Market Talk
– The dollar was up on Tuesday morning in Asia as investors hoped early signs the Omicron variant may be mild will be proven correct. News from South Africa suggesting the exponential rise in Omicron infections has not been followed by a big wave in hospitalization and jump in US Treasury yields also help the greenback.
– The Reserve Bank of Australia, at its monetary policy meeting this morning, kept cash rates unchanged at a record low of 0.1%. The RBA said Omicron was not expected to derail the economy’s recovery. The Aussie dollar edged up to 0.7080 in the wake of RBA’s decision.
– Bank of England Deputy Governor Ben Broadbent said on Monday that inflation in the U.K. could “comfortably exceed” 5% in April 2022 and that a tight labour market risked becoming a more persistent source of inflation, helping the British pound higher.
– China eased its monetary policy by cutting banks’ reserve requirements for the second time in 2021, releasing CNY1.2 trillion of liquidity into the financial system. Chinese data released earlier in the day showed exports grew 22% year-on-year and imports grew 31.7% year-on-year in November 2021.
Gold was down on Tuesday morning in Asia, with a rebounding dollar and U.S. Treasury yields boxing the yellow metal in a tight $4 range. Expectations of higher inflation helped to check its decline.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9230. Stop at 0.9195 and profit target at 0.9315
3. An increase in US Treasury yields and risk appetite have aided the US dollar.
4. A strong price support coupled with bullish MACD is a sign of a bullish price trend.
Fundamental Comments
1. An increase in US Treasury yields is helping the US dollar.
2. As omicron turned out to be mild, investors’ risk appetite has increased, weighing on the safe haven Swiss francs.
Technical Comments
1. Price is likely to be supported by the 20EMA as well as the Fibonacci 38% support point.
2. MACD has turned bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.9225 | 0.9195 | 0.9155 |
| Resistance | 0.9270 | 0.9300 | 0.9335 |
Technical Overview
USD/JPY – We had a buy call at 112.90 yesterday but price only reached a low of 113.06 and our entry order was not filled. Price has moved higher and we think the rally will continue towards 114.00 or 114.35. Stochastic is already in the overbought zone but MACD remains bullish and is hinting at a bullish price trend. 20EMA is also bullish and hinting at a bullish price trend. A move below 113.40 would confirm a top in place and the start of a decline to 112.50.
| Support | 113.60 | 113.30 | 112.95 |
| Resistance | 113.95 | 114.35 | 114.75 |
EUR/USD – Our view remains the same as last Friday. We see price declining to 1.1235 initially and eventually to 1.1185. However, Stochastic currently is near to the oversold zone and hinting at a limited downside. MACD remains bearish but is turning neutral at the moment. 20EMA is also turning flat, hinting at a limited downside. If price were to move above 1.1380, our bearish view will be negated.
| Support | 1.1265 | 1.1225 | 1.1185 |
| Resistance | 1.1305 | 1.1335 | 1.1380 |
GBP/USD – For the past 4 days, price has been moving within 30 Nov range of 1.3366 high to the low at 1.3194. We are likely to see price moves within this range until there is a breakout of this range. Stochastic is rising from the oversold zone, hinting at a price rally. MACD remains bearish and is hinting at a bearish price trend. 20EMA is flat and is neutral at the moment. Watch the breakout of this range for clue to the next direction of this pair.
| Support | 1.3245 | 1.3210 | 1.3160 |
| Resistance | 1.3290 | 1.3335 | 1.3370 |
XAU/USD – Our view remains the same as yesterday. We think price had hit a low of $1761.77 last Thursday and we think this could be a temporary low. We see price moving higher to $1815 over the next few days. Stochastic is near to the overbought zone. MACD and 20EMA are both neutral and hinting of a sideways movement. A price move below $1761.75 would negate our bullish view.
| Support | 1775.60 | 1761.75 | 1750.50 |
| Resistance | 1787.30 | 1802.15 | 1815.45 |
NZD/USD – Price is forming a mini Double Bottom at the moment with both lows at 0.6735. A move above 0.6770 would hint at a price move to 0.6865 in the next few days. However a move below 0.6735 would negate our bullish view. Stochastic is rising from the oversold zone but MACD remains bearish and is hinting at a bearish price trend. However MACD has given a divergence warning of a possible price low. 20EMA remains bearish.
| Support | 0.6760 | 0.6730 | 0.6700 |
| Resistance | 0.6795 | 0.6830 | 0.6865 |