Market Talk
– The dollar was up on Friday morning in Asia but is headed for its worst week since early February 2022, weighed down by a retreat in Treasury yields and fatigue after the currency’s breathless 10%, 14-week surge.
– Treasury yields fell to a more than three-week low of 2.772% on Friday as continued softness in U.S. economic data fueled growth concerns amid aggressive monetary tightening by the Federal Reserve as investors rushed for the safety of Treasury bonds.
– The yen ticked up slightly on Friday, headed for a second-straight weekly advance, with the dollar dropping 0.84% to 128.13 yen over the period. The Swiss franc headed for its best week since March 2020, with the dollar falling 3.1% since last Friday to 0.97070 franc.
– The euro edged 0.1% lower on Friday to $1.0572, but was still on course for a 1.56% weekly gain. Sterling slipped 0.11% to $1.2457, but was up 1.49% for the week, its best showing since late 2020.
– Gold was down on Friday morning in Asia but is set for its first weekly gain since mid-April 2022 as a slide in the greenback and Treasury yields enhanced bullion’s safe-haven appeal after weak U.S. jobs numbers compounded economic concerns.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation
2. Buy USD/CHF at 0.9710. Stop at 0.9680 and profit target at 0.9830
3. Monetary policy and interest rate differential are both in the US dollar favour.
4. Price may have found a support and a corrective rally is likely.
Fundamental Comments
1. Aggressive monetary tightening by the Federal Reserve is likely to aid the US dollar.
2. Interest rate differential is in the US dollar favour.
Technical Comments
1. Price may have found support at the previous low and could be making a corrective rally.
2. Stochastic is in the oversold zone and is hinting at a price rally.
Key Levels
| Support | 0.9685 | 0.9650 | 0.9615 |
| Resistance | 0.9735 | 0.9775 | 0.9825 |
Technical Overview
USD/JPY – Price reached a low of 127.02 and this low was accompanied by a divergence warning from the MACD indicator. Stochastic is also in the oversold zone and is hinting at a price rally. 20EMA is bearish and is hinting at a bearish price trend. We think price has reached a low and a correction rally to 128.95 is likely in the next 1-2 days head. A move below 127.02 would negate our bullish view and hint at a continuation of the decline.
| Support | 127.50 | 127.05 | 126.70 |
| Resistance | 127.95 | 128.40 | 128.90 |
EUR/USD – We had a buy recommendation at 1.0465 yesterday but our order was not filled as price only reached a low of 1.0464 on the bid side. Price has since moved higher to 1.0606 this morning. This high was also accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. Stochastic is near to the overbought zone but can still move higher. 20EMA is hinting at a bullish price trend.
| Support | 1.0550 | 1.0505 | 1.0460 |
| Resistance | 1.0585 | 1.0605 | 1.0640 |
GBP/USD – Price reached a high of 1.2525 overnight but this high was accompanied by a bearish divergence warning from the MACD indicator, hinting at a possible price high. Stochastic could also be making a divergence formation. However, 20EMA is bullish and is hinting at a bullish price trend. We think price has reached a high and could be moving lower to 1.2330 in the next few days.
| Support | 1.2435 | 1.2390 | 1.2335 |
| Resistance | 1.2495 | 1.2525 | 1.2580 |
XAU/USD – Price had made a low at $1786.57 on Monday and has been moving higher since that low. Price has moved to a high of $1848 at the point of this writing. We are likely to see a continuation of the rally to $1866.50, which is the Fibonacci 161.8% price projection from the low, in the next couple of days. Both MACD and 20EMA are bullish. Stochastic is in the overbought zone and is hinting at a price decline.
| Support | 1836.20 | 1824.40 | 1809.90 |
| Resistance | 1848.85 | 1858.55 | 1871.45 |
NZD/USD – Price has reached a high of 0.6416 overnight and we are likely to see a continuation of this rally to 0.6455 in the next couple of days as price was supported by the 20EMA. As long as price stays above 0.6360, we are likely to test higher. 20EMA is also hinting at a bullish price trend but MACD could be forming a divergence and is hinting at a top could be near.
| Support | 0.6360 | 0.6330 | 0.6290 |
| Resistance | 0.6415 | 0.6455 | 0.6485 |