Market Talk
– The U.S. dollar fell against a basket of peer currencies on Wednesday morning as reports of progress in peace talks between Russia and Ukraine lifted the euro and reduced the safe-haven appeal of the greenback.
– The widely tracked U.S. 2-year/10- year Treasury yield curve briefly inverted for the first time since September 2019, as bond investors bet that aggressive tightening by the Federal Reserve could hurt the U.S. economy over the longer term, weighing on the greenback.
– The widening differential between U.S. and Japanese yields has caused the yen to weaken sharply. On Wednesday morning it was at 122.36 per dollar, having staged a little recovery from a six-year low of 125.09. However the greenback was still up 6.9% against the yen this month.
– The euro was at $1.1107 on Wednesday morning as it edged back toward an overnight two-week high of $1.1137. Heavily sold on fears of the economic fallout from war in Ukraine and nerves about the risk of the conflict spreading west, it has been a beneficiary of hopes for peace.
– Gold was up on Wednesday morning in Asia, but remained near a one-month low hit during the previous session. Progress in peace talks between Russia and Ukraine dimmed the yellow metal’s safe-haven appeal.
Chart Focus Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1929.00. Stop at $1934.50 and profit order at $1890.50
3. Progress in peace talk and expectation of an aggressive rate path by the Fed are both likely to weigh on gold.
4. Price is likely to be capped by the 20EMA and MACD is hinting at a bearish price trend.
Fundamental Comments
1. Progress in peace talk between Ukraine and Russia is weighing on the safe haven yellow metal.
2. Expectation of an aggressive rate path by the Fed is likely to weigh on the yellow metal.
Technical Comments
1. Price is likely to be capped by the 20EMA line which is also hinting at a bearish price trend.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 1915.90 | 1889.90 | 1879.40 |
| Resistance | 1929.20 | 1937.25 | 1949.40 |
Technical Overview
USD/JPY – Price surged as much as 2.5% to its highest level since August 2015 at 125.09 on Monday but price has been in a decline since that high. Price has come close to an important support at 121.10. MACD remains bullish and Stochastic is moving towards the oversold zone. If price can stay above this support, we could see another test of the high at 125.09 again in the next few days.
| Support | 121.45 | 121.10 | 120.60 |
| Resistance | 121.95 | 122.40 | 122.90 |
EUR/USD – Progress in peace talk between Ukraine and Russia sent the euro to the previous high at 1.1137. We are likely to see another test of the high at 1.1137 in the next 24 hours. A break above the high is likely to send price higher to 1.1290 in the next few days. We favour the topside as MACD and 20EMA are turning bullish and Stochastic is also rising towards the overbought zone.
| Support | 1.1105 | 1.1070 | 1.1035 |
| Resistance | 1.1140 | 1.1190 | 1.1235 |
GBP/USD – Price reached a low of 1.3050 overnight and this low was accompanied by a divergence warning from both the MACD and the stochastic indicator. Both indicators are hinting that 1.3050 could be the low and a rally is likely to follow this low. We saw a rally to 1.3150 overnight before another decline to 1.3060. Price is likely to test the declining trend channel and a break is likely to send price higher to 1.3220.
| Support | 1.3100 | 1.3060 | 1.3030 |
| Resistance | 1.3140 | 1.3195 | 1.3225 |
USD/CHF – We had a buy recommendation at 0.9325 yesterday but price fell to a low of 0.9275 this morning and our stop loss at 0.9295 was triggered. We lost 30 pips on this trade. Price is likely to continue lower. A test of the previous low at 0.9255 is likely and a break is likely to send price to 0.9160. Stochastic continues to move lower and 20EMA has turned bearish. MACD is about to turn bearish as well.
| Support | 0.9255 | 0.9215 | 0.9170 |
| Resistance | 0.9295 | 0.9325 | 0.9360 |
NZD/USD – We had a sell recommendation at 0.6940 Tuesday which was filled. Yesterday, we had recommended stop at 0.6925 and profit order at 0.6860. Price declined to a low of 0.6869 but has rallied higher to 0.6970 this morning. We are out of this position with a small 15 pips profit. MACD remains bearish but Stochastic is rising and hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. We see price moving above 0.6990 to 0.7040 in the next few days.
| Support | 0.6945 | 0.6915 | 0.6870 |
| Resistance | 0.6990 | 0.7040 | 0.7080 |