Market Talk
– The Japanese yen remained under pressure on Monday, weakening toward a 24-year low after the Bank of Japan on Friday bucked the trend in a week of massive central bank tightening to renew its commitment to ultra-easy policy.
– The Japanese yen tumbled against the greenback on Monday, heading back toward last Wednesday’s 24-year peak of 135.60. Divergent monetary policy between the two central banks is likely to keep the greenback strong.
– The euro ticked up to $1.0493 on the back of broad base US dollar weakness, despite French President Macron losing control of the National Assembly in legislative elections on Sunday, a major setback that could throw the country into political paralysis.
– Sterling slipped 0.09% to $1.2209 while the Swiss franc inched up to $0.9684. The Australian dollar was higher at $0.6960. The kiwi made a minor gain to $0.6330 ahead of a U.S holiday on Monday.
– Gold was up on Monday morning in Asia as the U.S. dollar weakened. Gold prices fell on Friday as a stronger dollar and interest rate hikes from major central banks dented the safe-haven metal’s appeal.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.0505. Stop at 1.0475 and profit target at 1.0605
3. A pullback in US Treasury yields and Powell’s comment that further super-sized interest-rate hikes are rare are both likely to weigh on the US dollar.
4. Price is supported by a strong support zone with both MACD and 20EMA hinting at a bullish price trend.
Fundamental Comments
1. A pullback in US benchmark 10-year Treasury yields is weighing on the greenback.
2. Powell’s comment that further super-sized interest-rate hikes are rare is likely to weigh on the US dollar.
Technical Comments
1. Price is supported by the 20EMA as well as the Fibonacci correction support points.
2. Both MACD and 20EMA are hinting at a bullish price trend.
Key Levels
| Support | 1.0495 | 1.0440 | 1.0395 |
| Resistance | 1.0545 | 1.0595 | 1.0635 |
Technical Overview
USD/JPY – The yen tumbled and is moving towards its 24-year low after the Bank of Japan chooses to kept its rate on hold and stick with its ultra-loose monetary policy last Friday. MACD and 20EMA are bullish and are hinting at a bullish price trend. We think price is likely to move above its 24-year high at 135.59 in the next few days to another new high. There is a previous high resistance 137.25.
| Support | 134.65 | 134.20 | 133.80 |
| Resistance | 135.15 | 135.60 | 136.00 |
NZD/USD – After reaching a price high at 0.6395, we saw a price decline to a low of 0.6268. The low was just above the Fibonacci 62% of the price rally from the low of 0.6195 to the high at 0.6395. MACD has remained bullish and is hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. We think price is likely to test the high of 0.6395 again in the next couple of days. A move below 0.6270 would negate this bullish view.
| Support | 0.6315 | 0.6270 | 0.6235 |
| Resistance | 0.6355 | 0.6395 | 0.6435 |
GBP/USD – Price went up to a high of 1.2343 on Friday and our sell order’s entry price at 1.2345 was not filled. Price has declined on Friday to a low of 1.2172, which is also the Fibonacci 50% correction point of the rally from 1.1933 to 1.2407. If price can stay above this Fibonacci 50% correction point, we are likely to see a test of 1.2407 again in the next few days. MACD and 20 remain bullish while stochastic is hinting at a price correction.
| Support | 1.2225 | 1.2170 | 1.2115 |
| Resistance | 1.2265 | 1.2300 | 1.2350 |
XAU/USD – After reaching a price high at $1857.40, we saw a price decline to a low of $1832.80 this morning. MACD has remained bullish and is hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. The price decline also stop right before the Fibonacci 62% correction point. If price can stay above this Fibonacci point, we are likely to see another rally to test the previous high of $1857.40 in the next couple of days.
| Support | 1832.80 | 1815.75 | 1804.95 |
| Resistance | 1846.20 | 1857.45 | 1866.85 |
USD/CAD – Price reached a high of 1.3078 last Friday but that high was accompanied by a bearish divergence warning form the MACD indicator. This is a warning of a possible price high and a likely decline. Stochastic is also hinting at a bearish price trend but 20EMA is hinting at a bullish price trend. We think price has reached a peak and we see a correction back to the Fibonacci 38% correction point of the rally from 1.2516 to 1.3078.
| Support | 1.2970 | 1.2940 | 1.2885 |
| Resistance | 1.3010 | 1.3050 | 1.3080 |