Market Talk
– The US dollar traded near a one-week high versus its major rivals on Tuesday, supported by expectations of a hawkish Federal Reserve meeting this week and safe haven demand amid continued uncertainty about the Omicron coronavirus variant.
– The Fed’s two-day meeting begins later Tuesday with policy decision announcement on Wednesday. The central bank is expected to announce it will wrap up its bond buying stimulus sooner than previously communicated, potentially setting up earlier interest rate increases next year.
– The euro was about flat at 1.1283 after touching a one-week low of 1.1260 overnight. The euro fell, as it is seen as vulnerable to a rate hike in the United States given expectations that the Fed will tighten policy more quickly than the dovish ECB.
– Sterling was little changed at 1.3210, meandering for the past week near the one-year low of 1.3161 reached last week. Britain reported the first publicly confirmed death globally from Omicron after U.K. Prime Minister Boris Johnson warned on Monday of a “tidal wave” of infections from the new variant.
– Gold prices were down on Tuesday morning as investors squared positions ahead of key central bank meetings this week, with the Federal Reserve likely to signal the pace at which it may wind down pandemic-era economic support measures.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation.
2. Sell AUD/USD at 0.7130. Stop at 0.7160 and profit target at 0.7050
3. The US dollar is supported by expectations of a hawkish Fed as well as uncertainty about the Omicron variant.
4. Price has broken below the neckline of a mini Double Top chart pattern with MACD hinting of a bearish price trend.
Fundamental Comments
1. The US dollar is supported by safe haven demand amid continued uncertainty about the Omicron.
2. The US dollar is supported by expectations of a hawkish Federal Reserve meeting later this week.
Technical Comments
1. Price has broken below the neckline of a mini Double Top chart pattern, which is hinting at a bearish price trend.
2. MACD is turning bearish and is hinting at a bearish price trend.
Key Levels
| Support | 0.7090 | 0.7045 | 0.7010 |
| Resistance | 0.7120 | 0.7145 | 0.7185 |
Technical Overview
USD/JPY – Our view remains the same as yesterday. We see a range for the next few days until there is a breakout of this range. We can narrow the range to 113.20 to 114.00 from yesterday’s 113.00 to 114.20. Stochastic is in the middle of its range and MACD is flat and near to the zero line. 20EMA is flat. All our three indicators are hinting at a sideways movement.
| Support | 113.45 | 113.10 | 112.80 |
| Resistance | 113.70 | 114.00 | 114.50 |
EUR/USD – We think last week’s range of 1.1354 to 1.1227 is likely to contain trading for this week. We favour the downside but we see this range until there is a breakout of either high or low. Stochastic is near to the oversold zone, but looks weak in its rally. MACD is flat and near to the zero line, hinting at a sideways movement. 20EMA is bearish and is hinting at a bearish price trend.
| Support | 1.1260 | 1.1230 | 1.1185 |
| Resistance | 1.1305 | 1.1350 | 1.1380 |
GBP/USD – Price had moved to a high of 1.3275 on Friday and we see this as a temporary high. We see price moving lower to test the previous low of 1.3161 over the next few days. Price had moved to a low of 1.3190 this morning and we are expecting the decline to continue to 1.3161. Stochastic continues to move down. MACD and 20EMA are both hinting at a bearish price trend.
| Support | 1.3190 | 1.3160 | 1.3105 |
| Resistance | 1.3220 | 1.3270 | 1.3310 |
XAU/USD – We had a buy call yesterday at $1781.50 but price only reached a low of $1781.70, missing out on our entry price. However, there was no rally. Instead price moved sideways. MACD and 20EMA are also hinting at a sideways price movement ahead. Stochastic has a bearish crossover and is hinting at a bearish price trend. We think price is likely to range within last week’s range of $1792.75 to 1770.05 until there is a breakout of either side of this range.
| Support | 1781.70 | 1770.05 | 1761.75 |
| Resistance | 1791.50 | 1802.15 | 1815.45 |
USD/CAD – Price moved above the resistance point of 1.2745 and we saw a move to a high of 1.2827 this morning. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a bullish price trend. 20EMA is pointing up with a steep slope hinting at a strong bullish price trend. We think the upside could be limited to the previous high at 1.2853 with a pullback to the 20EMA at 1.2750 likely over the next 48 hours.
| Support | 1.2790 | 1.2750 | 1.2705 |
| Resistance | 1.2825 | 1.2855 | 1.2895 |