Market Talk
– The US dollar sank to its lowest level in nearly three months on Monday morning in Asia, as fears of an economic contagion from China Evergrande Group’s receded. The fact that the Fed will soon begin tapering and hike interest rate next year fails to support the greenback.
– Treasury yields climbed to 1.466% for a second day on Monday, its highest level since Jul. 2, 2021, as a re-pricing of portfolios continues in the wake of the Federal Reserve’s decision to soon begin tapering its massive bond purchases, a move that could lead to higher interest rates next year.
– The euro was little changed at $1.1724 even as Germany’s Social Democrats narrowly won over incumbent Chancellor Angela Merkel’s Christian Democratic Union of Germany party in Sunday’s election.
– The Australian and New Zealand dollars rallied on Monday as gains in global stocks pointed to an improvement in risk sentiment, while a surge in oil prices led to a stronger Canadian dollar. The British pound was little changed from last Friday’s closing.
– Spot gold rose due to a subdued dollar and as investors avoided riskier assets because of China’s Evergrande saga, but looming interest rate hikes slowed bullion’s advance.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9255. Stop at 0.9215 and profit target at 0.9330
3. Higher Treasury yields and higher risk appetite are both weighing on the Swiss francs
4. Price has managed to stay above a support zone with both MACD and Stochastic hinting of a bullish price.
Fundamental Comments
1. US Treasury yield has crept higher to 1.466% which aiding the US dollar against the Swiss francs.
2. Risk appetite has increased which is weighing on the Swiss francs
Technical Comments
1. Price has managed to stay above a support zone and could be about to break above the recent high which is a bullish hint.
2. Both MACD and Stochastic are moving up and hinting of a bullish price trend.
Key Levels
| Support | 0.9240 | 0.9210 | 0.9175 |
| Resistance | 0.9280 | 0.9305 | 0.9335 |
Technical Overview
USD/JPY – In our last update last Wednesday, we had a buy call on this pair at 109.45 but price only reached a low of 109.47. Our entry order was not filled. Price has since moved higher to 110.80. This may be a temporary high as MACD has a bearish crossover and Stochastic has reached the overbought zone. However, 20EMA remains bullish and is hinting of bullish price trend.
| Support | 110.50 | 110.15 | 109.75 |
| Resistance | 110.80 | 111.20 | 111.65 |
EUR/USD – We had a sell call on Tuesday at 1.1740, which was filled and we had place stop at 1.1740 and profit order at 1.1670 on Wednesday. Price reached a low of 1.1682 before rebounding to 1.1750 on Thursday. We are out of this position at cost price. MACD and 20EMA are both bearish and hinting of bearish price trend but Stochastic is rising. Price may consolidate today in a range as indicated by the mixed indicators’ readings.
| Support | 1.1695 | 1.1660 | 1.1630 |
| Resistance | 1.1725 | 1.1755 | 1.1785 |
GBP/USD – After reaching a low of 1.3608 on Wednesday, we saw a rally that brought price to 1.3750 on Thursday. However, price has not managed to hold its support and has declined to a low of 1.3656 on Monday. The picture is mixed at the moment. 20EMA and MACD are both hinting of a bearish price trend but Stochastic is rising and hinting of a bullish price trend. We prefer to stay aside for today.
| Support | 1.3655 | 1.3610 | 1.3570 |
| Resistance | 1.3695 | 1.3750 | 1.3815 |
XAU/USD – Price had reached a low of $1737.60 on Thursday and had moved to a high of $1760.60 this morning but we are unable to confirm neither the low nor the high. MACD is hinting of a bearish trend while Stochastic is rising and hinting of a bullish price trend. 20EMA is flat and neutral at the moment. We would prefer to stay on the bearish side for a test of $1737 again.
| Support | 1747.95 | 1737.60 | 1723.90 |
| Resistance | 1760.60 | 1776.35 | 1787.15 |
XAG/USD – In our last update on Wednesday, we had placed stop at $22.45 and profit target at $23.10. Price reached a high of $23.13 on early Thursday morning and we are out of this position with a $0.65 profit. Price may have ended its correction at $22.09 on Friday and we could be heading up to $23.10 again in the next few days ahead. MACD and Stochastic are both hinting of a price rally ahead.
| Support | 22.45 | 22.10 | 21.70 |
| Resistance | 22.80 | 23.15 | 23.55 |