Market Talk
– The U.S. dollar was up on Friday morning in Asia against its major peers after Federal Reserve Chairman Jerome Powell suggested the U.S. central bank would move aggressively to curb inflation.
– The euro rallied to a high of 1.0936 after hawkish comments from ECB officials but slid after ECB President Christine Lagarde said the ECB may need to cut its growth outlook further as the fallout from Russia’s invasion of Ukraine weighs on households and businesses.
– The yen is down 1.6% for the week and last traded at 128.44 to the dollar, just above Wednesday’s 20-year low of 129.43, pressurized by rising US Treasury yields while the BOJ kept yields at close to zero for Japanese Government bonds.
– The Australian dollar fell 1% on Thursday and was hovering around $0.7363 in Friday’s morning trade. The New Zealand dollar had also dropped 1% overnight and inched lower to $0.6723 on Friday.
– Gold was up on Friday morning in Asia after hitting a low of $1936.40 overnight. A stronger U.S. dollar and elevated U.S. Treasury yields offset safe-haven demand arising from Ukraine and increasing worries over inflation.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.0830. Stop at 1.0795 and profit target at 1.0935
3. Growing expectations of a rate hike and a peak in interest rate differential are both likely to support the Euro.
4. Price is supported by the 20EMA and MACD is hinting at a bullish price trend.
Fundamental Comments
1. Expectation of a rate hike is growing after hawkish comments from ECB officials
2. A hike would hint at a likely peak in interest rate differential which is likely to aid the Euro.
Technical Comments
1. Price is supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.0825 | 1.0790 | 1.0755 |
| Resistance | 1.0865 | 1.0905 | 1.0940 |
Technical Overview
USD/JPY – We had a buy recommendation at 128.05 which was filled. Price has moved below the 20EMA at the point of this writing and MACD is starting to move below the zero line. Both are not a good sign. If price stays below the 20EMA, are likely to see a continuation of the decline to 126.70. We would recommend keeping stop at 127.70 and profit order at 129.35.
| Support | 127.65 | 127.25 | 126.75 |
| Resistance | 128.15 | 128.65 | 128.95 |
AUD/USD – Price broke below the previous low of 0.7341 and price could be heading lower to 0.7230 in the next few days ahead. Stochastic is in the oversold zone and is hinting at a limited downside but MACD and 20EMA are both hinting at a strong bearish price trend. MACD has also hinted earlier of a possible price high and a reversal. Only a price move above 0.7460 would negate this bearish trend.
| Support | 0.7280 | 0.7240 | 0.7195 |
| Resistance | 0.7340 | 0.7380 | 0.7420 |
GBP/USD – Price broke below the previous low of 1.2971 at the point of this writing and we could be on the way to 1.2900 in the next couple of days. Stochastic is moving lower, supporting the price view of a decline. MACD and 20EMA has also turned bearish and is hinting at a price decline. Only a price move above 1.3040 would negate this bearish view for the next few days.
| Support | 1.2930 | 1.2880 | 1.2830 |
| Resistance | 1.2985 | 1.3035 | 1.3080 |
XAU/USD – Price declined below the previous low on Wednesday at $1939.28 to a low of $1936.40 overnight. The overnight low was accompanied by divergence warnings from both the MACD and Stochastic hinting at possible price low. We are inclined towards this view as well. We see price moving higher to the Fibonacci 50% of this decline at $1967.25 or 1966 in the next 48 hours.
| Support | 1948.50 | 1939.30 | 1927.70 |
| Resistance | 1958.20 | 1965.95 | 1981.50 |
XAG/USD – Price declined below the previous low on Wednesday at $24.87 to a low of $24.41 overnight. The low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. Stochastic is also in the oversold zone, hinting at a limited downside. However, 20EMA is hinting at a strong bearish price trend. We think price could be close to a bottom and we are looking at a reversal back to 25.25 if price can hold above $24.41.
| Support | 24.40 | 24.10 | 23.80 |
| Resistance | 24.75 | 25.10 | 25.40 |