Market Talk
– The dollar was down on Wednesday morning in Asia despite US Treasury yields climbing to a multi-year high. Investors now await U.S. inflation data due on Thursday for clues of the U.S. Federal Reserve’s timeline on interest rate hikes.
– Upbeat comments from French President Emmanuel Macron about his meeting with Russian President Vladimir Putin over the Ukraine crisis also dented demand for the safe haven US dollar despite US Treasury yields rising to 1.97%, the highest since November 2019.
– Currencies broadly traded little changed as the market awaits U.S. consumer price data on Thursday. Economists polled by Reuters forecast the year-over-year CPI in January was 7.3%.
– The euro weakened in sideways trade to 1.1426, a day after European Central Bank President Christine Lagarde tapped down expectations of aggressive interest rate hikes that have spooked European bond markets.
– Gold was up on Wednesday morning in Asia given the ongoing pressure from U.S. inflation. However, rising U.S. treasuries yield and growing expectations on U.S. Federal Reserve interest rate hike kept the gains in check.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9240. Stop at 0.9210 and profit target at 0.9320
3. Easing of worries over Ukraine and rise in 10-year US Treasury yields are both likely to aid the US dollar.
4. Price is supported by the 20EMA with MACD, 20EMA and Stochastic hinting at a bullish price trend.
Fundamental Comments
1. The rally in US 10-year Treasury yield is aiding the US dollar.
2. Easing of worries over Ukraine is likely to weigh on the safe haven Swiss franc.
Technical Comments
1. Price is supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD remains bullish and Stochastic has a bullish crossover and is hinting at a bullish price trend.
Key Levels
| Support | 0.9220 | 0.9175 | 0.9145 |
| Resistance | 0.9260 | 0.9300 | 0.9340 |
Technical Overview
USD/JPY – Price reached a high of 115.67 this morning, forming a possible Double Top chart pattern. Stochastic is in the overbought zone. MACD remains bullish. 20EMA is also hinting at a bullish price trend. Price will need to move above the previous high to continue its upward trend. If price fails to move above the high, price is likely to move lower to test the previous low at 114.13.
| Support | 115.30 | 114.90 | 114.45 |
| Resistance | 115.70 | 116.10 | 116.60 |
EUR/USD – We had a sell order yesterday at 1.1415 which was filled when price moved to a high of 1.1432. We would recommend keeping stop loss at 1.1455 and profit target at 1.1310. MACD remains bullish and is hinting at a bullish price trend. 20EMA is bullish and supporting price at the moment. 20EMA is also hinting at a bullish price trend. If price fails to move below the 20EMA support at 1.1410, price is likely to move higher to the previous high at 1.1483.
| Support | 1.1400 | 1.1370 | 1.1330 |
| Resistance | 1.1450 | 1.1485 | 1.1515 |
GBP/USD – Price declined to a low of 1.3489 on Monday, which is the Fibonacci 50% correction point of the rally from 1.3358 to the high at 1.3627. 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. Stochastic is rising and hinting at a price rally. Both MACD and 20EMA are also hinting at a bullish price trend.
| Support | 1.3530 | 1.3490 | 1.3460 |
| Resistance | 1.3570 | 1.3625 | 1.3660 |
XAU/USD – We had a sell call on Monday at $1814 which was filled when price reached a high of $1823.30.Yesterday, we had recommended keeping stop at $1825 and profit order at $1796. Unfortunately, our stop loss was triggered and we lost $9 on this trade. Stochastic is already in the overbought zone but MACD and 20EMA both remain bullish. We see price moving higher to test the previous high at $1853 in the next couple of days.
| Support | 1824.50 | 1815.25 | 1801.95 |
| Resistance | 1838.60 | 1846.55 | 1853.60 |
USD/CAD – Price reached a high of 1.2787 last Friday and could have formed a possible Double Top chart pattern. Confirmation of this chart pattern will come when price break the support at 1.2645. 20EMA is flat and neutral at the moment. Stochastic is rising from the oversold zone. However, MACD is about to turn bearish. Watch the break of the support at 1.2645 for the bearish price trend to 1.2560.
| Support | 1.2680 | 1.2645 | 1.2595 |
| Resistance | 1.2720 | 1.2755 | 1.2795 |