Market Talk
– The US dollar hovered near a one month low after minutes from the Federal Reserve’s early May meeting minutes showed a majority of members backing half-percentage-point rate hikes in June and July, and the potential for a pause in rate hikes after two half-point increases in June and July 2022.
– Atlanta Federal Reserve President Raphael Bostic had already suggested earlier this week that a pause might be the best course of action in September to monitor the effects on the economy following two more 50-basis-point hikes in June and July.
– The New Zealand dollar edged lower to $0.6474, after shedding most of the gains following Wednesday’s hawkish Reserve Bank of New Zealand meeting outcome, which had lifted it to a three-week top of $0.6514.
– The dollar was little changed against the Japanese yen at 127.32 while the euro edged up 0.14% to $1.0695. The British pound was flat at $1.2584 after rising overnight to a 3-week high at 1.2612.
– Gold was up on Thursday morning in Asia as investor risk appetite improved after overnight FOMC meeting minutes confirmed the potential for a pause in rate hikes after two more half-point increases in June and July 2022.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.0660. Stop at 1.0630 and profit target at 1.0745
3. ECB’s rate hike and an improvement in risk appetite are aiding the euro dollar.
4. Price is supported by the 20EMA with MACD hinting at a bullish price trend.
Fundamental Comments
1. European Central Bank President Christine Lagarde’s hint of a 50 basis points rate hike by September 2022 is aiding the euro.
2. An improvement in investors’ risk appetite is weighing on the US dollar.
Technical Comments
1. Price is supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD is bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.0640 | 1.0600 | 1.0555 |
| Resistance | 1.0685 | 1.0710 | 1.0740 |
Technical Overview
USD/JPY – Price declined to a low of 126.35 on Tuesday but this low was accompanied by a bullish divergence warning from the MACD indicator. This is a hint of a possible price low in the making. Price has since recovered but is currently capped by the 20EMA at 127.60. Price will need to move above this resistance to proceed higher to 129.50 in the next few days. Failure could lead to a test of the previous low at 126.35.
| Support | 127.10 | 126.80 | 126.35 |
| Resistance | 127.55 | 128.05 | 128.30 |
EUR/JPY – We had a sell order yesterday at 135.90 but price rose to a high of 136.53 this morning, which triggered our entry order as well as our stop order. Stochastic is rising and is hinting there could be more upsides. Both MACD and 20EMA are bullish and hinting at a strong bullish price trend. The next resistance comes in at 136.75 and above this resistance; the next resistance comes in at 138.10.
| Support | 135.85 | 135.30 | 134.95 |
| Resistance | 136.40 | 136.80 | 137.25 |
GBP/USD – Price reached a high of 1.2612 on Thursday and this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. As this is the second divergence, the chance of a reversal is higher. We are looking at a price decline to 1.2465 in the next 1-2 days with potential for 1.2425. However, stochastic, MACD and 20EMA are all currently hinting at a bullish price trend.
| Support | 1.2525 | 1.2470 | 1.2435 |
| Resistance | 1.2570 | 1.2610 | 1.2640 |
XAU/USD – We saw a rally to a high of $1869.55 but this high was accompanied by a divergence warning from the MACD indicator on the 4-hourly chart. This could be a hint that the rally from $1786.55 could have come to an end. Stochastic is also hinting at a price decline and 20EMA is also hinting at a bearish price trend. We favour a decline to $1832.15 in the next 1-2 days ahead.
| Support | 1832.15 | 1819.05 | 1806.05 |
| Resistance | 1847.60 | 1859.80 | 1869.55 |
NZD/USD – Price reached a high of 0.6513 yesterday on news of a rate hike by the RBNZ. However, the high was accompanied by a divergence warning from the MACD indicator. Currently, both stochastic and the 20EMA are hinting at a bullish price trend. Price will need to move below the 20EMA at 0.6445 in order for the trend to turn bearish. A break of 0.6445 is likely to send price lower to 0.6370.
| Support | 0.6435 | 0.6405 | 0.6365 |
| Resistance | 0.6470 | 0.6515 | 0.6565 |