Market Talk
– The U.S. dollar slipped on Friday and posted its first weekly decline this month, as traders pared back bets on where interest rates may peak and brought forward their outlook on the timing of rate cuts to counter a possible recession
– US data were mixed on Friday as new home sales jumped 10.7% and. May’s sales pace was revised higher. However the University of Michigan consumer sentiment survey showed sentiment worsening in June to 50, from a final reading in May of 58. But the reading on five-year inflation expectations eased to 3.1 from the preliminary 3.3% estimate in mid-June.
– The risk-sensitive Australian dollar eased 0.3% to $0.6918, weighed down by sliding commodity prices on growing fears about a looming slowdown in the global economy. The New Zealand dollar was pinned at $0.6035.
– The euro edged up at $1.0563 amid improved risk sentiment as oil prices eased, tempering fears of prolonged inflation and the accompanying aggressive Federal Reserve tightening. The Japanese yen steadied to 134.68 per dollar while the British pound was stuck at $1.2282.
– Gold was up on Monday morning in Asia as some countries from the Group of Seven plan to ban bullion imports from Russia, which might tighten supplies leading to a rise in its price. A weaker U.S. dollar and recession fears also buoyed the yellow metal safe-haven appeal.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.0540. Stop at 1.0505 and profit target at 1.0640
3. An improved risk sentiment and easing of inflation are both likely to weigh on the U.S. dollar.
4. Price is supported by the 20EMA with both stochastic and MACD hinting at a bullish price trend.
Fundamental Comments
1. An improved risk sentiment is likely to weigh on the safe haven U.S. dollar.
2. A fall in commodity prices has eased inflation worries and aggressive Fed tightening weighing on the U.S. dollar.
Technical Comments
1. Price is supported by the 20EMA which is also hinting at a bullish price trend.
2. Stochastic and MACD are both hinting at a bullish price trend.
Key Levels
| Support | 1.0540 | 1.0505 | 1.0465 |
| Resistance | 1.0575 | 1.0605 | 1.0650 |
USD/JPY – Price has managed to hold above the support level at 134.50 for the past few days. If price can hold above this support, we are likely to see a move towards 136.70 in the next few days. Stochastic is near to the oversold zone and is moving higher, hinting at a bullish price trend. MACD and 20EMA are both bearish but could be about to turn bullish.
| Support | 134.50 | 134.05 | 133.50 |
| Resistance | 135.15 | 135.60 | 136.00 |
EUR/JPY – We had a sell recommendation of this pair last Friday but we were wrong on this call. We lost 35 pips on this trade. MACD is flat and neutral at the moment. 20EMA is also flat and neutral at the moment. Stochastic is hinting at a price rally ahead. If price is supported above 141.90, we are likely to see a move towards 144. However, if price falls below 141.90, we are likely to see a decline to 140.
| Support | 141.90 | 141.40 | 140.65 |
| Resistance | 142.50 | 142.95 | 143.40 |
GBP/USD – Price has been trading in a range of 1.2160 to 1.2325 for the past 3 days and looks likely to stay within this range for the next 24 hours. MACD is flat and neutral around the zero line but stochastic has a bearish crossover and is hinting at a price decline. 20EMA is flat but is below price. We would recommend waiting for the breakout and following in the direction of the break.
| Support | 1.2225 | 1.2170 | 1.2115 |
| Resistance | 1.2285 | 1.2335 | 1.2380 |
XAU/USD – Price broke below the previous low of $1822.95 as well as the Fibonacci 62% correction point last Thursday but price has bounced back higher again into the range. We think price is likely to trade within a range of $1816.85 to $1847.75 in the next few days until we have a breakout of this range. Stochastic is hinting at a price rally. 20EMA and MACD are also hinting at a bullish price trend.
| Support | 1827.85 | 1816.85 | 1804.95 |
| Resistance | 1837.35 | 1847.75 | 1866.85 |
AUD/USD – We had a sell recommendation at 0.6980 last Tuesday which was filled and last Friday we had recommended placing stop at 0.6950 and keeping profit order unchanged at 0.6860. Last Friday, our stop was triggered but we still made 30 pips on this trade. Stochastic is hinting at a price rally and 20EMA has turned bullish. However, MACD is still hinting at a bearish price trend.
| Support | 0.6905 | 0.6850 | 0.6810 |
| Resistance | 0.6955 | 0.6990 | 0.7020 |