Market Talk
– The U.S. dollar was up on Monday morning in Asia, amid mounting concerns that the raft of penalties against Russia could dim global growth and further stoke inflation. Disruptions to supplies of grain, energy and metals are adding to price pressures, at a time when the Federal Reserve is preparing to raise interest rates.
– The euro fell to a fresh 22-month low against the dollar as worries increased over the impact of the escalating Ukraine-Russia conflict and stoked fears of a stagflationary shock that could hammer Europe’s growth outlook.
– Commodity currencies were swept to multi-month peaks as war in Ukraine sent oil and coal prices spiking. The Australian dollar cracked January’s peak to scale a four-month high of $0.7440. The Kiwi dollar also cleared a January’s top to reach $0.6926, with $0.6976 the next target.
– Sterling was weighted by gloom over Europe’s economic outlook and fell to a two-month low of $1.3187. The U.S. dollar rose against the Swiss franc to 0.9207 and was 0.2% higher on the yen at 114.93.
– Gold surged above $2,000 an ounce for the first time in a year and a half on growing demand for haven assets as investors weigh the geopolitical and economic fallout from Russia’s invasion of Ukraine.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation.
2. Buy USD/CAD at 1.2680. Stop at 1.2650 and profit target at 1.2840
3. War in Ukraine and expectations of a US rate hike are aiding the U.S. dollar.
4. Price is supported by the 20EMA and Fibonacci support with MACD hinting at a bullish price trend.
Fundamental Comments
1. War in Ukraine is aiding the U.S. as a safe haven.
2. Expectation of a US rate hike next week is likely to boost the U.S. dollar
Technical Comments
1. Price is supported by the 20EMA as well as the Fibonacci 38% correction point.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.2665 | 1.2620 | 1.2595 |
| Resistance | 1.2700 | 1.2740 | 1.2790 |
Technical Overview
USD/JPY – Last Friday, we had a buy call on this pair but our call was wrong. We lost 35 pips on this trade. Price fell below the 20EMA and tested the previous low from Tuesday at 114.70. Price dipped to a low of 114.64. Price has moved higher this morning and could be moving higher to test the 20EMA at 115.10 again. MACD has turned bearish but Stochastic is near to the oversold zone. 20EMA is hinting at a strong bearish price trend.
| Support | 114.80 | 114.40 | 114.10 |
| Resistance | 115.10 | 115.40 | 115.80 |
EUR/USD – The decline continues and price reached a low of 1.0820 last Friday. This could be a temporary low as both the Stochastic and MACD indicators are at extreme low. However, 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. We could see a rebound to 1.0940 before the downtrend resumes again. We prefer to sell into the rally near to 1.0940.
| Support | 1.0845 | 1.0815 | 1.0775 |
| Resistance | 1.0895 | 1.0940 | 1.0995 |
GBP/USD – Price declined to a low of 1.3187 and this low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. Stochastic is also into the oversold zone and is hinting at a limited downside. However, 20EMA is hinting at a strong bearish price trend. If price can hold above the overnight low, we are likely to see a bounce up to 1.3285 in the next 24 hours.
| Support | 1.3200 | 1.3165 | 1.3130 |
| Resistance | 1.3250 | 1.3295 | 1.3335 |
XAU/USD – Price reached a high of $2000.85 early this morning. Since the high, price has been consolidating within the previous 4-hourly candle, with the low at $1974.30. However, a move below $1974.30 would hint at a price high and a decline to $1950. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a strong bullish price trend. 20EMA is also hinting at a strong bullish price trend.
| Support | 1974.30 | 1964.25 | 1950.70 |
| Resistance | 1986.90 | 2000.85 | 2015.45 |
AUD/USD – Price reached a four month high at 0.7440 and the bullish trend remains intact. However, a move below 0.7280 would negate our bullish view. We may see a pullback to 0.7370 before the rally continues towards 0.7480 in the next 24 hours. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a strong bullish price trend. 20EMA is also hinting at a strong bullish price trend.
| Support | 0.7400 | 0.7365 | 0.7320 |
| Resistance | 0.7440 | 0.7480 | 0.7510 |