Market Talk
– The US dollar eased on Tuesday morning as traders awaited U.S. inflation data due later in the week, to see how the data will impact the U.S. Federal Reserve’s timeline to tighten its monetary policy. Markets have now priced in a one-in-three chance the Fed might hike by a full 50 basis points in March, and a reasonable chance rates will reach 1.5% by year end.
– The euro was down to $1.1443, just short of strong resistance levels at 1.1483 on Tuesday after European Central Bank President Christine Lagarde calmed market expectations of a quick hike in interest rates that pushed regional bond yields in Europe up to multi-year highs.
– The Japanese yen strengthened 0.13% versus the greenback at 115.06 per dollar, while the British pound was last trading at $1.3536, up 0.05% on the day but little changed for the past three days.
– The Australian dollar rose about 0.7% and was last at $0.7130, just shy of resistance around its 50-day moving average of $0.7163. The New Zealand dollar held a small overnight gain at $0.6642.
– Gold was slightly higher on Tuesday morning in Asia, supported by inflation worries and lingering geopolitical risks, as markets awaited key U.S. inflation data for cues on the Federal Reserve’s interest rate hike trajectory.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.1415. Stop at 1.1455 and profit target at 1.1310
3. ECB President Lagarde’s comment and interest rate differential are both likely to weigh on the Euro dollar.
4. Price and stochastic are both hinting at a price decline ahead.
Fundamental Comments
1. ECB President Lagarde commented that there was no need for big monetary policy tightening is likely to weigh on the Euro.
2. Interest rate differential is against the Euro dollar.
Technical Comments
1. Price is breaking below a support and is hinting at a price decline ahead.
2. Stochastic has a bearish crossover in the overbought zone and is hinting at a price decline.
Key Levels
| Support | 1.1410 | 1.1370 | 1.1330 |
| Resistance | 1.1455 | 1.1485 | 1.1515 |
Technical Overview
USD/JPY – We had a buy call on this pair last Friday at 114.85, which was filled. Yesterday, we had shifted stop loss higher to 115.10 while keeping profit order unchanged at 115.70. Our stop was triggered last night when price declined to a low of 114.91. We make 25 pips on this trade. We still think price is likely to move higher to test the previous high of 115.70 in the next couple of days.
| Support | 115.30 | 114.90 | 114.45 |
| Resistance | 115.70 | 116.10 | 116.60 |
EUR/AUD – Price is coming into the support area at 1.6000 provided by the 20EMA as well as the Fibonacci 50% correction point of the rally from 1.5776 to the high at 1.6219. MACD remains bullish and is hinting at a bullish price trend. Stochastic is declining while 20EMA is flat and neutral at the moment. We see a price rally to 1.6219 again if price can hold above the Fibonacci 62% correction point at 1.5945.
| Support | 1.6010 | 1.5975 | 1.5930 |
| Resistance | 1.6065 | 1.6095 | 1.6130 |
GBP/USD – Price declined to a low of 1.3489 overnight and this low is the Fibonacci 50% correction point of the rally from 1.3358 to the high at 1.3627. Price is currently just below the 20EMA which has turned bearish. However, stochastic is hinting at a price rally. If price can stay above 1.3460, we see price moving higher to 1.3627. If price were to decline below the Fibonacci 62%, we see price going lower to 1.3358.
| Support | 1.3505 | 1.3465 | 1.3435 |
| Resistance | 1.3550 | 1.3585 | 1.3625 |
XAU/USD – We had a sell call yesterday at $1814 which was filled when price reached a high of $1823.30. Our view remains unchanged. For today, we would recommend keeping stop at $1825 and profit order at $1796. Stochastic is in the overbought extreme. MACD remains bullish but is weak. 20EMA remains bullish. A move above $1825 is likely to target the previous high at $1853.58.
| Support | 1817.05 | 1801.95 | 1793.45 |
| Resistance | 1825.50 | 1838.60 | 1848.10 |
NZD/USD – We saw a price low at 0.6590 and from this low, price has moved to 0.6653 this morning. This is also the Fibonacci 62% correction point of the decline from the high at 0.6683 to the low at 0.6588. Our view remains the same as yesterday. We think the price is likely to be capped at 0.6650 and from there we see a decline to the previous low at 0.6530 in the next few days ahead.
| Support | 0.6610 | 0.6580 | 0.6530 |
| Resistance | 0.6655 | 0.6685 | 0.6710 |