Market Talk
– The dollar gained on Friday morning in Asia as worries over the news on Ukraine’s Zaporizhzhia nuclear power plant, the largest of its kind in Europe, was on fire early on Friday after an attack by Russian troops.
– Powell repeated the comments during his second day of testimony before Congress. Data showed the number of Americans filing new claims for unemployment benefits dropped to their lowest level this year last week, suggesting that the labor market was gaining steam.
– The euro extended recent declines and was set for its worst week versus the dollar in nine months, as the war in Ukraine and the prospect of sustained high commodity prices continued to drag on expectations of European economic growth.
– The Aussie hit four-month highs on Friday as massive gains in commodity prices promised to shower the country in cash, while investors seeking distance from Europe’s woes drove the euro to its lowest on the Aussie in four years. The kiwi dollar added 0.9% for the week so far to reach $0.6805, a whisker from its recent peak of $0.6808.
– Gold rose on Friday, eyeing its best weekly gain since May 2021, as investors scrambled for safe-haven assets after Russia attacked a nuclear power plant in Ukraine — the largest of its kind in Europe.
Chart Focus USD/JPY
Key Points
1. Buy USD/JPY recommendation.
2. Buy USD/JPY recommendation at 115.45. Stop at 115.10 and profit target at 116.20.
3. Increase jobless rate in Japan is likely to weigh on the yen and expected U.S. rate hike is in the U.S. dollar’s favour.
4. Price is supported by the 20EMA and a Doji candlestick was formed at the Fibonacci 50% correction point.
Fundamental Comments
1. Expected U.S. rate hike in March is likely to increase the interest rate differential in the U.S. dollar’s favour.
2. Increase jobless rate in Japan is likely to weigh on the yen.
Technical Comments
1. A Doji candlestick pattern was formed at the Fibonacci 50% correction point.
2. Price is supported by the rising 20EMA support.
Key Levels
| Support | 115.25 | 114.95 | 114.70 |
| Resistance | 115.55 | 115.80 | 116.15 |
Technical Overview
EUR/USD – Euro has been on a decline and the falling 20EMA confirms the bearish price trend. Price further violated its previous low support zone. Both Stochastic and MACD are giving potential divergence warning, but there is no sign of reversal yet. Price has to penetrate above the 20EMA resistance at 1.1105 for a corrective rebound.
| Support | 1.1000 | 1.0975 | 1.0900 |
| Resistance | 1.1055 | 1.1090 | 1.1140 |
GBP/USD – We had a buy recommendation of this pair yesterday, but we were wrong. We lost 50 pips on this trade. Price violated the 20EMA support and is falling now. Look for buy entry when price approaches the strong support zone at 1.3270. Stochastic is falling and MACD remains bearish.
| Support | 1.3310 | 1.3270 | 1.3240 |
| Resistance | 1.3350 | 1.3390 | 1.3420 |
USD/CHF – Price was resisted by its support-turned-resistance level of 0.9230. The 20EMA is falling currently, suggesting the bearish price trend. It moved below the 20EMA support and could test the previous low support zone at 0.9150. Stochastic is falling now and MACD remains bearish.
| Support | 0.9170 | 0.9150 | 0.9125 |
| Resistance | 0.9205 | 0.9230 | 0.9265 |
XAU/USD – Price unable to penetrate above the price resistance that capped price’s rally thrice at 1965. It retested its previous resistance at 1950.10 yesterday but unable to break through. A violation of the 20EMA of 1928.30 is likely to bring price lower. Both Stochastic and MACD are giving potential divergence warning.
| Support | 1928.30 | 1917.50 | 1890.80 |
| Resistance | 1947.10 | 1950.80 | 1967.00 |
NZD/USD – Price has been rising gradually along with the rising 20EMA which is acting as support at 0.6780 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 | 0.6805 | 0.6770 | 0.6745 |
| Resistance | 0.6850 | 0.6890 | 0.6925 |