Market Talk
– The U.S. dollar continues to gain on Wednesday morning in Asia after gaining in the previous day but the moves were small. Investors are flocking to safe-haven assets as Russia’s invasion into Ukraine intensified and stirred anxiety among investors.
– Russia warned Kyiv residents to flee their homes and rained rockets on the city of Kharkiv as Russian commanders intensified their bombardment of Ukrainian urban areas in a shift of tactics after their six-day assault stalled.
– Data overnight showed U.S. manufacturing activity picked up more than expected in February as COVID-19 infections subsided, while construction spending surged in January.
– The euro was last down 0.8% on the day after diving to its lowest since June 2020 as the Russia-Ukraine war entered its sixth day. The greenback was also stronger against the yen, up 0.1% at 115.00.
– Gold was down on Wednesday morning in Asia as the U.S. dollar strengthened and US Treasury yields rose to 1.755% in the previous trading session. Price of Gold had touched an 18-month high last week as the Russia-Ukraine crisis deepened, aiding the safe haven yellow metal.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation.
2. Sell AUD/USD at 0.7275. Stop at 0.7305 and profit target at 0.7165.
3. War in Ukraine and yields are both in the US dollar’s favour.
4. Price is likely to be capped by its previous high resistance point while momentum indicators are hinting at a price decline.
Fundamental Comments
1. Ongoing war in Ukraine is likely to weigh on the risk sensitive Aussie dollar.
2. Interest rate and bond yields are in the US dollar’s favour.
Technical Comments
1. Price has come up to the previous high resistance despite the ongoing war.
2. Stochastic is hinting at an overbought situation while MACD is hinting at a price decline.
Key Levels
| Support | 0.7265 | 0.7235 | 0.7205 |
| Resistance | 0.7300 | 0.7340 | 0.7375 |
Technical Overview
USD/JPY – We were looking for a decline to 114.40 but price only dropped to a low of 114.68 overnight. If price is capped by the 20EMA at 115.10, we are likely to see a continuation of the decline to 114.30 in the next 24 hours. However, a move above 115.10 would indicate the low was made last night at 114.68 and a rally is likely to send price up to the previous high at 115.75. Stochastic is near to the oversold zone while MACD is about to have a bullish crossover. We favour the upside at 115.75.
| Support | 114.70 | 114.40 | 114.10 |
| Resistance | 115.20 | 115.70 | 116.15 |
EUR/USD – We had a sell call at 1.1220 yesterday, which was filled when price reached a high of 1.1232. Overnight price declined to a low of 1.1089, filling our profit order at 1.1110. We are out of this trade with a 110 pips profit. MACD is starting to warn with divergence of a potential price low. Stochastic is also into the oversold zone but 20EMA remains bearish and is hinting at a strong bearish price trend ahead.
| Support | 1.1085 | 1.1055 | 1.1015 |
| Resistance | 1.1135 | 1.1180 | 1.1230 |
GBP/USD – Price was capped by the 20EMA at 1.3430 and we saw a decline to 1.3302. After a rally to 1.3338, price is again testing the overnight low of 1.3302. MACD remains bearish and is hinting at a price decline. Stochastic is in the oversold zone but is weak. 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. A break of 1.3302 is likely to send price lower to the previous low at 1.3272.
| Support | 1.3300 | 1.3270 | 1.3240 |
| Resistance | 1.3340 | 1.3385 | 1.3425 |
XAU/USD – Price broke above $1919 overnight and reached a high of $1950. The rally is likely to continue and price is likely to test the 18-month high at 1974.30 in the next few days ahead. Stochastic is in the overbought zone and is hinting at a limited upside. However both MACD and 20EMA remain bullish and are hinting at a strong bullish price trend ahead. A move below $1919 would negate our bullish view for the next few days.
| Support | 1930.75 | 1921.20 | 1910.70 |
| Resistance | 1949.90 | 1960.15 | 1974.30 |
XAG/USD – Price reached an overnight high at 25.53 but this high was accompanied by a divergence warning from the MACD indicator. This is a warning of a possible price high. Stochastic is also in the overbought zone and is hinting at a price decline. 20EMA is bullish and supporting price at $24.70. We see a price correction to the 20EMA support at $24.70, which could be an opportunity for long trade for another test of the previous high at $25.61 over the next couple of days ahead.
| Support | 24.95 | 24.65 | 24.20 |
| Resistance | 25.20 | 25.60 | 26.00 |