Market Talk
– The U.S. dollar was at a two-week high against the euro on Friday morning, ahead of U.S. inflation data that should guide the Federal Reserve’s policy tightening path, and after the European Central Bank said it would start its rate-hike campaign next month.
– U.S. data on Thursday showed the labour market remains very tight, with weekly initial jobless claims rising to a seasonally adjusted 229,000 for the week ended June 4, the highest since mid-January, and above the 210,000 estimate.
– The euro touched $1.0611 in early Asia trade, its lowest since May 23, despite the ECB ending a long-running stimulus program and said it would deliver its first interest rate hike since 2011 next month, followed by a potentially larger move in September as it seeks to tame rising inflation.
– The yen was trading at 134.16 per dollar in early Asia trade on Friday, after the BOJ repeatedly committed itself to keeping interest rates low, sending the yen down to within striking distance of 135.20 hit on Jan. 31, 2002. Yield differentials continue to favour the U.S. dollar.
– Gold edged down a little to $1,844 on Friday morning in Asia as U.S. Treasury yields rose, with investors looking to U.S. inflation data later in the global day, for more clues on the interest rate hikes path of the U.S. Federal Reserve.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation
2. Sell AUD/USD at 0.7155. Stop at 0.7190 and profit target at 0.7085
3. A better-than expected U.S. labour data and rising U.S. Treasury bond yields are both aiding the U.S. dollar.
4. Price is capped by a support turned resistance line and the 20EMA with MACD hinting at a price decline
Fundamental Comments
1. A better-than expected U.S. labour data is likely to keep the Federal Reserve on an aggressive path of interest rate hikes, aiding the greenback
2. A rising U.S. Treasury bond yields is also aiding the U.S. dollar
Technical Comments
1. A support turned resistance line together with the 20EMA are both likely to end the rally.
2. MACD is bearish and is hinting at a bearish price trend.
Key Levels
| Support | 0.7080 | 0.7035 | 0.6995 |
| Resistance | 0.7125 | 0.7160 | 0.7195 |
Technical Overview
USD/JPY – Price again made a fresh 20-year high at 134.56 this morning and we are expecting this rally to continue higher to 135.05. Stochastic is in the overbought zone and MACD remains bullish and is hinting at a bullish price trend. 20EMA is hinting at a strong bullish price trend. However, a break of the support at 133.17 would confirm a Double Tops chart pattern and negate our bullish view.
| Support | 133.60 | 133.15 | 132.60 |
| Resistance | 134.05 | 134.60 | 135.05 |
EUR/USD – Price broke below the range support at 1.0660 and decline to a low of 1.0610 overnight. We are expecting the decline to continue lower to 1.0530 in the next few days. Stochastic is declining and is hinting at a price decline. MACD and 20EMA are both bearish and hinting at a bearish price trend. Only a price move above 1.0670 would negate our bearish view for the next few days.
| Support | 1.0610 | 1.0580 | 1.0535 |
| Resistance | 1.0650 | 1.0690 | 1.0735 |
GBP/USD – Price was unable to move above the resistance 1.2600 on Tuesday and we are expecting price to test the support at 1.2480. Price is currently close to this support. MACD has turned bearish and is hinting at a bearish price trend. Stochastic is declining and is hinting at a price decline. MACD is bearish. We are expecting price to move lower to test the previous low at 1.2430 in the next 24 hours.
| Support | 1.2460 | 1.2425 | 1.2370 |
| Resistance | 1.2515 | 1.2560 | 1.2600 |
XAU/USD – Price has been moving sideways for the past 72 hours and we think price is likely to stay within the range of $1850 to $1836 until there is a breakout. MACD is flat and hinting at a sideways trend while stochastic is in middle of its range. However, 20EMA is hinting at a bearish price trend. A break of $1836 is likely to send price lower to the Fibonacci 127% price projection target at $1826.70.
| Support | 1836.85 | 1820.15 | 1813.40 |
| Resistance | 1848.85 | 1859.45 | 1873.95 |
AUD/JPY – We had a buy call at 95.70 yesterday but our stop was also triggered later in the global day. We lost 35 pips on this trade. However, we remain bullish on this pair. We think price is likely to be supported by a previous resistance turned support area at 94.60. We see price going back up to 96.90 again in the next few days. MACD remains bullish while stochastic is in the oversold zone and is hinting at a limited downside.
| Support | 94.60 | 94.15 | 93.75 |
| Resistance | 95.25 | 95.65 | 96.05 |