FX Commentary – Gold Gained On Lower Treasury Yield and Ukraine Crisis

Market Talk
– The U.S. dollar was up on Thursday morning in Asia, as commodity currencies took a breather from a steep rally driven by rising prices for exports, while a recovery in the U.S. bond market offered little solace to the struggling yen.

– The yen hit a six-year low of 121.41 per dollar on Wednesday, and was pinned near that level at 121.25 in Thursday Asian morning trade as investors expect the Bank of Japan to lag way behind policy tightening by other major central banks fighting inflation.

– The Australian dollar held at $0.7494 after a brief trip above $0.75 overnight but remained just below multi-month peaks as commodity prices to a breather from a steep rally. The New Zealand dollar was 0.2% softer at $0.6960.

– Sterling slipped overnight and was marginally softer on Thursday at $1.3187 even though February inflation was a little hotter than expected while the euro traded at $1.0989 after a small overnight fall.

– Gold was up on Thursday morning in Asia as US Treasury yields fell by 9 basis points overnight. The intensifying Ukraine crisis also fed demand for the safe-haven yellow metal.

Chart Focus GBP/SGD

Key Points

1. Buy GBP/SGD recommendation.

2. Buy GBP/SGD at 1.7910. Stop at 1.7870 and profit target at 1.8010

3. Expectation of interest rate hike and interest rate differential are both in the British pound’s favour.

4. Price is supported by the 20EMA line with MACD hinting at a bullish price trend.

Fundamental Comments

1. Expectation of interest rate hike by the Bank of England is likely to aid the British pound.

2. Interest rate differential is in the pound’s favour.

Technical Comments

1. Price is supported by the 20EMA which is hinting at a bullish price trend.

2. MACD remains bullish and is hinting at a bullish price trend.

Key Levels


USD/JPY – Price is currently trying to break above the overnight high at 121.41 at the point of this writing. If price is able to move able this point, we are likely to see a test to first to 121.70, which the high from early 2016, before 122.05. However failure to move above 121.41, price is likely to decline to 120.45. Stochastic is in the overbought zone but both MACD and 20EMA are hinting at a strong bullish price trend.


EUR/USD – We had a buy call for this pair yesterday at 1.1025 but our call was wrong and we lost 35 pips on this trade. MACD has turned bearish and 20EMA is also hinting at a bearish price trend. However, Stochastic is hinting at a price rally. If price stays below the 20EMA line at 1.1015, we could be seeing a price decline to 1.0900 in the next couple of days.


GBP/USD – Price broke above 1.3210 on the third attempt and we have seen a rally to a high at 1.3298 on Wednesday but price has now declined to the support at 1.3210 to 1.3180. Currently, the 20EMA is supporting price at 1.3190. If price can stay above 1.3180, we are likely to see a test of the overnight high at 1.3298 as MACD remains bullish. Stochastic is also near to the oversold zone.


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. Yesterday, price tried the upper range of the band but was unable to move above $1949.65. Stochastic is in the overbought zone but both MACD and 20EMA remain bullish. Watch the range boundaries for clue to the next price direction


USD/CHF – We had a buy recommendation at 0.9305 on Monday and yesterday, we had recommended placing stop at cost at 0.9305 and profit order at 0.9395. Unfortunately, our stop was triggered and we are out of this position without a loss. MACD and 20EMA remain bearish but Stochastic is close to the oversold zone. If price is able to hold above 0.9290, a rally to 0.9430 is still possible. A move below 0.9290 would send price down to 0.9230.


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