Market Talk
– The dollar was up on Friday morning in Asia, with markets adopting a broadly calmer tone. Investors now await the latest U.S. jobs that could clear the path to earlier Federal Reserve interest rate hikes, even as Omicron uncertainties cloud the outlook.
– Jobless claims and planned layoffs data provided further evidence that employers are increasingly disinclined to hand out pink slips amid a tight labour market, the result of booming demand colliding with worker scarcity and low labour market participation.
– Federal Reserve officials continue to reinforce its message that it will quicken the pace of asset tapering. San Francisco Fed President Mary Daly saying it may be time to “start crafting a plan” to raise rates to combat inflation, and Richmond Fed President Thomas Barkin throwing his support behind “normalizing policy.”
– The euro was little changed at 1.1297, consolidating after its drop to an almost 17-month low at 1.1186 last week. The dollar was flat at 113.21 yen. Against the Sterling, the greenback was little changed at 1.3295.
Gold was up on Friday morning in Asia. However, the yellow metal was set for a third, consecutive weekly fall, weighed down by signs that the U.S. Federal Reserve will quicken the pace of asset tapering and hike interest rates earlier than expected to curb inflationary pressures.
Chart Focus EUR/AUD
Key Points
1. Sell EUR/AUD recommendation.
2. Sell EUR/AUD at 1.5965. Stop at 1.6005 and profit target at 1.5800
3. Rising commodities prices and interest rate differential are both likely to favour the Aussie against the Euro dollar.
4. A possible Triple Top with triple divergence warnings from MACD is a strong sign of a market top.
Fundamental Comments
1. Rising commodities prices due to inflationary pressure is likely to favour the Aussie dollar.
2. Interest rate differential is in the Aussie dollar favour.
Technical Comments
1. A possible Triple Tops chart pattern is forming which is a warning of a possible price high and an impending reversal.
2. A triple divergence warnings from the MACD indicator is a strong sign of an impending reversal.
Key Levels
| Support | 1.5950 | 1.5900 | 1.5855 |
| Resistance | 1.6005 | 1.6040 | 1.6095 |
Technical Overview
USD/JPY – We think price may have hit a low on Tuesday at 112.52 and a rebound to 114.00 is likely within the next few days. Price has moved above 113.25, which is the 20EMA line resistance at the point of this writing and this could be the first sign of a rally to 114.00. Stochastic is moving higher and hinting of a price rally. MACD is moving higher but remains in the bearish zone. It will take a move below 112.52 to negate our bullish view.
| Support | 113.20 | 112.90 | 112.50 |
| Resistance | 113.55 | 113.95 | 114.25 |
EUR/USD – Price has declined below the 20EMA line which is also hinting at a bearish price trend. Stochastic is declining and hinting of a price decline. MACD is also declining but remains in the bullish zone. MACD has a bearish crossover and is hinting at a bearish price trend. We see price declining to 1.1235 initially and eventually to 1.1185. A price move above 1.1360 would negate our bearish view.
| Support | 1.1260 | 1.1225 | 1.1185 |
| Resistance | 1.1310 | 1.1355 | 1.1385 |
GBP/USD – We think the low on Tuesday at 1.3194 could be a low and we are likely to see a test to 1.3370 in the next couple of days. However, a price move below 1.3260 would hint at a decline to 1.3194. Stochastic has a bearish crossover and is hinting of a price decline. MACD is near to the zero line but remains bearish. MACD is neutral. 20EMA is also neutral at the moment.
| Support | 1.3260 | 1.3225 | 1.3195 |
| Resistance | 1.3310 | 1.3340 | 1.3370 |
XAU/USD – Price broke below $1769.85 last night and decline to a low of $1761.77. While the low is higher than our target at $1758.65, another divergence warning from the MACD indicator is hinting at a possible price low. Stochastic is also in the oversold zone and has a bullish crossover, hinting at a price rally. However, 20EMA remains firmly bearish. We would prefer to wait for tonight NFP for better trend direction.
| Support | 1769.85 | 1761.75 | 1745.70 |
| Resistance | 1776.45 | 1788.05 | 1802.15 |
GBP/JPY – Yesterday, we had a sell call at 150.25 which was triggered when price reached a high of 150.78. This price high also triggered our stop loss at 150.55. We lost 30 pips on this trade. Stochastic has a bullish crossover and is rising from the oversold zone. MACD is also rising from its extreme point but MACD remains bearish. 20EMA is also hinting of a bearish price trend.
| Support | 150.45 | 150.15 | 149.85 |
| Resistance | 150.80 | 151.15 | 151.45 |