Market Talk
– The dollar inched higher against the safe-haven yen while easing a touch against riskier currencies on Tuesday as a glimmer of improvement in U.S.-China trade ties lifted market sentiment. Interest rates expectations weighed on the euro ahead of ECB monetary policy meeting on Thursday.
– The greenback upward move came at the expense of the euro, the Japanese yen and the Swiss franc. The change seemed to indicate that the market had taken the dollar down too much recently on expectations that inflation outside the U.S. will force up interest rates for other currencies faster than for the greenback.
– The US dollar gained against the euro to 1.1599 as anticipation of the ECB pushing back on market inflation forecasts – as well as a soft German sentiment survey on Monday – have dragged on the euro down ahead of Thursday’s ECB meeting.
– The risk-sensitive Australian dollar poked past 75 U.S. cents to 0.7516 on Tuesday’s morning. Australian quarterly inflation data due on Wednesday is also likely to set the tone in a tussle between rates markets and the resolutely dovish Reserve Bank of Australia.
– Gold was down on Tuesday morning in Asia, after moving higher overnight to a near one-month high as a retreat in U.S. bond yields and persisting worries about inflation lifted the safe-haven asset ahead of major central bank meetings this week.
Chart Focus XAG/USD
Key Points
1. Buy XAG/USD recommendation.
2. Buy XAG/USD at 24.30. Stop at $23.99 and profit target at 24.90
3. Improvement in US-China ties and Powell’s remark are both likely to weigh on the safe haven US dollar.
4. Price is supported by the 20EMA with MACD and Stochastic both hinting of a bullish price trend.
Fundamental Comments
1. A glimmer of improvement in U.S.-China trade ties lifted market sentiment and weighs against the safe haven US dollar.
2. Powell’s remark to be patient with interest rate hike is likely to weigh on the US dollar.
Technical Comments
1. Price is likely to be support by the 20EMA line which is also hinting of a bullish price trend.
2. MACD remains bullish and Stochastic is also rising. Both are hinting of a possible rice rally ahead.
Key Levels
| Support | 24.30 | 24.00 | 23.75 |
| Resistance | 24.60 | 24.95 | 25.35 |
Technical Overview
USD/JPY – Last Thursday, we had a sell order at 113.95 which was filled. Yesterday we had left stop at 113.95 and profit order at 113.05. Unfortunately, our stop was triggered. We are out of this trade without a loss as we had lowered stop to our entry price. MACD remains bearish. However, Stochastic and 20EMA are giving out mixed signals. We would prefer to wait for better trading idea.
| Support | 113.90 | 113.40 | 113.00 |
| Resistance | 114.30 | 114.75 | 115.00 |
EUR/USD – Price broke below the range support at 1.1615 overnight and had declined to a low of 1.1589. We are expecting price to move lower to 1.1570, which is also the Triple Top chart pattern’s price target. 20EMA and MACD are both indicating a bearish price trend ahead. However, Stochastic is near to the oversold zone for the second time. The downside could be limited.
| Support | 1.1585 | 1.1545 | 1.1515 |
| Resistance | 1.1615 | 1.1650 | 1.1690 |
GBP/USD – After reaching a high of 1.3834 on 20 October, price had declined to a low of 1.3735. Overnight, price has stayed in this 100 pips range. We think price is likely to stay within the range of 1.3735 to 1.3835 for today. If price were to break out of this range, we would recommend following in the direction of the breakout. We prefer a break on the upside as Stochastic is near to the oversold zone.
| Support | 1.3735 | 1.3700 | 1.3665 |
| Resistance | 1.3790 | 1.3835 | 1.3865 |
XAU/USD – Gold continued to move within Friday’s range of $1782.25 to $1813.65 and we are expecting price to continue within this range for today. We would recommend following in the direction of a breakout of this range. If price were to move above $1813, we are likely to see a test of $1833. If price is unable to move above $1813.65, we are likely to see a decline to $1782.25. MACD and 20EMA remain bullish. We prefer a break on the topside.
| Support | 1800.85 | 1791.25 | 1782.25 |
| Resistance | 1813.65 | 1823.05 | 1833.80 |
NZD/USD – Yesterday, we had a buy call at 0.7150 which was filled when price declined to a low of 0.7129. Our view remains unchanged and we would recommend placing stop at 0.7120 while keeping profit order at 0.7215. Stochastic is rising and hinting of a price rally. 20EMA is bullish and hinting of a rising price trend as well. However, MACD remains bearish and below the zero line.
| Support | 0.7150 | 0.7120 | 0.7085 |
| Resistance | 0.7185 | 0.7220 | 0.7250 |