Market Talk
– The U.S. dollar was up against its peers on Thursday morning in Asia as hopes for a quick peace from the Russia-Ukraine talk started to fade and the upbeat sentiment turned to worry about looming interest rate hikes.
– The European single currency was at $1.1175 holding near its highest in a month at 1.1185, having gained 1.7% so far this week. The Euro had rallied on hopes the war in Ukraine might be entering a new de-escalating phase but peace talk is making little progress.
– The Japanese yen was set for its worst month since November 2016, as it resumed its decline on Thursday, with the greenback climbing 0.5% to as high as 122.45 yen. The Japanese currency has fallen sharply this month, dropping to its lowest since November 2015 on Monday.
– The British pound was steady at $1.3143, while the Canadian dollar was softer against the dollar after a decline in crude oil price. The Aussie dollar was at $0.7509 holding on this month’s 3.3% gains, but struggling to climb higher.
– Gold was down on Thursday morning in Asia, but the yellow metal is set for its biggest quarterly gain since September 2020 as the ongoing war in Ukraine raises demand for the safe-haven asset.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation.
2. Buy USD/CAD at 1.2510. Stop at 1.2470 and profit target at 1.2610.
3. Looming interest U.S. rate hikes and declining crude oil price are weighing on the Canadian dollar.
4. Price had moved above the 20EMA and divergence warnings from MACD and stochastic are hinting of a reversal.
Fundamental Comments
1. Looming interest U.S. rate hikes and fading hopes of peace in Ukraine are both aiding the U.S. dollar.
2. A decline in crude oil price is weighing on the Canadian dollar.
Technical Comments
1. Price has moved above the 20EMA hinting at a change in price trend.
2. Divergence warnings from the MACD and stochastic indicators are hinting at a price reversal as well.
Key Levels
| Support | 1.2485 | 1.2430 | 1.2400 |
| Resistance | 1.2530 | 1.2585 | 1.2620 |
Technical Overview
USD/JPY – Price was capped by the 20EMA and we are likely to see a test of the previous low at 121.17 in the next 24 hours. MACD is bearish and is hinting at a price decline. 20EMA is also hinting at a bearish price trend. Stochastic is in the oversold zone and is hinting at a limited downside. A move above 122.55 would negate our short term bearish view. We remain bullish in the longer term view.
| Support | 121.60 | 121.10 | 120.60 |
| Resistance | 121.95 | 122.45 | 122.90 |
EUR/USD – Price moved higher to 1.1185 overnight after moving above the previous 1.1137 high. Stochastic is into the overbought zone and is hinting at a bearish price trend. However, both MACD and 20EMA are hinting at a bullish price trend. We see the rally continuing towards 1.1290 in the 1-2 days. A move below 1.1135 would negate our bullish view and hint at a price high at 1.1185.
| Support | 1.1140 | 1.1105 | 1.1070 |
| Resistance | 1.1185 | 1.1235 | 1.1290 |
GBP/USD – Price broke above the declining trend channel overnight and moved to a high of 1.3180. We see the rally continuing towards 1.3220 in the next 24 hours. Only a move below 1.3050 would negate our bullish view for the next 24 hours. Stochastic is near to the overbought zone. MACD and 20EMA are turning bullish and are both hinting at a bullish price trend ahead.
| Support | 1.3105 | 1.3050 | 1.2995 |
| Resistance | 1.3145 | 1.3195 | 1.3225 |
XAU/USD – We had a sell call yesterday at $1929 but price went up to a high of $1938.30, triggering our stop at $1934.50. However, our view remains the same as yesterday. We see price resuming its decline to 1890 in the next few days. MACD remains bearish and Stochastic could be turning down near the overbought zone. 20EMA is also hinting at a bearish price trend. However, a move above $1945 would negate our bearish view and call for a rally to $1970.
| Support | 1917.50 | 1906.30 | 1889.90 |
| Resistance | 1929.20 | 1938.30 | 1948.55 |
AUD/JPY – Price has moved below 91.00 in the last 4 hours and could be heading lower to the Fibonacci 50% correction point of the rally from the low at 84.57 to the high at 94.30 at 89.45. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend but stochastic is in the oversold zone and is hinting at a limited downside.
| Support | 90.50 | 90.10 | 89.60 |
| Resistance | 91.00 | 91.50 | 92.10 |