Market Talk
– The U.S. dollar was lifted by safe haven flows amid nerves the Ukraine war and its economic consequences could spread as investors weighed the effects on global economic growth of oil prices that hit 14-year highs.
– The benchmark U.S. 10-year Treasury yield rose to 1.7648% compared with its close of 1.749% on Monday as surging oil prices due to the conflict between Russia and Ukraine stoked concerns about inflation pressures and slowing economic growth
– The euro was pinned near a 22-month low on Tuesday as war in Ukraine has darkened Europe’s economic outlook. The common currency is down 4% on the dollar since Russia launched what it calls a “special military operation” in Ukraine where fighting is showing no signs of abating.
– The yen fell overnight and was a little lower at 115.48 per dollar on Tuesday while commodity currencies took a breather in their weeks-long rally. The Australian dollars was down to 0.7290, after touching a four-month high made with soaring oil prices on Monday.
– Gold was down on Tuesday morning in Asia, falling below the $2,000 mark hit the day before as the U.S. dollar traded near a multi-month peak led by a rise in 10-year Treasury yields but talks between Russia and Ukraine to end their conflict that showed little result help to offset the dollar’s strength.
Chart Focus EUR/AUD
Key Points
1. Sell EUR/AUD recommendation.
2. Sell EUR/AUD at 1.4935. Stop at 1.4975 and profit target at 1.4790.
3. War in Ukraine and interest rate differential are both against the Euro.
4. Price is likely to be capped by a strong resistance with MACD hinting at a strong bearish price trend.
Fundamental Comments
1. War in Ukraine is likely to weigh on the Euro.
2. Interest rate differential is in the Aussie dollar’s favour.
Technical Comments
1. Price is likely to be capped by a strong resistance point.
2. MACD remains bearish and is hinting at a price high with divergence.
Key Levels
| Support | 1.4885 | 1.4840 | 1.4785 |
| Resistance | 1.4940 | 1.4985 | 1.5030 |
Technical Overview
USD/JPY – Price tested and moved above the 20EMA overnight and we could be moving up to the high at 115.75 again over the next 24 hours. However, we think price may not move above 115.75 but instead turned back to stay in the range of the past two week. Stochastic continues to move higher, hinting at a price rally. 20EMA is also hinting at a price rally. MACD is also hinting at a price rally.
| Support | 115.20 | 114.95 | 114.60 |
| Resistance | 115.50 | 115.80 | 116.15 |
EUR/USD – The decline continues and price reached a new low of 1.0805 last night. A bullish Engulfing candlestick price pattern is hinting at a low but MACD remains bearish and is hinting at a strong bearish price trend. The 20EMA is also hinting at a strong bearish price trend. In contrast, Stochastic is rising from the oversold zone and hinting at a price rally. We see a corrective rally to 1.0940 before the decline resumes again.
| Support | 1.0845 | 1.0805 | 1.0775 |
| Resistance | 1.0880 | 1.0910 | 1.0940 |
GBP/USD – The decline continues and price reached a new low of 1.3101 last night. MACD is hinting at a strong bearish price trend. 20EMA is also hinting at a strong bearish price trend. Stochastic is in the oversold zone but is showing no sign of a price reversal as yet. We think the decline is likely to continue lower to 1.3040 over the next few days. Only a price move above 1.3250 would negate our bearish view for the next few days.
| Support | 1.3100 | 1.3070 | 1.3025 |
| Resistance | 1.3135 | 1.3185 | 1.3215 |
XAU/USD – Price reached a high of $2002.25 yesterday and we saw a sharp decline lower to $1960.70 within the same day. The decline managed to stay above the 20EMA and could be a temporary low for a price rally above $2002.25 over the next 48 hours. Stochastic is in the overbought zone but MACD remains bullish and hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. A price decline below $1950.15 would negate our bullish view over the next couple of days.
| Support | 1984.10 | 1974.30 | 1964.25 |
| Resistance | 2002.25 | 2015.45 | 2032.75 |
USD/CAD – Yesterday we had a buy call at 1.2680 but our entry order was not filled as price only declined to a low of 1.2684. Our view remains unchanged. Price has moved higher overnight to 1.2820 and we are expecting the rally to continue towards 1.2875 over the next two days. Stochastic is in the overbought zone but both MACD and 20EMA are hinting at a bullish price trend ahead.
| Support | 1.2790 | 1.2745 | 1.2700 |
| Resistance | 1.2835 | 1.2875 | 1.2905 |