Market Talk
- The dollar was poised to score its best monthly gain in a decade after staying firm at a 20-year high on Friday, buoyed by bets on rising U.S. interest rates and doubts about growth in Europe and China.
- The uber-dovish decision set Japan miles apart from the Fed, where markets are priced for 150 basis points of hikes in just three meetings, triggering a fresh rush of funds into the dollar ahead of all else.
- The Aussie hit a three-month low of $0.7055 overnight before recovering to $0.7123 in early trade on Friday as investors think Australia’s monetary tightening cycle is set to begin as soon as next week.
- Fears of recession in Europe have driven sterling to the 22-month low of $1.2412 it made overnight. At $1.2481 in Asia, the pound was down 5% against the dollar in April, its worst showing since October 2016. – Gold rose on Friday as worrying U.S. economic data rekindled some interest in the safe-haven metal, but was likely to log its biggest monthly drop since September on bets for aggressive interest rate hikes by the Fed.
Chart Focus
Key Points
- Buy XAU/USD recommendation.
- Buy XAU/USD recommendation at 1895.00. Stop at 1886.00 and profit target at 1935.00.
- Disappointing U.S. economic data and Europe’s recession fears are in favour of safe-haven metal.
- Price moved above the 20EMA and MACD is showing divergence warning.
Fundamental Comments
- Disappointing U.S. economic data is in favour of safe-haven metal.
- Fears of recession in Europe and a slowdown in China amid coronavirus lockdowns are likely to aid the interest on gold.
Technical Comments
- Price moved above the 20EMA.
- MACD is showing divergence warning that hints at possible reversal ahead.
Key Levels
| Support | 1894.50 | 1881.75 | 1871.80 |
| Resistance | 1911.15 | 1920.10 | 1928.60 |
Technical Overview
USD/JPY – Price slightly retraced after reaching a high at 131.25 last night. There is no divergence warning given from MACD and 20EMA is hinting at a strong bullish price trend. It could be taking a pause and we are likely to see price retracing to 129.45. Stochastic is in the overbought zone but is still strong.
| Support | 130.15 | 129.75 | 129.35 |
| Resistance | 130.95 | 131.25 | 131.80 |
EUR/USD – Price reached a low at 1.0471 last night. MACD is starting to show a bullish divergence, which is a hint of a possible price low at 1.0471. However, 20EMA is hinting at a strong bearish price trend. We think price may have reached a temporary bottom and we are likely to see a corrective rally to 1.0580 in the next couple of days.
| Support | 1.0470 | 1.0450 | 1.0435 |
| Resistance | 1.0530 | 1.0545 | 1.0575 |
GBP/USD – Price declined to a fresh low at $1.2411 last night and we think price may have reached a temporary low. Stochastic is rising from the oversold zone and MACD is showing divergence warning. We think price is likely to move higher to the 20EMA resistance point at 1.2570 in the next couple of days in a corrective rally.
| Support | 1.2465 | 1.2440 | 1.2410 |
| Resistance | 1.2570 | 1.2600 | 1.2630 |
XAG/USD – Price reached a low at 22.88 last night. We think price may have reached a temporary bottom as both Stochastic and MACD are showing divergence warning. It is going to test its overhead 20EMA resistance point at 23.45 and if price can break above this resistance point, we are likely to see a corrective rally towards 23.90 in the next couple of days.
| Support | 23.20 | 23.05 | 22.88 |
| Resistance | 23.45 | 23.58 | 23.70 |
NZD/USD – Price declined to a low at 0.6450 last night. Both Stochastic and MACD are showing divergence warning and we think price may have reached a temporary bottom at 0.6450. It is on its way towards its overhead 20EMA resistance point at 0.6545. Price has to break above the 20EMA for more upside.
| Support | 0.6485 | 0.6450 | 0.6420 |
| Resistance | 0.6535 | 0.6560 | 0.6590 |