMA has turned neutral. Stochastic is rising from the oversold zone. Our view remains unchanged and we would recommend keeping stop at 0.9180 and profit order at 0.9065.
| Support | 0.9110 | 0.9080 | 0.9055 |
| Resistance | 0.9155 | 0.9180 | 0.9205 |