Market Talk
– The U.S. dollar was down on Thursday morning in Asia despite a hawkish outlook from the U.S. Federal Reserve. The Fed raised interest rates for the first time since 2018 and policymakers’ projections for as many as six more hikes this year were even more aggressive than expected.
– The yen was pinned to a six-year low on Thursday near 119.13, as a rate hike with a hawkish outlook from the U.S. Federal Reserve underscored just how far the Bank of Japan is likely to lag worldwide policy tightening.
– The euro, which caught a boost from peace hopes, surged more than 1% on the yen overnight and more than 0.7% on the dollar to stand at $1.1044 in early Asia trade. The Aussie jumped to 0.7320 after a better-than-expected employment data, as markets narrowed the odds on a rate rise from the Reserve Bank of Australia by June, if not even sooner.
– Sterling hovered at $1.3149 with the Bank of England expected to raise interest rates for a third straight meeting later this evening. Investors’ focus will be on any new thinking from policymakers about juggling the competing pressures of inflation and slowing growth.
– Gold was up to $1937.98 on Thursday morning in Asia but remained near a three-week low hit during the previous session as the U.S. Federal Reserve’s rate hike lifted Treasury yields but weighed on gold.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9380. Stop at 0.9350 and profit target at 0.9460
3. Hope that peace talk between Russia and Ukraine could end hostilities and interest rate differential are both against the Swiss francs
4. Price is likely to find support at the 20EMA line and MACD is hinting at a bullish price trend.
Fundamental Comments
1. Hope that Russia-Ukraine talk could end hostilities could weigh on the safe haven Swiss francs
2. Interest rate differential is in the U.S. dollar’s favour
Technical Comments
1. Price could be coming into the 20EMA support and the 20EMA hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.9380 | 0.9350 | 0.9315 |
| Resistance | 0.9415 | 0.9460 | 0.9500 |
Technical Overview
USD/JPY – Yesterday, we had a buy call at 117.80 but price only reached a low of 118.17. Our entry order was not filled. Price has moved up to 119.13 on the back of a U.S. rate hike. However, this high was accompanied by a bearish divergence warning from the MACD indicator, hinting of a potential price high at 119.13. Stochastic is also in the overbought zone and is starting to decline, hinting of a price decline. 20EMA is hinting at a bullish price trend. We think the rally may have ended at 119.13 and we are likely to see a correction.
| Support | 118.45 | 118.10 | 117.70 |
| Resistance | 118.85 | 119.15 | 119.60 |
EUR/USD – Price reached an overnight high at 1.1050 but has fallen back into the narrower range. Stochastic is close to the overbought zone but MACD is bullish with both its lines above the zero line. 20EMA is also hinting at a bullish price trend. We think price is likely to test the upper limit at 1.1120 again in the next couple of days. A move below 1.0900 would negate our bullish view.
| Support | 1.1000 | 1.0950 | 1.0900 |
| Resistance | 1.1050 | 1.1080 | 1.1120 |
GBP/USD – Price broke above 1.3090 overnight and has moved higher to 1.3163. We think the rally is likely to continue towards 1.3195 in the next 24 hours. A break above this resistance will likely send price higher to 1.3270. MACD has turned bullish and is hinting at a bullish price trend. Stochastic is into the overbought zone but 20EMA is hinting at a bullish price trend. A move below 1.3090 would negate our bullish view.
| Support | 1.3145 | 1.3110 | 1.3055 |
| Resistance | 1.3195 | 1.3230 | 1.3270 |
XAU/USD – Price has moved off the overnight low at $1895.10 but the rally is currently being capped by the 20EMA line at $1936.90 Price will need to move above this resistance to moved up to $1958.30. If price fails to move above $1936.90, we are likely to see a test back to the overnight low at $1895.30 again in the next 48 hours. Stochastic is rising but MACD remains bearish. 20EMA is also bearish and hinting at a price decline.
| Support | 1923.05 | 1912.70 | 1895.10 |
| Resistance | 1937.95 | 1949.50 | 1962.25 |
NZD/USD – Price reached a low of 0.6727 on Monday, which was just below the Fibonacci 62% of the rally from 0.6630 to 0.6925. Price has moved higher since and we are expecting the rally to continue towards the previous high of 0.6925 in the next few days. Stochastic is close to the overbought zone but MACD has turned bullish. 20EMA is also hinting at a bullish price trend.
| Support | 0.6820 | 0.6790 | 0.6740 |
| Resistance | 0.6850 | 0.6885 | 0.6925 |