Market Talk
– The U.S. dollar rose for the fourth time in the past five sessions, as economic data on the labour market helped firm expectations the U.S. Federal Reserve will be more aggressive in taking steps to curb inflation.
– After touching a six-year low of 122.44 per dollar on Friday morning, by the Tokyo afternoon the yen had snapped a five-day losing streak and was up as far at 1% to 121.18 after the BoJ seemed in no rush to counter an increase in Japanese bond yields.
– The Aussie dollar was steady at $0.7523, just a fraction below an overnight four-month high of $0.7527. Australia is an exporter of energy and agricultural commodities, where supplies have been disrupted by the conflict in Ukraine, sending the Aussie dollar higher.
– The euro has been hurt by the same commodity price moves, and though it managed a 0.3% lift in the Asia session. Sterling nudged higher to $1.3221 as traders weigh a cautiously dovish outlook from the BoE against February data that showed higher-than-expected inflation.
– Gold rose to a more than one-week high as concerns over soaring prices and uncertainty surrounding the war in Ukraine lifted bullion’s appeal as a safe -haven and an inflation hedge but a rise in US benchmark 10-Year Treasury yield capped the yellow metal’s gain.
Chart Focus GBP/USD
Key Points
1. Buy GBP/USD recommendation.
2. Buy GBP/USD at 1.3205. Stop at 1.3175 and profit target at 1.3310
3. Higher UK inflation and interest rate differential are both likely to aid the British pound.
4. Price is supported by a strong support with MACD hinting at a bullish price trend.
Fundamental Comments
1. Higher-than-expected inflation in February is likely to prompt the BoE to hike interest rate aiding the pound.
2. Interest rate differential is in the British pound’s favour.
Technical Comments
1. Price is supported by the 20EMA as well as a rising trend channel.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.3195 | 1.3155 | 1.3100 |
| Resistance | 1.3240 | 1.3295 | 1.3335 |
Technical Overview
USD/JPY – Price broke above the resistance 121.41 and reached a high of 122.44 this morning. This was followed by a swift decline to 121.17. However, MACD remains bullish and Stochastic is about to have a bullish crossover, hinting at a bullish price trend. 20EMA is currently capping price but we think price is likely to surpass the 20EMA and move higher again to 122.44 again within the next 48 hours.
| Support | 121.60 | 121.15 | 120.80 |
| Resistance | 122.05 | 122.45 | 123.05 |
EUR/USD – Price tested the low at 1.0965 on three separate occasions and has been able to hold above this support. The latest rally off this rally has reached a lower level compared to the other 2 previous attempts. Currently, MACD and 20EMA are both hinting at a bullish trend. However, if price is unable to move above the resistance at 1.1045, it is likely to test the low at 1.0965 again.
| Support | 1.0995 | 1.0960 | 1.0925 |
| Resistance | 1.1045 | 1.1090 | 1.1135 |
AUD/USD – Price reached a four-month high of $0.7536 this morning but this high could be in the form of a Rising Wedge chart pattern. This is a sign of a price high in the process of forming. Stochastic is also in the overbought zone but both MACD and 20EMA remain bullish. Price should continue to move higher but a break of the Rising Wedge’s trend line at 0.7490 would hint at a decline to 0.7375.
| Support | 0.7500 | 0.7450 | 0.7415 |
| Resistance | 0.7550 | 0.7580 | 0.7615 |
XAU/USD – Price reached a high of $1965.55 overnight which was also the Fibonacci 127% of the previous rally from the low of $1895.10 to $1949.65. If price is unable to move above this high, it could mean we have seen a price high and a decline back to $1895.10 is likely over the next few days. Stochastic is also in the overbought zone but 20EMA and MACD both remain bullish.
| Support | 1952.60 | 1937.95 | 1925.20 |
| Resistance | 1965.55 | 1974.55 | 1982.85 |
GBP/SGD – We had a buy call yesterday at 1.7910 with a stop at 1.7870 but price declined to a overnight low of 1.7861, triggering our stop. We are out of this position with a loss of 40 pips. However, our view remains unchanged. We are looking at price moving higher to 1.8010. MACD and 20EMA remain bullish supporting our view. Stochastic is close to the oversold zone and is hinting at a bullish price trend ahead.
| Support | 1.7895 | 1.7860 | 1.7805 |
| Resistance | 1.7935 | 1.7980 | 1.8030 |