Market Talk
– The US dollar is headed for its largest weekly fall in eight months on Friday as investors trimmed long positions and deemed, for now, that several U.S. rate hikes in 2022 are fully priced in and as investors waited for more economic cues and clarity on the Federal Reserve’s interest rate hike trajectory.
– Lael Brainard on Thursday became the latest and most senior Fed official to signal that the Fed is getting ready to start raising interest rates in March 2022. U.S. interest rate futures have all but locked in four interest rate hikes in 2022.
– The euro is up more than 0.8% for the week so far, and has punched out of a range it held since late November. At $1.1457 it doesn’t face strong chart resistance until $1.1525. The yen has rallied 1% over the week, and pushed back below 115 to the dollar, last holding at 114.13.
– The New Zealand dollar is up 1.3% for the week so far and is above its 50-day moving average at $0.6861. The Aussie briefly broke above stubborn resistance around $0.7276 this week, but retreated to 0.7265.
– Gold was up on Friday morning in Asia and was set for its best weekly gain since November 2021. Investors await U.S. data that could provide clarity regarding U.S. Federal Reserve’s monetary policy, while a weaker US dollar and lower U.S. Treasury yields also provided support to the yellow metal.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation.
2. Sell USD/CAD at 1.2500. Stop at 1.2530 and profit target at 1.2410.
3. A retreat in US Treasury yields coupled with a rally in crude oil price are both likely to weigh on the US dollar.
4. Price is facing a strong resistance and MACD is hinting of a bearish price trend, which is likely to result in a price decline.
Fundamental Comments
1. A retreat in US Treasury yields is weighing on the US dollar.
2. A rally in crude oil price above US$80 is aiding the Canadian dollar.
Technical Comments
1. Price is likely to be resisted by the 20EMA as well as a previous low turned resistance line.
2. MACD remains bearish and is hinting of a bearish price trend.
Key Levels
| Support | 1.2480 | 1.2450 | 1.2405 |
| Resistance | 1.2525 | 1.2565 | 1.2605 |
Technical Overview
USD/JPY – Price had fallen below the Fibonacci 62% correction point at 114.20 and we are likely to see a price decline to 113.60, which is the Fibonacci 261.8% price projection target or to the base of the rally at 113.10. Stochastic is in the oversold zone but both MACD and 20EMA are hinting at a strong bearish price trend ahead. Below 113.10, the next support lies at 112.55.
| Support | 113.55 | 113.10 | 112.85 |
| Resistance | 113.90 | 114.30 | 114.70 |
EUR/USD – Price broke above 1.1385 and we are likely to see the rally continue towards 1.1500 or 1.1525 in the next 48 hours. Stochastic is in the overbought zone but MACD remains strongly bullish. 20EMA is also hinting at a strong bullish price trend. The strong trend is likely to keep the Stochastic reading in the overbought zone for a prolong period of time. Stay on the bullish side for 1.1525.
| Support | 1.1445 | 1.1415 | 1.1385 |
| Resistance | 1.1480 | 1.1525 | 1.1560 |
GBP/USD – Price broke above 1.3605 on the 11 Jan 2022 and we are expecting the rally to continue towards the next resistance at 1.3830 over the 48 hours. Price has reached a high of 1.3748 overnight and Stochastic is already in the overbought zone but there is still no MACD divergence warning, which means price can continue to move higher. 20EMA is also hinting at a strong bullish price trend.
| Support | 1.3700 | 1.3665 | 1.3620 |
| Resistance | 1.3750 | 1.3790 | 1.3835 |
XAU/USD – Price reached a low of $1783.15 last Friday and we are expecting the rally to continue towards $1831.17 in the next 24 hours. Divergence could be developing which is a warning that a top is near. We think it could be the $1831 top. While Stochastic is in the overbought zone, both MACD and 20EMA are hinting at a strong bullish price trend.
| Support | 1820.70 | 1810.05 | 1799.70 |
| Resistance | 1831.00 | 1843.00 | 1854.70 |
NZD/USD – We had a buy order at 0.6855 yesterday and it was filled when price decline to a low of 0.6851. Overnight price had rallied to a high of 0.6890 but had declined to a low of 0.6848 this morning. Our view remains bullish and we are looking at a rally to 0.6950. Stochastic is in the overbought zone but both MACD and 20EMA remains bullish. We would recommend placing stop at 0.6840 and keeping profit order at 0.6950.
| Support | 0.6845 | 0.6810 | 0.6770 |
| Resistance | 0.6890 | 0.6920 | 0.6950 |