Market Talk
– The dollar was down on Monday in Asia; nursing losses after Federal Reserve Chair Jerome Powell said the Fed is likely to start paring back stimulus measures before the end of 2021 without specifying the timeline at the Jackson Hole symposium on Friday.
– Powell suggested that the central bank could start tapering off from the massive levels of support for the economy by the end of the year, but stopped short of providing a clearer picture regarding the timing of the central bank’s tapering of asset purchases or hiking interest rates.
– Economic data released on Friday delivered, in large part, precisely what economists had expected – a pullback in consumer spending and sentiment due to the COVID-19 Delta variant, and signs that the current wave of price spikes will not morph into long term inflation, in line with Fed assurances.
– The euro rose to just above 1.1800 and it held there on Monday, while the yen steadied at 109.78 per dollar. Sterling rose 0.4% on Friday and held at $1.3764 on Monday while the Aussie and Kiwi hung on to sizable gains from Friday in Monday’s trading.
– Gold was up Monday morning in Asia, continuing to ride a rebound sparked by comments on Friday by U.S. Federal Reserve Chairman Powell’s speech that the Fed is not planning to raise rates quickly.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation.
2. Sell USD/CAD at 1.2640. Stop at 1.2680 and profit target at 1.2490.
3. Dovish comments by Powell and rising crude oil price are both likely to aid the Canadian dollar against the US dollar.
4. Price is likely to be capped by the 20EMA with Stochastic and MACD both hinting of a bearish price trend.
Fundamental Comments
1. Powell’s dovish comments on Friday are likely to weigh on the US dollar.
2. Rising crude oil price is likely to aid the Canadian dollar
Technical Comments
1. Price is likely to be capped by the 20EMA which is hinting of a bearish price trend.
2. Stochastic is declining and MACD is about to turn bearish, which is a hint of a bearish price trend.
Key Levels
| Support | 1.2600 | 1.2570 | 1.2530 |
| Resistance | 1.2640 | 1.2685 | 1.2720 |
Technical Overview
USD/JPY – We had a sell recommendation from Thursday which is still opened. We had kept stop at 110.40 and profit order at 109.45. Stochastic is declining. Stochastic and MACD are hinting of a bearish price trend ahead. 20EMA is also hinting of a bearish price trend. We would recommend bringing stop down to cost at 110.10 while keeping profit order unchanged at 109.45.
| Support | 109.40 | 109.10 | 108.70 |
| Resistance | 109.85 | 110.20 | 110.55 |
EUR/USD – Price was capped by the resistance at 1.1805 and will need to move above this resistance to move higher to 1.1855. Stochastic is rising but is close to the overbought zone, MACD remains bullish. 20EMA is also bullish. Both MACD and 20EMA are hinting of a bullish price trend ahead. However, a price move below 1.1760 would negate our bullish view for the next few days.
| Support | 1.1775 | 1.1740 | 1.1705 |
| Resistance | 1.1810 | 1.1850 | 1.1895 |
GBP/USD – We had a buy call at 1.3700 on Friday which was filled when price declined to a low of 1.3679. Price had rallied to a high of 1.3780, just shy of our profit order at 1.3785. Our view remains unchanged but we would recommend bringing stop higher to 1.3720 and profit order higher to 1.3810. MACD and 20EMA remains bullish and Stochastic is still rising. All three indicators are hinting of a bullish price trend ahead.
| Support | 1.3740 | 1.3680 | 1.3640 |
| Resistance | 1.3780 | 1.3815 | 1.3865 |
XAU/USD – Last Friday, we had stated our case for $1831.70 and our view remains unchanged. Price has moved up to $1823.05 on Monday morning and we are expecting the rally to continue to $1831. Stochastic is rising but is near to the overbought zone. MACD and 20EMA are both bullish and are hinting of a bullish price trend. A move below $1804 would negate our bullish view.
| Support | 1809.35 | 1794.40 | 1782.65 |
| Resistance | 1823.05 | 1833.95 | 1844.50 |
XAG/USD – We had a long position from Thursday with stop at $23.35 and profit order at $24.35. Price had declined to a low of $23.33 on Friday and our stop was triggered. We lost $0.25 on this trade. Price had rallied to a high at $24.20 on Monday morning and we are expecting price to proceed higher to $24.40. Stochastic is rising and MACD remains bullish. 20EMA is also bullish. All three indicators are hinting of a bullish price trend.
| Support | 23.90 | 23.40 | 23.15 |
| Resistance | 24.20 | 24.50 | 24.85 |