Market Talk
– The safe-haven U.S. dollar and yen eased on Thursday while the Australian and New Zealand dollars jumped amid signs of an easing in Shanghai’s coronavirus lockdown, although sentiment remained fragile as global equities sold off.
– Treasury yields fell to 2.89% from 3.015% in the prior session in choppy trading, tracking sharp losses on Wall Street. A poor U.S. housing data added to growing slowdown concerns amid aggressive monetary tightening by the Federal Reserve and other global central banks.
– The USD/JPY pair was up 0.43% to 128.76 after a 0.86% tumble on Wednesday. The Aussie gained 0.8% to $0.7008 while the kiwi bounced 0.6% to $0.6334, after losing 1.1% overnight from a top of $0.6370.
– The euro clawed back some of its losses and was up 0.25% to $1.0489 after Wednesday’s 0.84% slump. The pound remained under pressure after falling 1.2% overnight, with Wednesday’s data showing that the U.K.’s consumer price index grew 9% year-on-year in April 2022. The growth was the highest in 40 years.
– Gold prices were mixed on Thursday morning trade in Asia as a slide in Treasury yields helped offset pressure from a firmer dollar and the Federal Reserve’s plans for aggressive interest rate hikes.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.0465. Stop at 1.0435 and profit target at 1.0565
3. Signs of an easing in Shanghai’s lockdown and a decline in Treasury yield are both weighing on the US dollar.
4. Price is supported by the 20EMA and Fibonacci 50% correction point with MACD hinting at a bullish price trend.
Fundamental Comments
1. Signs of an easing in Shanghai’s coronavirus lockdown is easing demand for the safe haven US dollar.
2. A decline in Treasury yield is weighing on the US dollar.
Technical Comments
1. Price is supported by the 20EMA and Fibonacci 50%
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.0460 | 1.0425 | 1.0390 |
| Resistance | 1.0505 | 1.0560 | 1.0595 |
Technical Overview
USD/JPY – Our view remains the same as yesterday. We see price moving to 127.50 in the next couple of days. We are expecting price to be capped by the declining 20EMA at 128.95 and from this resistance, we see a decline to test the previous low. Both MACD and 20EMA are hinting at a price decline but Stochastic is near to the oversold zone and is hinting at a limited downside.
| Support | 128.35 | 127.90 | 127.50 |
| Resistance | 128.95 | 129.30 | 129.75 |
USD/CHF – Price broke below the support at 0.9870 and we could be on the way down to 0.9700. However, Stochastic is already in the oversold zone and is hinting at a limited downside. MAC and 20EMA are both hinting at a strong bearish price trend. We are also bearish and prefer to go with the 20EMA and MACD. Only a move above 0.9985 would negate our bearish view.
| Support | 0.9800 | 0.9750 | 0.9705 |
| Resistance | 0.9865 | 0.9915 | 0.9970 |
GBP/USD – Price broke above the resistance at 1.2415 to reach a high of 1.2500 yesterday and we saw a decline to a low of 1.2328 from the high. The decline was supported by the Fibonacci 50% correction point and with MACD remaining bullish, we are expecting price to hold above the overnight low of 1.2328 and from here, we see a rally to the 1.2500 high again in the next few days.
| Support | 1.2325 | 1.2275 | 1.2215 |
| Resistance | 1.2395 | 1.2435 | 1.2470 |
XAU/USD – After breaching $1831 to reach a high of $1836, the rally seems to have lost its momentum. Price has since been moving in a sideways manner with the upper boundary at $1836 and the lower boundary at $1806.80. 20EMA is hinting at a bearish price trend but MACD is hinting at a bullish price trend. Stochastic is hinting at a price decline. We prefer to stay aside for today.
| Support | 1806.80 | 1797.20 | 1786.55 |
| Resistance | 1817.45 | 1830.90 | 1846.15 |
AUD/USD – We had a buy call at 0.6985 yesterday but price fell to a low of 0.6948, triggering our stop loss at 0.6955 as well. We lost 30 pips on this trade. Our view remains the same as yesterday. We think this pair is likely to rally higher to 0.7090 in the next couple of days. MACD and 20EMA remain bullish and are hinting at a bullish price trend. Stochastic is declining and is hinting at a price decline.
| Support | 0.6980 | 0.6945 | 0.6910 |
| Resistance | 0.7020 | 0.7050 | 0.7090 |