Market Talk
– The dollar was supported on Thursday morning in Asia as investors worried about the combination of slowing global growth, due in part to the spread of the COVID-19 Delta variant, and the potential tapering of central bank stimulus.
– The euro steadied to around 1.1819, following a three-day retreat from Friday’s two-month high of 1.1909, ahead of a European Central Bank policy meeting later in the day that is expected result in a reduction in stimulus.
– The yen was little moved at 110.20 yen to the dollar while the dollar held an upper hand against riskier currencies. Sterling eased to 1.3763, having peaked at 1.3890 on Friday, while the Australian dollar slipped to 0.7357.
– The Bank of Canada left its key interest rate at a record low 0.25% and maintained its current quantitative easing program on Wednesday. The Canadian dollar changed hands at 1.2693 per U.S. dollar, having fallen to its lowest since Aug. 23.
– Gold was down on Thursday morning in Asia, remaining near two-week lows as strength in the greenback outweighed the boost to bullion from deepening concerns about global economic growth and the ever-rising number of COVID-19 daily cases and deaths in the U.S.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9185. Stop at 0.9150 and profit target at 0.9260
3. A reduction in risk appetite due to the spread of the COVID-19 Delta variant, slowing global growth and interest rate differential are likely to aid the US dollar.
4. Price is supported by the 20EMA and Fibonacci 50% correction point with MACD hinting of a bullish price trend.
Fundamental Comments
1. A reduction in risk appetite due to the spread of the COVID-19 Delta variant and slowing global growth is likely to aid the US dollar more than the Swiss francs.
2. Interest rate differential is in the US dollar favour.
Technical Comments
1. Price is supported by the 20EMA and the Fibonacci 50% correction.
2. MACD remains bullish and is hinting of a bullish price trend.
Key Levels
| Support | 0.9180 | 0.9135 | 0.9100 |
| Resistance | 0.9235 | 0.9265 | 0.9295 |
Technical Overview
USD/JPY – Price moved to a high of 110.44 on Wednesday but price was unable to move higher. With this false breakout, we are likely to see price reversed and continues in a sideways range again of 110.40 to 109.50 again in the next 1-2 days ahead. Stochastic is in the oversold zone but both MACD and 20EMA remain bearish and both are hinting of a price decline ahead.
| Support | 110.00 | 109.65 | 109.30 |
| Resistance | 110.45 | 110.85 | 111.10 |
EUR/USD – Price failed to hold above the 20EMA and support level at 1.1865 on Tuesday and we have seen a decline in price to 1.1801 overnight. Our view remains the same and we are looking for a price decline to 1.1780 in the next 1-2 days ahead. However, Stochastic has a bullish crossover and is warning of a price rally ahead. MACD and 20EMA both remain bearish and is warning of a bearish price trend. A move above 1.1865 would negate our bearish view.
| Support | 1.1800 | 1.1750 | 1.1725 |
| Resistance | 1.1835 | 1.1865 | 1.1910 |
GBP/USD – Price broke the support at 1.3815 on Tuesday and we saw a price move to 1.3725 overnight. We do not think the down move is over. We think price can go lower to 1.3690 in the next 24 hours. MACD and 20EMA both remain bearish and are both hinting of a bearish price trend ahead. However, Stochastic has a bullish crossover and is moving up from the oversold zone.
| Support | 1.3750 | 1.3700 | 1.3650 |
| Resistance | 1.3790 | 1.3830 | 1.3860 |
XAU/USD – We had a sell recommendation at $1805.25 yesterday but price only reached a high of $1802 and our order was not filled. Overnight, price had declined to a low of $1782. Our view remains unchanged and we are looking for a decline to $1775 in the next 1-2 days ahead. Stochastic is in the oversold zone but both MACD and 20EMA remain bearish and are both hinting of a price decline ahead.
| Support | 1782.45 | 1770.70 | 1758.10 |
| Resistance | 1792.20 | 1801.95 | 1814.95 |
USD/CAD – Yesterday we were looking for a rally to 1.2715 and for today, we think price has the potential to move up to 1.2770, which is also the Fibonacci 62% of the decline from 1.2944 to the low of 1.2492. Stochastic is just below the overbought zone and has the potential to move higher. MACD remains bullish. 20EMA is pointing up with a steep slope, hinting of a strong bullish trend ahead.
| Support | 1.2690 | 1.2650 | 1.2620 |
| Resistance | 1.2725 | 1.2770 | 1.2800 |