Market Talk
– The US dollar climbed to a two-week peak against a basket of currencies on Monday, bolstered by expectations the U.S. Federal Reserve could reduce its asset purchases by the end of the year despite a surge in COVID-19 cases.
– Ahead of the Federal Reserve’s next policy review on Sept 21-22, investors are closely looking at U.S. consumer price data due at 8.30pm Singapore time later today for clues to the timeline to when the Fed could reduce its asset purchases and hike interest rate.
– The euro was among the currencies to lose ground to the dollar, dipping to 1.1770, its lowest in a little over two weeks, after the European Central Bank said last week it would start to trim its own emergency bond purchases. The euro was last down at 1.1801.
– Sterling was flat at 1.3842 while the Australian dollar dipped to 0.7353 after the country’s central bank chief, Philip Lowe, reiterated that interest rates were not expected to rise from record lows until 2024. The yen stood at 110.05 yen to the dollar, staying in its familiar territory over the past few weeks around 110.
– Gold was down on Tuesday morning in Asia ahead of U.S. inflation data that could hint at when the U.S. Federal Reserve could begin asset tapering. The yellow metal is trading below the $1,800 mark as investors weigh risks from the COVID-19 Delta variant and elevated inflation.
Chart Focus USD/JPY
Key Points
1. Buy USD/JPY recommendation.
2. Buy USD/JPY at 109.90. Stop at 109.65 and profit target at 110.45
3. Risks from the COVID-19 Delta variant and expectation of a tapering are both aiding the US dollar
4. Price is supported by the 20EMA with both the MACD and 20EMA hinting of a bullish price trend.
Fundamental Comments
1. The US dollar is bolstered by expectations of a U.S. Federal Reserve’s tapering.
2. Risks from the COVID-19 Delta variant and elevated inflation are both aiding the greenback
Technical Comments
1. Price is supported by the rising 20EMA, which is also hinting of a bullish price trend.
2. MACD is near to the zero line and could be turning bullish soon, with the fast line already above the zero line.
Key Levels
| Support | 109.95 | 109.55 | 109.10 |
| Resistance | 110.20 | 110.50 | 110.85 |
Technical Overview
AUD/USD – We had a sell call on Friday at 0.7395 and this was filled when price moved to a high of 0.7409. Stochastic is near to the oversold zone but both MACD and 20EMA are bearish and hinting of a bearish price trend ahead. Price has broken the support at 0.7335 and we are expecting the decline to continue to 0.7290 We would recommend bringing stop lower to cost at 0.7395 and changing profit target lower at 0.7295.
| Support | 0.7310 | 0.7280 | 0.7245 |
| Resistance | 0.7345 | 0.7395 | 0.7425 |
EUR/USD – Price had moved lower to 1.1770 overnight. The low is also just below the 50% Fibonacci 50% correction point of the rally from 1.1663 to the high at 1.1909. MACD has also given a divergence warning of a possible price low. Stochastic has turned up from the oversold zone. 20EMA is currently capping the rally at 1.1815. A break of this resistance is likely to send price higher to 1.1880 in the next 1-2 days.
| Support | 1.1770 | 1.1725 | 1.1690 |
| Resistance | 1.1820 | 1.1865 | 1.1910 |
GBP/USD – Price reached a low of 1.3796 overnight which was also just below the Fibonacci 50% of the rally from 1.3726 to the high at 1.3888. Stochastic is about to have a bullish crossover and MACD remains bullish and hinting of a bullish price trend. 20EMA is supporting price at 1.3830. We think price is likely to rally to the previous high of 1.3888 initially and later to 1.3935 in the next few days ahead.
| Support | 1.3825 | 1.3795 | 1.3750 |
| Resistance | 1.3865 | 1.3895 | 1.3935 |
XAU/USD – Price hit a low of $1782.45 last Wednesday and reached a high of $1803.80 on Friday. For this week, price has been moving within this range. Stochastic is in the middle of its range and both MACD and Stochastic are hinting of a bearish price trend ahead. If price is capped below $1800, we are looking at a decline to $1782.45. Above $1803.80 price is likely to advance to $1832.
| Support | 1789.35 | 1782.45 | 1775.80 |
| Resistance | 1798.25 | 1808.10 | 1820.45 |
USD/CHF – We have a buy call at 0.9185 on Thursday and had placed stop at 0.9150. Unfortunately price reached a low of 0.9149 and we got stop out for a 35 pips loss. Price has moved higher and had reached a high of 0.9240. Stochastic has reached the overbought zone but MACD and 20EMA are both bullish. We think price is likely to be supported at 0.9200 and the rally to continue higher to 0.9270 in the next 48 hours.
| Support | 0.9195 | 0.9150 | 0.9105 |
| Resistance | 0.9235 | 0.9270 | 0.9315 |