Market Talk
– The U.S. dollar was little changed against major peers on Friday, but was on track for its best week in four as investors weighed the boost from tighter Federal Reserve policy and the risks of a U.S. recession.
– The euro slipped to $1.0469 on Friday morning, retreating after dollar weakness on Thursday saw it rally 0.39% to $1.0488 from a two-week low at $1.0381 reached earlier in the global day. Sterling dropped 0.26% to $.1.2147, reversing Thursday’s 0.45% climb from a low of $1.2091 to $1.2188.
– The yen was flat, with one U.S. dollar buying 135.77 of the Japanese currency. Mid-week, the yen dropped to a multi-decade low of 137.00 per dollar as the Fed’s aggressive stance contrasted sharply with the Bank of Japan’s steadfast dovishness.
– The Australian and New Zealand dollars got a brief respite from selling on Friday as their U.S. counterpart was restrained by a round of weak economic data, though both were perilously close to reaching new lows for the year. The Aussie was at $0.6890 while the kiwi held at $0.6228.
– Gold prices edged lower to $1805 on Friday after hitting a 6-week low of $1801.50 overnight. Price is on track for a third straight weekly decline, as rising U.S. Treasury yields weighed on demand for zero-yield bullion.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.0480. Stop at 1.0510 and profit target at 1.0360
3. A tighter Federal Reserve policy, the risks of a U.S. recession and interest rate differential are all aiding the US dollar.
4. Price is capped by the 20EMA with both the 20EMA and MACD hinting at a bearish price trend.
Fundamental Comments
1. A tighter Federal Reserve policy and the risks of a U.S. recession are both aiding the US dollar.
2. Interest rate differential is in the U.S. dollar favour.
Technical Comments
1. Price is capped by the 20EMA with the 20EMA hinting at a bearish price trend.
2. MACD is bearish and hinting at a bearish price trend.
Key Levels
| Support | 1.0445 | 1.0415 | 1.0380 |
| Resistance | 1.0490 | 1.0535 | 1.0585 |
Technical Overview
USD/JPY – Price reached a fresh 24-year peak of 137 yen on 29 June but with divergence showing up in the MACD indicator, we think price is more likely to go into a correction. The correction has sent price lower and we are expecting the decline to continue towards 134.40 in the next 1-2 days ahead. Stochastic continues to decline and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend while MACD remains bullish.
| Support | 134.70 | 134.25 | 133.80 |
| Resistance | 135.10 | 135.65 | 136.00 |
EUR/JPY – A price rally was capped by the 20EMA this morning at 142.35. We saw a price decline to 140.88 at the point of this writing. This low is also the Fibonacci 50% correction point of the rally from 137.82 to the high at 144.23. Stochastic is in the oversold zone and is hinting at a limited downside. However, both MACD and 20EMA are hinting at a strong bearish price trend. Watch the reaction at 140.90 for clues to the next price direction.
| Support | 140.85 | 140.35 | 139.95 |
| Resistance | 141.35 | 141.85 | 142.35 |
GBP/USD – Price was capped by the 20EMA line at 1.2170 and we have seen a decline to 1.2115 this morning. We are likely to see the decline continues towards to 1.1930 in the next few days. 20EMA is pointing down and is hinting at a bearish price trend. MACD is also bearish and hinting at a bearish price trend. Stochastic is rising and hinting at a price rally. We are bearish and see price declining to 1.1930.
| Support | 1.2090 | 1.2040 | 1.1990 |
| Resistance | 1.2155 | 1.2190 | 1.2225 |
XAU/USD – We saw a decline to 1804.95 this morning and price could be moving lower to the next important support at $1786.60 in the next few days. 20EMA is pointing lower with a steep slope, hinting at a strong bearish price trend. MACD is also hinting at a strong bearish price trend. Stochastic is in the oversold zone and is hinting at a limited downside. Above $1816.85 would negate our bearish view.
| Support | 1786.60 | 1771.95 | 1761.75 |
| Resistance | 1804.60 | 1816.20 | 1824.85 |
USD/CAD – We had a buy call on this pair at 1.2885 yesterday. Price declined to a low of 1.2860 overnight and our entry order was filled. Our view remains unchanged. We would recommend placing stop at 1.2840 and profit order at 1.3010. Stochastic is still declining and hinting at a price decline. MACD has turned bullish and is hinting at a bullish price trend. 20EMA remains fat and neutral.
| Support | 1.2885 | 1.2840 | 1.2795 |
| Resistance | 1.2930 | 1.2970 | 1.3015 |