Market Talk
– The US dollar was up on Monday morning in Asia, after stunningly strong U.S. jobs data soothed concerns about the global economy but also added to the risk of an aggressive tightening by the Federal Reserve.
– Expectations are now growing that the Fed will hike rates over five times in 2022, thanks to a strong U.S. jobs report. Non-farm payroll were at 467,000 in January while the unemployment rate was 4%. Payrolls for prior months were revised up by 709,000 to radically change the trend in hiring.
– The euro was last at $1.1451, not far from Friday’s high of $1.1483, on Monday morning after the European Central Bank’s hawkish turn last week. However, analysts said further short-term gains looked less likely with looming Fed tightening supporting the greenback.
– The yen was at 115.16 per dollar, and sterling was at $1.3531, both in the middle of their recent ranges. The Australian dollar was on the back foot at $0.7071, with the Reserve Bank of Australia looking to be at the more dovish end of the central bank spectrum.
– Gold was up on Monday morning in Asia, hitting a more than one-week high at $1815.05. Inflationary pressures helped counter the impact of a U.S. Treasury yield rally after better-than-expected U.S. employment data.
Chart Focus Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1814. Stop at $1825 and profit target at $1796
3. A strong US labour data and expectations of 5 US rate hikes in 2022 are both likely to weigh on Gold.
4. Price is capped by the Fibonacci 50% correction point with momentum indicators hinting at a price decline.
Fundamental Comments
1. Expectations of 5 US rate hikes in 2022 are likely to weigh on Gold.
2. A strong US labour data is likely to boost the US dollar.
Technical Comments
1. Price is capped by the Fibonacci 50% correction point.
2. MACD and Stochastic are both hinting of a price decline.
Key Levels
| Support | 1801.95 | 1793.45 | 1780.10 |
| Resistance | 1815.05 | 1828.30 | 1838.60 |
Technical Overview
USD/JPY – We had a buy call on this pair last Friday at 114.85. Our entry order was filled when price reached a low 114.76. We would recommend shifting stop loss order higher to 115.10 while keeping profit order at 115.70. Momentum indicators, MACD and Stochastic are both showing signs of weakness, hinting that the upside could be limited. However, we think price can reach our profit target before the decline set in.
| Support | 115.10 | 114.80 | 114.45 |
| Resistance | 115.40 | 115.70 | 116.00 |
EUR/USD – Price reached a high of 1.1483 last Friday which was also the previous high on 14 Jan. Stochastic is into the overbought zone and hinting of a price decline. MACD remains bullish. 20EMA is also hinting at a bullish price trend. However, price will need to move above 1.1483 to continue the rally. If not, we are likely to see a decline to 1.1270 in the next few days.
| Support | 1.1410 | 1.1370 | 1.1330 |
| Resistance | 1.1455 | 1.1485 | 1.1515 |
GBP/USD – Price reached a high of 1.3627 last Thursday and we have seen a decline to 1.3505. The high last Thursday was also accompanied by a divergence warning from MACD, warning of a possible price high. Stochastic is near to the oversold zone, hinting at a limited downside. 20EMA has turned bearish and is hinting at a bearish price trend. We see price going lower to 1.3435 in the next 24 hours.
| Support | 1.3505 | 1.3465 | 1.3435 |
| Resistance | 1.3550 | 1.3585 | 1.3625 |
AUD/USD – The price correction managed to stay above the Fibonacci 62% of the rally from the low of 0.6966 to the high at 0.7167, keeping the bullish trend intact. Stochastic is also turning up after a bullish crossover near to the oversold zone. MACD is turning bullish but 20EMA remains bearish. We think price can break above the 20EMA and proceed higher to 0.7225 in the next couple of days.
| Support | 0.7065 | 0.7030 | 0.6990 |
| Resistance | 0.7100 | 0.7135 | 0.7170 |
NZD/USD – We saw a price low at 0.6590 this morning and price has moved higher. Stochastic continues to rise and MACD is also moving higher from the extreme point. 20EMA has also turned bullish. While these indicators are hinting at a price rally, we see the price rally capped at 0.6650 and from there; we see another decline to the previous low at 0.6580 again over the next few days.
| Support | 0.6610 | 0.6580 | 0.6530 |
| Resistance | 0.6650 | 0.6680 | 0.6710 |