Market Talk
– The US dollar firmed, bolstered by a rise in Treasury yields, ahead of a slew of Federal Reserve speakers this week who could affirm expectations of the start of asset purchase reduction before the end of the year.
– Treasury yields resumed their march higher to 1.516%; with 10-year yields hitting their highest level in three months on solid economic data and signals the Federal Reserve is shifting toward a more hawkish policy.
– The 10-year Treasury yield rose, attracting Japanese investors with 10-year Japanese government bond yields remaining near zero due to the Bank of Japan’s yield curve control policy, sending USD/JPY as high as 111.25 on Tuesday morning.
– The Euro was little changed at 1.1693, hovering near the more than one-month low of 1.1683 reached last Thursday with many analysts expecting the dollar to rise over time against the Euro.
– Gold was up on Tuesday morning in Asia as investors continued to fret over China Evergrande Group’s unsolved debt crisis. However, a strengthening dollar and rising U.S. Treasury yields capped the yellow metal’s gains.
Chart Focus NZD/USD
Key Points
1. Sell NZD/USD recommendation
2. Sell NZD/USD at 0.7020. Stop at 0.7055 and target at 0.6945
3. A rising Treasury yield and expectation of interest rate hike next year are both likely to aid the US dollar against the Kiwi.
4. Price is capped by the 20EMA with both the MACD and 20EMA hinting of a bearish price trend ahead.
Fundamental Comments
1. A rising Treasury yield is giving support to the US dollar.
2. Expectation of tapering and interest rate hike are likely to aid the US dollar.
Technical Comments
1. Price is capped by the 20EMA which is hinting of a bearish price trend ahead.
2. MACD is bearish and is hinting of a bearish price trend ahead.
Key Levels
| Support | 0.6990 | 0.6945 | 0.6905 |
| Resistance | 0.7030 | 0.7060 | 0.7095 |
Technical Overview
USD/JPY – Price continues to rise and we have seen a high of 111.20 this morning. Stochastic is already in the overbought zone but looks strong. MACD remains bullish and is rising. MACD is also hinting of a bullish price trend ahead. 20EMA is pointing up with a steep slope, which is a hint of a strong bullish price trend ahead. The next resistance lies at 111.65 which is also the Fibonacci 261.8% price projection of the rally from 109.10 to 110.10.
| Support | 110.95 | 110.50 | 110.15 |
| Resistance | 111.40 | 111.70 | 112.00 |
EUR/USD – Price was unable to move above 1.1760 last week and we have seen a price decline to the current low of 1.1685, which is close to the previous week’s low of 1.1682. A break of this support is likely to send price lower to 1.1640. Stochastic is declining but is close to the oversold zone. MACD and 20EMA are bearish and are hinting of a bearish price trend towards 1.1640.
| Support | 1.1680 | 1.1640 | 1.1605 |
| Resistance | 1.1725 | 1.1760 | 1.1785 |
GBP/USD – Price continues to consolidate within a 100 pips range from 1.3650 to 1.3750. While 20EMA is below and supporting price at the moment, a move below 1.3685 will have bearish implication. Stochastic has a bearish crossover and could be heading lower. MACD remains bullish but is close to the zero line and looks weak. We prefer the downside and a test of 1.3650 again.
| Support | 1.3685 | 1.3650 | 1.3610 |
| Resistance | 1.3725 | 1.3755 | 1.3815 |
XAU/USD – Price has been declining and looks likely to test the previous week low of $1737 again. A break of this support is likely to send price lower to $1717. Stochastic is inside the oversold zone but MACD remains bearish and is hinting of a bearish price trend ahead. 20EMA is bearish with a steep slope hinting of a bearish price trend ahead. Our bearish view will be negated if price moved above $1761.
| Support | 1737.95 | 1723.90 | 1717.00 |
| Resistance | 1748.70 | 1760.60 | 1771.90 |
USD/CHF – We had a buy call yesterday at 0.9255, which was filled when price reached a low of 0.9247. MACD remains bullish and is rising. 20EMA is also bullish and rising. Stochastic is in the middle of its range and can continue to rise. Our view remains bullish. We would recommend shifting stop higher to 0.9230 while keeping profit target unchanged at 0.9330.
| Support | 0.9255 | 0.9210 | 0.9175 |
| Resistance | 0.9290 | 0.9335 | 0.9365 |