Market Talk
– The dollar was on course for a second straight week of gains against major peers on Friday, ahead of a key U.S. NFP jobs report that could sway the timing of Federal Reserve interest rate increases.
– Investors have been forced to reset monetary policy expectations this week, after some of the biggest central banks knocked back bets for early rate hikes. The Fed, Bank of England, Reserve Bank of Australia and ECB has all knocked back rate hikes expectations.
– Sterling is headed for its worst week in 11 after the Bank of England caught the market off-guard by keeping rates steady on Thursday. The British pound was little changed on Friday following a 1.36% tumble in the previous session.
– The euro was little changed at 1.1552 after dropping 0.49% overnight, putting it on course for a slight decline this week ahead of a NFP report. The dollar was about flat at 113.78 yen, down 0.22% since last Friday.
– Gold was up on Friday morning in Asia, bouncing back from a three-week low as some of the biggest central banks knocked back bets for early rate hikes. Silver was up 0.3% to $23.85.
Chart Focus EUR/AUD
Key Points
1. Buy EUR/AUD recommendation.
2. Buy EUR/AUD at 1.5605. Stop at 1.5565 and profit target at 1.5700.
3. RBA dovish stand and the country later re-opening compared to Euro zone is likely to weigh on the Aussie dollar.
4. A Double Bottom chart pattern breakout coupled with bullish MACD and 20EMA is hinting of a bullish price trend ahead.
Fundamental Comments
1. Reserve Bank of Australia has kept to a dovish monetary stance which is likely to weigh on the Aussie dollar.
2. Australia re-opening of its economy due to COVID-19 is behind the Euro zone and is likely to weigh on the Aussie dollar.
Technical Comments
1. Price has broken out of a Double Bottom chart pattern which is a sign of a bullish price trend.
2. MACD and 20EMA are both hinting of a bullish price trend ahead.
Key Levels
| Support | 1.5600 | 1.5560 | 1.5525 |
| Resistance | 1.5650 | 1.5715 | 1.5745 |
Technical Overview
USD/JPY – Price managed to stay above the important 113.50 support but price was unable to move above 114.00. We think price is likely to stay within this 50 pips range of 113.50 to 114.00 until the release of NFP tonight. The next direction is likely to be determined by the NFP tonight. Stochastic is moving higher but MACD remains bearish. 20EMA is also bearish and hinting of a down trend.
| Support | 113.50 | 113.25 | 112.95 |
| Resistance | 113.95 | 114.35 | 114.70 |
EUR/USD – Our view remains unchanged from yesterday. We are looking for a move to 1.1505 in the next couple of days ahead. 20EMA remains bearish and is hinting of a bearish price trend ahead. MACD is also bearish. However, Stochastic is in the oversold zone with a bullish crossover, hinting of a possible price bottom. The next direction is likely to be determined by tonight U.S. job report.
| Support | 1.1525 | 1.1505 | 1.1455 |
| Resistance | 1.1560 | 1.1590 | 1.1625 |
GBP/USD – Price declined overnight to a low of 1.3470 after Bank of England did not hike rate as per market expectation. Stochastic is in the oversold zone but both MACD and 20EMA are hinting of a bearish price trend ahead. We would prefer to put weigh on the trend indicators and favour another test of the downside if price is unable to move above 1.3565.
| Support | 1.3470 | 1.3435 | 1.3410 |
| Resistance | 1.3510 | 1.3565 | 1.3605 |
XAU/USD – We had a sell order yesterday at $1786 but price went to a high of $1798.65, triggering our stop at $1797. 20EMA has turned bullish but MACD remains bearish. Stochastic is rising and is hinting of a price rally. If price can stay above the 20EMA line at $1786, we may see a rally to $1813.65. However, the next direction is mostly likely to be determined by job report tonight.
| Support | 1789.80 | 1778.80 | 1765.55 |
| Resistance | 1798.65 | 1813.65 | 1823.80 |
NZD/USD – After a week of decline, price has come into a strong support area at 0.7075. Stochastic is into the oversold zone and is hinting of a limited downside. MACD is bearish but there could be a bullish divergence forming. This is another hint of a possible price low. However 20EMA remains bearish and is hinting of a strong bearish price trend ahead. Tonight NFP could have a bearing on this pair direction as well.
| Support | 0.7075 | 0.7045 | 0.7015 |
| Resistance | 0.7110 | 0.7145 | 0.7175 |
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