Market Talk
– The U.S. dollar rose as a lack of progress in peace talks between Russia and Ukraine boosted demand for the safe haven currency and over expectations that the U.S. will further tighten its monetary policy after a stronger than expected non-farm payroll data.
– Data on Friday showed U.S. unemployment hitting a two-year low of 3.6% last month, strong enough that investors bet it would strengthen the Federal Reserve’s resolve to tackle inflation by lifting rates sharply.
– The euro has been weighed down by worries about economic damage from war in Ukraine and was parked at $1.1047, not too far from last month’s almost two-year trough of $1.0806. The British pound inched up to 1.3125 against the greenback.
– The yen, which steadied last week after a pummelling through March on the expectation of higher U.S. interest rates against anchored Japanese yields, has been squeezed back below 122 per dollar and last traded at 122.59. The Australian dollar was broadly steady at $0.7510 ahead of a RBA meeting on Tuesday.
– Gold was down on Monday morning in Asia as U.S. yields rose after a strong U.S. jobs data raised expectations of tighter U.S. monetary policy and offset safe-haven demand as the war in Ukraine triggered by the Russian invasion of Feb. 24 worsens.
Chart Focus XAG/USD
Key Points
1. Buy Silver recommendation.
2. Buy Silver at $24.70. Stop at $24.35 and profit target at $25.40
3. War in Ukraine is likely to drive up commodity prices and further Fed tightening may have already been factored in.
4. Price has moved above the 20EMA and Stochastic has a bullish crossover and is hinting at a price rally.
Fundamental Comments
1. War in Ukraine is likely to drive up commodity prices.
2. Expectation that the Fed will further tighten its monetary policy may have already been factored in.
Technical Comments
1. Price has moved above the 20EMA.
2. Stochastic has a bullish crossover and is hinting at a price rally.
Key Levels
| Support | 24.65 | 24.35 | 23.95 |
| Resistance | 24.85 | 25.10 | 25.50 |
Technical Overview
USD/JPY – We had a buy call at 122.05 last Friday, but price only reached a low of 122.25 and our entry order was not filled. 20EMA is currently supporting price at 122.40 and MACD is about to turn bullish. Stochastic is close to the overbought zone. We think price is likely to continue higher towards the next resistance point at 123.80 in the next few days. A move below 121.20 would negate our bullish view.
| Support | 122.25 | 121.80 | 121.25 |
| Resistance | 122.80 | 123.20 | 123.80 |
EUR/USD – Our view remains the same as last Friday. We see price going lower to 1.0945 in the next 1-2 days ahead. However Stochastic is close to the oversold zone, hinting at a limited downside. MACD remains bearish. 20EMA is also bearish and hinting at a bearish price trend. Price will need to move above 1.1105 to negate our bearish view.
| Support | 1.1025 | 1.0995 | 1.0945 |
| Resistance | 1.1055 | 1.1115 | 1.1145 |
GBP/USD – Our view remains the same as last Friday, We think price is likely to decline back to 1.3050 in the next 48 hours. Price had reached a low of 1.3085 last Friday and has turned up. Stochastic is near to the oversold zone, hinting at a limited downside. MACD and 20EMA are both neutral and hinting at a sideways movement. A move above 1.3180 would negate our bearish view.
| Support | 1.3085 | 1.3050 | 1.2995 |
| Resistance | 1.3150 | 1.1395 | 1.3220 |
XAU/USD – Price reached a low of $1915.40 this morning and we have seen a bounce higher to $1928.70 in late morning trade. The low this morning, which was just below the Fibonacci 62% correction point, may be the low as stochastic is near to the oversold zone. MACD and 20EMA are both flat and neutral at the moment. We see price moving higher to $1970 in the next few days.
| Support | 1922.10 | 1906.65 | 1889.90 |
| Resistance | 1932.30 | 1949.50 | 1967.70 |
NZD/USD – After hitting a high of 0.6998 last Wednesday, we saw a decline to 0.6895 last Friday. We think this may be the low and a rally back to the previous high at 0.6998 in the next 1-2 days is likely. Stochastic has a bullish crossover and is hinting at a price rally. MACD has a bullish crossover and is hinting at a price rally. Only a price move below 0.6895 would negate our bullish view.
| Support | 0.6915 | 0.6875 | 0.6835 |
| Resistance | 0.6950 | 0.6995 | 0.7040 |