Market Talk
– The safe-haven U.S. dollar was up on Tuesday morning in Asia, hovering near a two-week high against its major peers amid escalating worries about both a faster pace of Federal Reserve policy tightening and potential military conflict in Ukraine.
– The Fed begins a two-day policy meeting later in the global day, and investors will be anxious for any hints on the timing and pace of rate hikes, as well as about how fast the central bank will shrink its more-than $8 trillion holdings of Treasuries and mortgage debt.
– Escalation of tensions in Eastern Europe led the euro lower to $1.1323, leaving it near the middle of its range of the past week. Overnight it fell as low as $1.1291 for the first time since Jan. 10. The dollar eased slightly to $113.87 versus the yen, after recovering from a one-month low of $113.47 touched in the previous session.
– The Aussie dollar traded 0.09% higher at $0.7150 after briefly climbing as much as 0.45% as a key inflation gauge jumped to a 7 1/2-year peak. Many analysts contend that such a pace will force the RBA into a rate hike this year, despite Governor Philip Lowe previously maintaining that such an eventuality was extremely unlikely.
– Gold was up on Tuesday morning in Asia, but remained little changed as investors look to FOMC meeting for clues on interest rate hikes, while concerns about the geopolitical tension in Eastern Europe boosted the safe-haven yellow metal.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation.
2. Sell AUD/USD at 0.7165. Stop at 0.7195 and profit target at 0.7090.
3. Escalating worries about both a faster pace of Federal Reserve policy tightening and potential military conflict in Ukraine are both aiding the safe haven US dollar.
4. Price could be facing a strong resistance with MACD hinting at a bearish price trend.
Fundamental Comments
1. Escalating worries about both a faster pace of Federal Reserve policy tightening is aiding the US dollar.
2. Potential military conflict in Ukraine is aiding the safe haven US dollar.
Technical Comments
1. Price could be facing a strong resistance which could halt its rally.
2. MACD remains bearish and is hinting of a bearish price trend.
Key Levels
| Support | 0.7130 | 0.7090 | 0.7050 |
| Resistance | 0.7170 | 0.7210 | 0.7255 |
Technical Overview
USD/JPY – Price reached a low of 113.46 overnight, which was close to the previous low of 113.47. A possible Double Bottom chart pattern could be forming with confirmation if price were to move above 115.05. MACD is also showing a divergence warning of a possible price low. Stochastic is currently rising from the oversold zone. All the indicators are hinting of a possible price bottom and a possible rally ahead.
| Support | 113.45 | 113.20 | 112.70 |
| Resistance | 113.95 | 114.30 | 114.80 |
EUR/USD – Price reached an overnight low of 1.1289 and there were divergence warnings given from the MACD indicator as well as the stochastic indicator. There is a possibility that price may have reached a low. A price move above 1.1358 would confirm the reversal. However, 20EMA is still hinting at a bearish price trend. We favour another decline to test the previous low of 1.1235.
| Support | 1.1290 | 1.1260 | 1.1230 |
| Resistance | 1.1330 | 1.1375 | 1.1410 |
GBP/USD – Price broke below the Fibonacci 38% support point at 1.3525 and reached a low of 1.3440. Stochastic is in the oversold extreme and Stochastic had a bullish crossover, which is a hint of a likely price rally ahead. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. We think price could be close to a low and would prefer to go long on dip to the overnight low.
| Support | 1.3440 | 1.3405 | 1.3365 |
| Resistance | 1.3490 | 1.3525 | 1.3570 |
XAU/USD – Yesterday, we had a buy order at $1834.20 which was filled when price declined to a low of $1829.60. Our view remains unchanged. We would recommend keeping profit order at $1847.60 while shifting stop higher to cost at $1834.20. Stochastic is rising and hinting at a bullish price trend and MACD is also bullish. 20EMA is also bullish and hinting at a bullish price trend.
| Support | 1837.30 | 1828.30 | 1818.50 |
| Resistance | 1847.60 | 1858.70 | 1870.65 |
USD/CAD – We had a buy call last Thursday which was filled at 1.2510. Yesterday, we had left orders at 1.2600 for profit and stop at 1.2545. Price rose to a high of 1.2700 and we are out of this position with a 90 pips profit. Stochastic is in the overbought zone but MACD remains bullish. 20EMA is also bullish and hinting at a strong bullish price trend. However, we think the upside could be limited to 1.2730-1.2750.
| Support | 1.2620 | 1.2575 | 1.2535 |
| Resistance | 1.2660 | 1.2700 | 1.2750 |