Market Talk
– The dollar scaled three-week peaks on Friday, supported by better-than-forecast U.S. retail sales data released on Thursday that backed expectations for a reduction of asset purchases by the Federal Reserve before the end of the year.
– The University of Michigan consumer sentiment for September inched higher to 71 versus the final August reading of 70.3, but overall analysts said the rise was nowhere near the improvements seen in the Empire States and Philadelphia Fed manufacturing surveys.
– In trade thinned by holidays in Japan, China and South Korea, the euro fell to 1.1710, its lowest since late August. The yen held its own, edging up to 109.88 per dollar, while equity markets dropped with concern that an Evergrande collapse could trigger a broader crisis.
– Sterling hit multi-week troughs below 1.3700 against the rising greenback. However, with investors bringing forward forecasts for a Bank of England interest rate hike to mid-2022, sterling remains supported.
– Gold was down on Monday morning in Asia, hitting a more than five-week low against a strengthening US dollar with investors believing that an asset tapering announcement could be imminent.
Chart Focus Silver
Key Points
1. Buy Silver recommendation.
2. Buy Silver at 22.35. Stop at 22.00 and target at 23.10
3. US dollar may have over reacted to both UOM consumer confidence and Evergrade news.
4. A bullish candlestick price pattern coupled with bullish momentum indicators are hinting of a price rally ahead.
Fundamental Comments
1. US dollar may have over reacted to the UOM consumer confidence data which only inched higher while Silver suffered a sharp decline.
2. Evergrande events may have been discounted after being in the headline for the past 1 week.
Technical Comments
1. A Hammer candlestick price pattern may be hinting of a price low and a reversal in trend going forward.
2. Stochastic is in the oversold zone and MACD is turning up. Both indicators are hinting of a price rally going forward.
Key Levels
| Support | 22.30 | 22.00 | 21.70 |
| Resistance | 22.60 | 22.90 | 23.15 |
Technical Overview
USD/JPY – We had a buy recommendation on this pair at 109.70 last Friday but price did not go lower than 109.80 and our order was not filled. Price had reached a high of 110.07 and there was a divergence warning from the MACD indicator. Stochastic is moving lower and 20EMA has turned bearish. We think price may have reached a high and a pullback to 109.50 is likely in the next 24 hours.
| Support | 109.65 | 109.20 | 108.70 |
| Resistance | 109.95 | 110.20 | 110.50 |
EUR/USD – Price broke the support at 1.1755 and we are likely to see the decline continues to 1.1665 in the next couple of day ahead. Stochastic is in the oversold zone but MACD remains bearish and is hinting of a bearish price trend. 20EMA is pointing lower with a steep slope, hinting of a strong bearish price trend. A move above 1.1750 would negate our bearish view.
| Support | 1.1705 | 1.1665 | 1.1635 |
| Resistance | 1.1750 | 1.1790 | 1.1845 |
GBP/USD – Although price has moved down below 1.3700, the downtrend does not look like it will be ending soon. Stochastic is already in the oversold zone but MACD is bearish and hinting of a bearish trend. 20EMA is pointing lower with a steep slope, hinting of a strong bearish price trend. The next support lies at 1.3670 and this level needs to break the fall to end the bearish trend.
| Support | 1.3680 | 1.3630 | 1.3570 |
| Resistance | 1.3715 | 1.3760 | 1.3805 |
XAU/USD – Price reached a low of $1741.95 this morning and this low was accompanied by divergence warning from the MACD indicator. There is a possibility that price may have found a temporary low. Stochastic is also in the oversold zone but 20EMA is hinting of a strong bearish price trend. A move above $1762.70 would confirm the low in place and a price move to $1808.50.
| Support | 1741.95 | 1729.20 | 1717.55 |
| Resistance | 1756.95 | 1767.35 | 1777.90 |
USD/CNH – Price continues to move higher after hitting a low at 6.4250. Price has also broken the neckline of a Triple bottom at 6.4647. Stochastic is in the overbought zone but MACD remains bullish and hinting of a strong uptrend. 20EMA is pointing higher with a steep slope, hinting of a strong bearish price trend. We think price may be able to move higher to 6.5100 in the next few days ahead.
| Support | 6.4750 | 6.4620 | 6.4440 |
| Resistance | 6.4860 | 6.5035 | 6.5100 |