FX Commentary – USD Stronger On Rising US Treasury Yield

– The dollar stays firm on Wednesday after U.S. yields vaulted it up sharply on the euro overnight, putting it back above support levels that have held for the past few months in anticipation of rising U.S. interest rates.

– U.S. Fed will meet to set their policy next week and traders are growing anxious about another hawkish surprise. A delicate situation in Ukraine will be monitored closely as U.S. Secretary of State Antony Blinken will seek to defuse a crisis with Moscow when he meets Russia’s foreign minister in Geneva this week.

– The euro had its sharpest daily drop in a month, falling about 0.7% last night despite data showed that German investor sentiment hit its highest in six months in January on expectations COVID-19 cases will fall by early summer, allowing growth in Europe’s largest economy to pick up.

– The Aussie slipped 0.3% overnight and way down from a recent two-month top of $0.7314. The kiwi was pinned at $0.6771, well away from last week’s top of $0.6890.

– Gold prices remained steady on Wednesday, staying firm near a one-week low hit in the previous session, as the yields strengthened to two-year highs on expectations of quicker interest rate hikes by the Fed.

Chart Focus NZD/USD

Key Points

1. Sell NZD/USD recommendation.

2. Sell NZD/USD recommendation at 0.6790. Stop at 0.6830 and profit target at 0.6755.

3. Rising US Treasury yields and expectations of US rate hikes are likely to aid on US dollar.

4. Both 20EMA and MACD hints at a bearish price trend.

Fundamental Comments

1. Rising US Treasury yields will strengthen the dollar.

2. Expectation of US rate hikes will aid on US dollar.

Technical Comments

1. Price could be resisted by the falling 20EMA.

2. MACD remains bearish with both of its lines below the zero line.

Key Levels


Technical Overview

EUR/USD – Price has been on a decline after violating a Double Top chart pattern. The 20EMA is falling, hinting at a bearish price trend. Price is near to the rising trendline support that formed since Nov 2021. It could have a corrective rebound if price hold at the trendline support. Stochastic is weak and is at the oversold region. MACD is bearish as well.


USD/JPY – Price has been rallying after forming a Bullish Engulfing reversal candlestick pattern at the low of 113.47. Our buy order was filled yesterday. It is currently hovering around the 20EMA. A correction could be likely as price has to take a rest for its next bounce, but we think this correction is likely to find support at Fibonacci 62% correction point at 114.08. Stochastic is still strong. MACD remains bullish despite having a bearish crossover that hints at the correction.


GBP/USD – Price has been declining after reaching a high at 1.3748 on 13 Jan 2022 and it has moved below the falling 20EMA. Stochastic is at the oversold region and had a bullish crossover, hinting at a possible rebound towards the 20EMA resistance point at 1.3636. MACD is still below the zero line, remaining its bearish view. Price could head lower towards 1.3535 if it could not penetrate the 20EMA.


XAU/USD – Price has moved below the 20EMA after trading near to its overhead key resistance of $1831. The 20EMA is falling, hinting at a bearish price trend. Stochastic is neutral, but MACD has moved below its zero line, confirming the bearish outlook. Price could head lower towards $1793.


USD/CHF – Price was resisted by the support-turned-resistance level, which is also near to the Fibonacci 50% correction point. It has been retracing since then and we are likely to see price heading lower towards the 20EMA support at 0.9153. A price rebound could be expected if price able to stay at the 20EMA support, else a deeper correction could be followed.


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