Market Talk
– The U.S. dollar fell from a two-decade high against a basket of major peers, as an uptick in investors’ appetite diminished the U.S. currency’s appeal. A strong U.K. jobs data, a robust U.S. retail sales data and hopes that China will ease COVID-19 lockdowns also helped to lift investors’ appetite.
– Treasury yields jumped after Federal Reserve Chairman Jerome Powell said that the U.S. central bank will “keep pushing” to tighten U.S. monetary policy until it is clear that inflation is declining.
– The higher yields helped put an end to the yen’s small recent recovery, as the Japanese currency is very sensitive to higher rates in the United States. The yen was last at 129.28 per dollar, little changed on the day.
– Sterling touched $1.2501 after a 1.4% overnight rally, its best day since late 2020, helped by data that showed Britain’s jobless rate hit a 48-year low. The European common currency touched $1.0563 in Asia trade, after rising 1.1% overnight, its largest day of percentage gains since March 2022.
Gold was down on Wednesday morning in Asia, as rising Treasury yields, a robust U.S. retail sales and Fed Chair Powell’s comment weighed on the yellow metal. However, a weak greenback helps to limit its decline.
Chart Focus AUD/USD
Key Points
1. Buy AUD/USD recommendation.
2. Buy AUD/USD at 0.6985. Stop at 0.6955 and profit target at 0.7085
3. Expectation of Aussie rate hike and an uptick in risk appetite are both aiding the Aussie dollar.
4. Price is likely to find support at the Fibonacci 38% correction point with MACD hinting at a bullish price trend.
Fundamental Comments
1. An uptick in investors’ appetite has diminished the U.S. currency’s appeal as a safe haven.
2. Expectation that the Reserve Bank of Australia will hike rate in June is aiding the Aussie dollar.
Technical Comments
1. Price is likely to find support at the Fibonacci 38% correction and also the 20EMA.
2. MACD is bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6995 | 0.6965 | 0.6915 |
| Resistance | 0.7045 | 0.7090 | 0.7135 |
Technical Overview
USD/JPY – Price reached a high of 129.77 overnight and looks like turning down again. Stochastic has a bearish crossover near the overbought zone and is hinting at a price decline. MACD also has a bearish crossover and is also hinting at a bearish price trend. 20EMA remains bearish. We are expecting a price decline to the previous low at 127.50 in the next few days. Only a move above 129.80 would negate our bearish price view.
| Support | 128.95 | 128.50 | 128.10 |
| Resistance | 129.30 | 129.75 | 130.05 |
EUR/USD – Price moved above 1.0460 overnight and reached a high of 1.0563. Stochastic has reached the overbought zone. Stochastic has a bearish crossover and is hinting at a price decline. However, both MACD and 20EMA are hinting at a bullish price trend. We see a price correction to the 20EMA support at 1.0480 and from there we are expecting another rally to 1.0590 in the next few days.
| Support | 1.0490 | 1.0445 | 1.0390 |
| Resistance | 1.0540 | 1.0575 | 1.0610 |
GBP/USD – Price broke above the resistance at 1.2415 to reach a high of 1.2500 this morning. We are now expecting a price correction to bring price back lower to the 20EMA support at 1.2370. Stochastic has a bearish crossover in the overbought zone and is hinting at a price decline. However, both MACD and 20EMA are hinting at a bullish price trend. We are expecting price to be supported at the 20EMA and from there we see another rally to 1.2575 in the next few days.
| Support | 1.2430 | 1.2390 | 1.2340 |
| Resistance | 1.2475 | 1.2505 | 1.2575 |
XAU/USD – Price moved above $1831 overnight but only reached a high of $1836 before declining to current level at $1810. Stochastic has a bearish crossover in the overbought zone and is hinting at a price decline. 20EMA and MACD are also hinting at a price decline. We think price is likely to be capped by the 20EMA line at $1820 and from there we are likely to see a decline to the previous low at $1786.57 in the next few days.
| Support | 1807.40 | 1797.20 | 1786.55 |
| Resistance | 1820.45 | 1836.05 | 1846.15 |
USD/CHF – We had a sell recommendation at 1.0025 yesterday but our order was not filled as price only reached a high of 1.0007. Price reached a low of 0.9917 overnight and with Stochastic in the oversold zone, we think there may be a pullback in price to 0.9970. MACD remains bearish and 20EMA is also hinting at a bearish price trend. Near to 0.9970, we may see another decline to test the previous low of 0.9870.
| Support | 0.9935 | 0.9890 | 0.9835 |
| Resistance | 0.9970 | 1.0015 | 1.0060 |