Market Talk
– The US dollar was up on Thursday morning in Asia but remained near a one-week low as concerns over COVID-19’s impact on the global economic recovery receded. Investors also await the U.S. Federal Reserve’s Jackson Hole symposium for clues on the tapering of economic support.
– The markets expect Powell to sound dovish and echo concerns last week by Robert Kaplan, the Dallas Fed president, who said he might reconsider the start to tapering due to the Delta variant of the coronavirus
– Data showed new orders for key U.S.-made capital goods were steady in July, while acceleration in shipments suggested business investment in equipment could offset an anticipated slowdown in consumer spending and keep the economy on a solid growth path in the third quarter.
– Against the euro, the dollar was little changed at 1.1765 on Thursday, after touching a one-week low of 1.1775 the previous day. The greenback rose to 110.06 yen, another safe haven currency, meandering near the center of its trading range since early July.
– Gold was down on Thursday morning in Asia, sliding further below the $1,800 level with investors looking for a timeline for the tapering of economic support from the U.S. Federal Reserve at this week’s Jackson Hole symposium. Investors remain divided over whether the Fed will give a road map.
Chart Focus USD/JPY
Key Points
1. Sell USD/JPY recommendation.
2. Sell USD/JPY at 110.10. Stop at 110.40 and profit target at 109.45
3. An increase in risk appetite and a reduction in tapering expectation are both likely to weigh on the US dollar.
4. Price is near a range high with Stochastic hinting of a bearish price trend ahead.
Fundamental Comments
1. Concerns over COVID-19’s impact on the global economic recovery receded after full approval of vaccine.
2. Lower expectation of a tapering is likely to weigh on the US dollar
Technical Comments
1. Price is near to the top of the range and could be capped by the range’s high.
2. Stochastic has reached the overbought zone and could be turning down, which is a hint of a price decline.
Key Levels
| Support | 109.90 | 109.40 | 109.10 |
| Resistance | 110.25 | 110.55 | 110.80 |
Technical Overview
XAG/USD – Yesterday, we had a buy recommendation at $23.60 which was filled when price declined to a low of $23.56. Stochastic is moving down from the overbought zone which could be a sign of a correction as MACD remains bullish. 20EMA is also bullish. Our view remains unchanged. We would recommend keeping stop at $23.35 and profit target unchanged at $24.35.
| Support | 23.55 | 23.25 | 22.95 |
| Resistance | 23.95 | 24.40 | 24.85 |
EUR/USD – Price has moved above 1.1710 and we were expecting price to test the overhead resistance at 1.1805 in the next few days. However, the movement had been small and price has only made a marginal gain to reach a high of 1.1777. Our view remains unchanged for 1.1810. Stochastic is in the overbought zone but MACD remains bullish. 20EMA is bullish and hinting of a bullish price trend ahead.
| Support | 1.1760 | 1.1720 | 1.1665 |
| Resistance | 1.1805 | 1.1840 | 1.1875 |
GBP/USD – Our view remains the same as yesterday. We think price may have reached a low at 1.3602 last Friday and the rally is likely to continue higher to 1.3795. So far price has reached a high of 1.3767. Stochastic is in the overbought zone and MACD has remained bullish. 20EMA is also bullish. Both MACD and 20EMA are hinting of a bullish price trend ahead and Stochastic is hinting the topside could be limited.
| Support | 1.3735 | 1.3690 | 1.3655 |
| Resistance | 1.3765 | 1.3795 | 1.3835 |
XAU/USD – Price broke above $1795.50 on Monday and had rallied to a high of $1809.30 on Tuesday. However, price has been declining since this high was achieved. Price has declined to a low of $1782.65 and could be heading lower to $1774.30. Price will need to stay above this low to maintain its bullish trend. A price move below this support will trigger a Double Top chart pattern which will call for a price move to $1739.30.
| Support | 1782.65 | 1774.30 | 1758.05 |
| Resistance | 1794.05 | 1809.35 | 1824.85 |
USD/CHF – We had a sell recommendation at 0.9145 on Tuesday and yesterday, we had recommended keeping stop at 0.9180 and profit target at 0.9065.Stochastic continues to rise but there could be a bearish crossover coming up. MACD has remained bearish for the past two day. 20EMA is flat. We would recommend lowering stop to 0.9165 while keeping profit target unchanged.
| Support | 0.9110 | 0.9080 | 0.9055 |
| Resistance | 0.9155 | 0.9180 | 0.9205 |