Market Talk
– The U.S. dollar was headed for a fifth winning week versus major peers on Friday, as a sharp stocks selloff boosted demand for the safe haven currency and as the Federal Reserve was seen as tightening monetary policy more than peers.
– The greenback edged up to 130.46 yen, as benchmark U.S. Treasury yields resumed their climb – topping 3.1% overnight – after a blip lower immediately after the Federal Reserve raised interest rates by half a percentage point mid-week.
– The euro slipped 0.11% to $1.0529 on Friday, but the currency has mostly traded sideways since sliding to a five-year trough of $1.0469 last week. Sterling edged lower to $1.2347, after tumbling 2.22% overnight after BoE warned of the risk of recession as it raised interest rates by half a percentage point.
– The Aussie dollar retreated 0.27% to $0.7093, but is on course for a 0.52% rally against the greenback – snapping a five-week losing run – after the central bank raised rates by more than expected and signalled further hikes ahead.
– Gold was up on Thursday morning in Asia but is on track for a third consecutive weekly loss, as a bounce in US Treasury yields and a stronger greenback offset support for bullion from a relatively less hawkish stance on interest rate hikes from the U.S. Federal Reserve.
Chart Focus AUD/JPY
Key Points
1. Buy AUD/JPY recommendation.
2. Buy AUD/JPY at 92.40. Stop at 92.05 and profit target at 93.95
3. Further hikes in Aussie interest rate and current interest rate differential are both aiding the Aussie dollar.
4. Price is supported and MACD is hinting at a bullish price trend.
Fundamental Comments
1. Further hike in Aussie interest rate are likely to aid the Aussie dollar.
2. Interest rate differential is aiding the Aussie dollar.
Technical Comments
1. Price is likely to be supported by the rising trend line as well as the 20EMA.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 92.35 | 91.85 | 91.50 |
| Resistance | 92.95 | 93.30 | 93.75 |
Technical Overview
USD/JPY – Price has moved above the 20EMA and we think the rally is likely to continue towards the previous week high at 131.25., Stochastic is moving higher and is not into the overbought zone as yet. MACD remains bullish and is hinting at a bullish price trend. 20EMA is pointing higher and is hinting at a bullish price trend. A move below 129.85 would negate our bullish view for the next few days.
| Support | 130.35 | 129.90 | 129.55 |
| Resistance | 130.80 | 131.25 | 131.50 |
EUR/USD – We had a buy call yesterday at 1.0575 but our call was wrong and we lost 35 pips on this trade. Price has moved back, close to the previous low of 1.0470. Stochastic is close to the oversold zone and MACD continues to remain bullish. However, 20EMA is hinting at a bearish price trend. We think price is likely to test the low at 1.0470 again. Watch the reaction at the support for clue to the next direction.
| Support | 1.0500 | 1.0470 | 1.0445 |
| Resistance | 1.0550 | 1.0590 | 1.0640 |
GBP/USD – Price is currently testing the previous day’s low at 1.2323 and we think price is likely to break below this low. We think price can go lower to 1.2250 in the next 24 hours. Stochastic is moving into the oversold zone but MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. Only a move above 1.2470 would negate our bearish view.
| Support | 1.2320 | 1.2275 | 1.2250 |
| Resistance | 1.2380 | 1.2415 | 1.2450 |
XAU/USD – Price reached a low of $1850.35 on Tuesday and has moved higher to $1909.70 yesterday. MACD has also been warning of a possible price low with divergence. However, Stochastic has yet to reach the oversold zone, hinting that the price decline could continue. 20EMA is also hinting at a price decline. We think price is likely to test the week low at $1850 again. Watch for clue at this support.
| Support | 1865.95 | 1850.35 | 1841.90 |
| Resistance | 1880.95 | 1894.90 | 1903.30 |
NZD/USD – Price is likely to test the overnight low at 0.6392 in the next 24 hours. A break of this support is likely to send price lower to 0.6320. Stochastic continues to decline, hinting at a bearish price trend. MACD remains bearish and 20EMA is also hinting at a bearish price trend ahead. Only a move above 0.6460 would negate this bearish price trend and call for a rally to 0.6580.
| Support | 0.6390 | 0.6355 | 0.6315 |
| Resistance | 0.6420 | 0.6450 | 0.6485 |