Market Talk
– The U.S. dollar was little changed in a choppy trade on Wednesday morning in Asia. Investors are turning away from safe havens to riskier assets as climbing commodity prices continue to drive market movements.
– U.S. benchmark 10-year yields rose to 2.4026% early in the Asian session on Wednesday after Federal Reserve Chair Jerome Powell hawkish comment a day earlier but rising U.S. yields are having little effect on the dollar, with some investors saying much of the increase is already in the price.
– The yen fell to as low as $121.41, with the greenback gaining 1.1% on the Japanese currency overnight on the back of rising US Treasury yield. Sterling touched $1.3279, its highest in nearly three weeks, as focus turns to UK inflation data and British finance minister Rishi Sunak’s Spring Statement, both scheduled later on Wednesday.
– The Australian dollar hit its highest level since December 2015 versus the yen and has gained 8% in March to date as investors slowly turn to riskier assets and amid climbing commodity prices. Versus the dollar, the Australian dollar touched a four and-a-half month high of $0.7477 in early trade, having gained 0.95% overnight.
– Gold was little changed on Wednesday morning in Asia, holding steady as the ongoing war in Ukraine supported demand for the safe-haven yellow metal. However, calls from U.S. Federal Reserve policymakers to quicken interest rates weighed on the yellow metal.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.1025. Stop at 1.0990 and profit target at 1.1120.
3. A “risk on” sentiment and a possible peak in interest rate differential are both likely to aid the Euro.
4. Price is supported by the 20EMA and Stochastic is hinting at a bullish price trend.
Fundamental Comments
1. A move away from safe haven into riskier assets is likely to aid the Euro.
2. Interest rate differential may have peaked with the ECB expected to hike interest rate in the second half of the year.
Technical Comments
1. Price is supported by the 20EMA in a rising trend channel, hinting at a bullish price trend.
2. Stochastic is rising and hinting at a bullish price trend.
Key Levels
| Support | 1.1010 | 1.0960 | 1.0925 |
| Resistance | 1.1045 | 1.1075 | 1.1115 |
Technical Overview
USD/JPY – The rally continues and price moved to a high of 121.41 this morning. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a bullish price trend. 20EMA is also pointing higher and hinting at a strong bullish price trend. However, we would prefer to be cautious at this stage. The next higher resistance lies at 122.05. Failure to move above 121.50 could result in a decline back to 120.15.
| Support | 121.00 | 120.65 | 120.25 |
| Resistance | 121.40 | 121.80 | 122.05 |
AUD/USD – We have a buy recommendation yesterday at 0.7365 but price only reached a low of 0.7378 and our entry order was not filled. Price touched a four and-a-half month high of $0.7477 in early trade this morning. Stochastic and MACD are giving bearish divergence warnings of potential price high but 20EMA is hinting at a strong bullish price trend. We see a price correction back to 0.7370 in the next 48 hours.
| Support | 0.7450 | 0.7400 | 0.7360 |
| Resistance | 0.7480 | 0.7510 | 0.7550 |
GBP/USD – Price broke above 1.3210 on the third attempt and we have seen a rally to a high at 1.3298 this morning. However, divergence warnings could be forming from the MACD and Stochastic indicators, warning of a possible price high. We think price has the potential to reach the next higher resistance point at 1.3320, as 20EMA is pointing up with a steep slope and hinting at a strong bullish price trend at the moment.
| Support | 1.3255 | 1.3210 | 1.3170 |
| Resistance | 1.3300 | 1.3355 | 1.3390 |
XAU/USD – Our view remains the same as yesterday. We see price moving within the range of $1949.65 to $1895.10 in the next couple of days until there is a breakout of this range. Stochastic continues to decline and 20EMA is also hinting at a bearish price trend. However. MACD is flat and neutral at the moment. Watch the range boundaries for clue to the next price direction.
| Support | 1910.70 | 1895.10 | 1878.00 |
| Resistance | 1925.20 | 1938.30 | 1949.65 |
USD/CHF – We had a buy recommendation at 0.9305 on Monday which was filled and yesterday, we had recommended placing stop at 0.9290 while keeping profit target unchanged at 0.9395. For day, we would recommend moving stop higher to cost at 0.9305 while keeping profit target unchanged. Stochastic is rising but MACD remains bearish. 20EMA is flat and neutral.
| Support | 0.9310 | 0.9280 | 0.9250 |
| Resistance | 0.9350 | 0.9380 | 0.9415 |