Market Talk
– The dollar rose on Thursday morning in Asia after reaching its highest since June 2020 at 97.834, while commodity currencies were at multi-week highs as export prices surged.
– Inflation was also on the mind of the Bank of Canada when it kicked of a tightening cycle on Wednesday with a quarter-point rate hike to 0.5%. The move combined with the strength of oil prices to lift the Canadian dollar to a five-week high at $1.2625.
– The euro was near a 21-month low as the Russian invasion of Ukraine will hurt Europe’s economy, while commodity currencies hit multi-week highs as export prices surged.
– The Australian dollar hit a seven-week high on Wednesday, remaining near that mark on Thursday as prices for Australian exports such as coal, gas, and grains climb.
– Gold prices were flat on Thursday as risk appetite improved after the Fed chair tried to assuage fears about aggressive interest rate hikes, offsetting safe-haven demand spurred by the Russia-Ukraine conflict.
Chart Focus GBP/USD
Key Points
1. Buy GBP/USD recommendation.
2. Buy GBP/USD recommendation at 1.3410. Stop at 1.3360 and profit target at 1.3490.
3. Interest rate is in pound’s favour and Fed’s hawkish move is likely to weigh on the U.S. dollar.
4. Price has moved above the 20EMA after rebounding from a Double Bottom chart pattern’s low.
Fundamental Comments
1. Interest rate is in the British pound favour.
2. The Fed’s move to mitigate fear of a hawkish rate hike is likely to weigh on the U.S. dollar.
Technical Comments
1. Price rebounded after hitting a Double Bottom chart pattern.
2. Price has moved above the 20EMA.
Key Levels
| Support | 1.3375 | 1.3310 | 1.3270 |
| Resistance | 1.3440 | 1.3490 | 1.3545 |
Technical Overview
EUR/USD – Price has been on a decline and the falling 20EMA confirms the bearish price trend. However, a Spinning Top candlestick pattern was formed yesterday. MACD is giving potential divergence warning while Stochastic is rising currently. If price able to penetrate above the 20EMA resistance at 1.1150, we are likely to see a corrective rebound.
| Support | 1.1055 | 1.1015 | 1.0900 |
| Resistance | 1.1110 | 1.1140 | 1.1190 |
USD/JPY – Price has been moving within a range of 114.40 to 116.20. It moved above the 20EMA and is going to test its previous price high resistance of 115.75. A move above 115.75 is likely to bring price higher towards the upper edge of 116.20. Stochastic is rising and MACD remains bullish.
| Support | 115.45 | 115.25 | 114.95 |
| Resistance | 115.75 | 115.90 | 116.20 |
USD/CHF – Price was resisted by its support-turned-resistance level of 0.9230. It is currently testing the 20EMA support at 0.9200. A move below the 20EMA is likely to bring price lower towards its previous low support zone at 0.9150. Stochastic is likely to have a bearish crossover soon but MACD remains bullish.
| Support | 0.9200 | 0.9165 | 0.9150 |
| Resistance | 0.9215 | 0.9230 | 0.9265 |
XAU/USD – Price unable to penetrate above the price resistance that capped price’s rally thrice at 1965 and is currently hovering around the 20EMA at 1922. A correction is likely to occur is price violates the 20EMA support. Stochastic is falling now. MACD remains bullish but had a bearish crossover.
| Support | 1917.50 | 1890.80 | 1877.80 |
| Resistance | 1935.50 | 1950.10 | 1967.00 |
NZD/USD – Price has been rising gradually along with the rising 20EMA which is acting as support at 0.6760 currently. As long as price stays above the 20EMA, the bullish price trend remains intact. Stochastic is rising and MACD remains bullish with both of its lines above the zero line.
| Support | 0.6760 | 0.6745 | 0.6720 |
| Resistance | 0.6795 | 0.6810 | 0.6850 |