Market Talk
- The dollar toppled from a five-year high and was nursing its sharpest fall in more than a month on Thursday as investors reacted to the U.S. Federal Reserve’s latest policy decision that put paid to the possibility of super-size hikes.
- The Fed hike was the largest since 2000 as policymakers urgently tried to tamp down inflation. However, the Fed Chair Jerome Powell said Fed members aren’t actively considering 75-basis-point moves in the future at the press conference.
- The euro was up nearly 1% and last bought $1.0606. The yen fought its way back to the stronger side of 130 per dollar for the first time in a week, last trading at 129.26.
- The Aussie dollar’s 2.2% leap was its largest since late 2011 and followed a surprisingly hawkish turn from the Reserve Bank of Australia, which began its cycle of interest rate rises with a larger-than-expected 25 bp hike on Tuesday.
- Gold prices climbed more than 1% on Thursday after U.S. Fed Chair ruled out large and aggressive interest rate hikes for the year as the central bank seeks to contain inflation without triggering an economic recession.
Chart Focus
Key Points
- Buy EUR/USD recommendation.
- Buy EUR/USD recommendation at 1.0575. Stop at 1.0540 and profit target at 1.0675.
- Investors reaction to the Fed decision not to consider a 75bp hike weighs on the US dollar
- Price rebounded from a temporary bottom and indicators are hinting at a bullish price trend.
Fundamental Comments
- Fed decision not to consider a 75bp hike weigh on the US dollar.
- Investors reaction to the Fed decision is likely to weigh on the US dollar.
Technical Comments
- Price rebounded after breaking above the rising 20EMA.
- Both MACD and Stochastic have turned bullish and are rising, suggesting the increased upward momentum.
Key Levels
| Support | 1.0575 | 1.0510 | 1.0470 |
| Resistance | 1.0640 | 1.0700 | 1.0760 |
Technical Overview
USD/JPY – Price has been moving within the range of a one-day sharp rally on 28 April for the past few days. However, there is divergence warning given from both Stochastic and MACD that hints of a possible price top. It moved below the 20EMA and if price could not surpass the 20EMA at 129.70, we are likely to see price retracing to 127.65 in the next couple of days.
| Support | 128.60 | 127.95 | 127.50 |
| Resistance | 129.40 | 130.00 | 130.40 |
NZD/USD – Our entry order was filled yesterday. Price rebounded after forming a temporary bottom at 0.6410. It is on its way towards the next resistance point at 0.6590, which is also our target price. Stop can be shifted higher to 0.6450. Both Stochastic and MACD have turned bullish and are rising.
| Support | 0.6510 | 0.6480 | 0.6425 |
| Resistance | 0.6570 | 0.6635 | 0.6685 |
GBP/USD – Price declined to a fresh low at $1.2411 on 28 April and we think price may have reached a temporary low. As long as price stays above 1.2470, we see a corrective rebound towards 1.2760 in the next couple of days. Stochastic is rising now and MACD has turned bullish.a temporary low. As long as price stays above 1.2470, we see a corrective rebound towards 1.2690 in the next couple of days. Stochastic is falling now but MACD is showing divergence warning.
| Support | 1.2520 | 1.2465 | 1.2410 |
| Resistance | 1.2565 | 1.2605 | 1.2640 |
XAG/USD – A new low was created at $1850.34 on 3 May, and this may be a temporary price low. Price rebounded from this low and it has moved above the 20EMA. We are likely to see a slight pullback to the Fibonacci 50% correction point at $1876.85, and if this support holds, price may resume its rally to $1919.70 in the next couple of days.
| Support | 1887.40 | 1877.60 | 1861.70 |
| Resistance | 1905.70 | 1916.30 | 1924.30 |
XAG/USD – Price rebounded after hitting a support zone that has been tested for the fourth times on 2 May. It moved above the 20EMA and penetrated above its recent price high. We are likely to see a slight pullback to the 20EMA at 22.80 and if price holds at this support, price may resume its rally. Both Stochastic and MACD are bullish and are rising.
| Support | 22.90 | 22.60 | 22.25 |
| Resistance | 23.30 | 23.55 | 23.70 |