Market Talk
– The U.S. dollar was down on Thursday morning in Asia, after minutes from the last U.S. Federal Reserve meeting suggested policymakers are not set on an aggressive pace of interest rate hikes. Tensions in Europe, with fears of an invasion still very much alive, offset a much less hawkish FOMC minutes.
– Minutes from the Federal Reserve’s January meeting were less hawkish than some investors had expected, without any mention about a 50 basis point hike. Easing of bets on aggressive hikes by the Federal Reserve weighed on the U.S. dollar.
– The euro was pinned around $1.1379 early in the Asia session. It had rallied after Russia signaled a military pullback, a step forward in the deepest regional crisis in decades. However, the U.S. said on Wednesday that the Russian statement was false.
– The New Zealand dollar is also in focus, with the RBNZ widely expected to hike interest rates by 25 basis points when it hands down its policy decision on Feb. 23. A better-than-expected employment data was not enough to lift the Australian dollar through resistance around $0.7210 and the currency hovered near that level.
– Gold continues on its overnight rally on Thursday morning in Asia, with the yellow metal close to an eight-month high after the United States said Russia was still building up troops around Ukraine. A less hawkish FOMC minutes also lifted the yellow metal.
Chart Focus USD/JPY
Key Points
1. Sell USD/JPY recommendation.
2. Sell USD/JPY at 115.50. Stop at 115.80 and profit target at 114.70
3. Fear of a Russian invasion and a less hawkish FOMC minutes are both likely to aid the yen.
4. Price is capped by a strong resistance with both Stochastic and MACD are hinting at a bearish price trend.
Fundamental Comments
1. After the U.S. called the Russian’s move as false, fears of an invasion are likely to aid the safe haven yen.
2. A less hawkish FOMC minutes is likely to weigh on the U.S. dollar.
Technical Comments
1. Price is capped by the 20EMA line as well as the Fibonacci 38% correction point.
2. Stochastic and MACD are both hinting at a bearish price trend.
Key Levels
| Support | 115.00 | 114.65 | 114.20 |
| Resistance | 115.50 | 115.85 | 116.15 |
Technical Overview
XAG/USD – Yesterday, we had a buy call at 23.20 but price only fell to a low of $23.25 and our entry order was not filled. Our view remains unchanged. Stochastic is near to the oversold zone and is likely to move higher. MACD remains bullish but is weak while 20EMA is neutral at the moment. However, a price move below $23.00 would negate our bullish view. If price fails to move above $23.70, it would also negate our bullish view and call for a decline to $22.75 over the next few days.
| Support | 23.25 | 22.85 | 22.45 |
| Resistance | 23.65 | 24.00 | 24.30 |
EUR/USD – The rally from Monday’s low reached a high of 1.1395 overnight. The high was also the Fibonacci 50% correction point of the decline from the high at 1.1491 to the low at 1.1279. As long as price remains below 1.1410, the trend remains bearish with 1.1220 as the target of the decline. Stochastic is into the overbought zone and MACD remains bearish. 20EMA is neutral at the moment.
| Support | 1.1350 | 1.1320 | 1.1280 |
| Resistance | 1.1395 | 1.1425 | 1.1460 |
GBP/USD – Price moved above the upper limit of a tight range overnight. We are likely to see a continuation of the rally to test the previous high at 1.3627 in the next couple of days. Stochastic is rising but is near to the overbought zone. MACD and 20EMA are both bullish and hinting at a bullish price trend. A price move below 1.3490 would negate our bullish view for the next 48 hours.
| Support | 1.3565 | 1.3520 | 1.3490 |
| Resistance | 1.3600 | 1.3630 | 1.3670 |
XAU/USD – Our view remains the same as yesterday. As price managed to stay above the 20EMA line at $1850, we are likely to see a test of the previous high at $1879.40 again over the next 48 hours. A price move below $1841 would negate our bullish view. Stochastic is moving higher after a bullish crossover. 20EMA and MACD are both hinting at a bullish price trend. All three indicators are hinting at a price rally ahead.
| Support | 1867.70 | 1859.80 | 1844.20 |
| Resistance | 1879.40 | 1889.85 | 1900.00 |
USD/CAD – We had a sell order at 1.2750 from Tuesday and yesterday we had left orders at 1.2775 for stop and profit order at 1.2650. Price went to a low of 1.2663 and had bounced up to 1.2733 this morning. Our view remains unchanged. We would recommend bringing stop lower to 1.2735 and profit order higher to 1.2665. Stochastic is in the overbought zone and MACD remains bearish but 20EMA has turned bullish.
| Support | 1.2695 | 1.2665 | 1.2635 |
| Resistance | 1.2735 | 1.2775 | 1.2800 |