Market Talk
– The dollar hovered near a one-week peak on Wednesday against major peers, buoyed by higher Treasury yields. The benchmark 10-year Treasury note rose as high as 1.385% on Tuesday for the first time since mid-July, a climb of almost 6 basis points from last Friday’s close.
– The rising Treasury yields prompted investors to reduce short dollar positions against the euro before a European Central Bank meeting this week. The euro was down to 1.1839, below Friday’s one-month peak of $1.1909.
– The Reserve Bank of Australia’s decision on Tuesday to forge ahead with a taper of bond purchases while adding the dovish concession of extending the programme to February sent the Aussie was down to 0.7375 from last Fridays high of 0.7477.
– The Canadian dollar suffered a 0.9% decline overnight against a strong US dollar ahead of Bank of Canada monetary policy meeting later tonight. The Canadian dollar hovers near the overnight low at 1.2650.
– Gold retreated as a buoyant dollar and higher yields took the shine off the yellow metal despite expectations that the Fed will maintain its accommodative monetary policy due to worries about the slowing growth of the US economy.
Chart Focus Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1805.25. Stop at $1815.20 and profit target at $1776.20
3. The US dollar is buoyed by higher Treasury yields and a move towards “risk off” environment.
4. Price has turned down following a Double Top chart pattern with MACD. 20EMA and Stochastic hinting of a bearish price trend.
Fundamental Comments
1. The US dollar is buoyed by higher Treasury yields, which rose almost 6 basis points from last Friday’s close to as high as 1.385%
2. Worries about the slowing growth of the US economy is aiding the safe haven US dollar.
Technical Comments
1. Price has turned down from a Double Tops chart pattern with 20EMA hinting of a bearish price trend.
2. Stochastic and MACD are both warning of a possible price high with divergence warnings.
Key Levels
| Support | 1792.20 | 1779.90 | 1765.70 |
| Resistance | 1801.65 | 1813.45 | 1823.05 |
Technical Overview
USD/JPY – Price moved to a high of 110.44 overnight but if price is unable to move higher, we are likely to see price continues in a sideways range again. If price can move higher, it is likely to move either to the Fibonacci 127% projection price of 110.65 or the Fibonacci 161% projection target of 110.95. Stochastic is in the overbought zone but both MACD and 20EMA are bullish and hinting of a bullish price trend.
| Support | 110.10 | 109.70 | 109.30 |
| Resistance | 110.45 | 110.85 | 111.10 |
EUR/USD – Yesterday, price failed to hold above the 20EMA at 1.1865 and we saw a price move to 1.1827. Unless price can move above 1.1865, we are likely to see this price move continues lower to 1.1780 in the next 1-2 days ahead. Stochastic is declining and is into the oversold zone. MACD has turned bearish and is hinting of a bearish price trend. 20EMA is also hinting of a bearish price trend.
| Support | 1.1815 | 1.1780 | 1.1735 |
| Resistance | 1.1855 | 1.1910 | 1.1945 |
GBP/USD – Price broke the support at 1.3815 last night and we saw a price move to 1.3758 at the point of this writing. Yesterday we were talking about 1.3740 but we think price is likely to move lower to 1.3690. Stochastic is near to the oversold zone. Both 20EMA and MACD are hinting of a bearish price trend ahead. Only a move above 1.3835 would negate our bearish view.
| Support | 1.3745 | 1.3700 | 1.3650 |
| Resistance | 1.3795 | 1.3830 | 1.3860 |
XAG/USD – We had a buy call yesterday at $24.45 and a stop at $24.15. Unfortunately price hit a low of $24.14 and we are out with a loss of $0.30. Stochastic is declining and 20EMA is bearish. However MACD is bullish and is hinting of a bullish price trend ahead. Price is also moving inside the uptrend channel. We prefer to stick to our chart view from yesterday. We are predicting price will be support at $24.10 and a price move to $25 in the next couple of days ahead.
| Support | 24.15 | 23.80 | 23.45 |
| Resistance | 24.45 | 24.85 | 25.15 |
USD/CAD – At the point of this writing, price has moved past the overnight high of 1.2655 and we are expecting the rally to continue to 1.2715 in the next 24 hours. Stochastic is inside the overbought zone but MACD is bullish. MACD is also hinting of a strong bullish price trend ahead. 20EMA is pointing up with a steep slope, hinting of a strong bullish price trend.
| Support | 1.2650 | 1.2620 | 1.2585 |
| Resistance | 1.2690 | 1.2720 | 1.2760 |