Market Talk
– The dollar edged higher against safe-haven currencies such as the yen and Swiss franc after reassuring news on the Omicron COVID-19 variant, while units like the Australian dollar that had weakened in recent weeks on growth worries also advanced.
– While the Omicron COVID-19 variant has caused alarm and some new restrictions around the world, investors appeared to be reassured by Dr. Anthony Fauci, the top U.S. infectious disease official, who told CNN that “thus far it does not look like there’s a great degree of severity to it.” However, he did say that more study is needed.
– A rebound in oil prices helped the Canadian dollar to gain against the US dollar to a 2-week high going into a Bank of Canada policy meet later on Wednesday. All 29 economists polled by Reuters expect the Bank of Canada to keep rates unchanged at 0.25% at the meeting.
– The BOE could delay becoming the world’s first key central bank to hike interest rates, thanks to the discovery of the omicron COVID-19 variant even after Bank of England Deputy Governor Ben Broadbent warned on Monday of more persistent inflation.
– Gold was up on Wednesday morning in Asia, boosted by rising inflation and lingering uncertainty over the Omicron coronavirus variant. Market focus is turned towards U.S. consumer prices data on Friday.
Chart Focus USD/JPY
Key Points
1. Buy USD/JPY recommendation
2. Buy USD/JPY at 113.45. Stop at 113.05 and profit target at 114.35
3. An increase in risk appetite and US Treasury yields are both weighing on the safe haven yen.
4. Price has a strong support and MACD is bullish. Both are hinting of a price rally.
Fundamental Comments
1. Investors appeared to be reassured by Dr. Anthony Fauci that the omicron variant is less severe and this is weighing on the safe haven yen.
2. A gain in US Treasury yields is weighing on the yen.
Technical Comments
1. Price is likely to be supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD is bullish and is hinting at a bullish price trend.
Key Levels
| Support | 113.40 | 113.05 | 112.80 |
| Resistance | 113.75 | 114.20 | 114.65 |
Technical Overview
USD/CHF – We had a buy call at 0.9230 yesterday but while price did reached a low of 0.9230, it was on the bid side an our order was not filled. Price reached a high of 0.9374 overnight but has declined to 0.9232 at the point of writing. Stochastic is turning down from the overbought zone and MACD has a bearish divergence warning. If price were to decline below the 20EMA support at 0.9240 currently, we are likely to see a decline to 0.9165.
| Support | 0.9235 | 0.9195 | 0.9155 |
| Resistance | 0.9275 | 0.9300 | 0.9335 |
EUR/USD – Price has moved above 1.1280 and this may negated our bearish view. Stochastic is rising after a bullish crossover from the oversold zone, hinting at a bullish price rally. MACD is near to the zero line and is neutral at the moment. 20EMA has turned bullish. If price can stay above 1.1280, price could be heading higher to test the previous high at 1.1382. Inability to stay above this support, price is likely to test the low of 1.1185.
| Support | 1.1280 | 1.1230 | 1.1185 |
| Resistance | 1.1325 | 1.1380 | 1.1430 |
GBP/USD – For the past 5 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 has a bullish crossover and is hinting of a price rally. MACD remains bearish and is hinting at a bearish price trend. 20EMA is bearish. Watch the breakout of this range for clue to the next direction of this pair.
| Support | 1.3210 | 1.3160 | 1.3105 |
| Resistance | 1.3260 | 1.3290 | 1.3335 |
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. Price has moved above this week’s high at $1787.30. This is a good sign and confirms the rally to $1815. Stochastic is rising. MACD and 20EMA are both bullish and hinting at a bullish price trend.
| Support | 1787.30 | 1775.60 | 1761.75 |
| Resistance | 1802.15 | 1815.45 | 1822.15 |
NZD/USD – Price has formed a mini Double Bottom with both lows at 0.6735. The price move above 0.6770 confirmed the chart pattern and is hinting at a price move to 0.6865 in the next few days. Stochastic is rising and hinting at a bullish price trend. Stochastic is not near to the overbought zone and there is still potential for price to move higher. 20EMA has turned bullish and is hinting at a bullish price trend but MACD is still bearish.
| Support | 0.6760 | 0.6730 | 0.6700 |
| Resistance | 0.6800 | 0.6830 | 0.6865 |