Market Talk
– The U.S. dollar was little changed against major peers on Monday morning, ahead of a US holiday tonight, having rallied on Friday on the back of a tighter Federal Reserve policy and investors’ pessimism about of a possible global recession.
– Data on Friday showed that U.S. manufacturing activity slowed more than expected in June, with a measure of new orders contracting for the first time in two years, signs that the economy was cooling.
– Concerns that the Federal Reserve will continue to hike rates aggressively to blunt inflation led to concerns about an economic downturn, sending the benchmark 10-year U.S. Treasury yields to one-month lows. The dollar dipped 0.37% against the Japanese yen to 135.26.
– The euro fell 0.56% to $1.0424. The single currency declined on Friday to a low of $1.0365, near a five-year low of $1.0349 reached on May 13. Sterling reached a two-week low of $1.1976 a day after official data showed a record shortfall in Britain’s current account deficit in early 2022.
– Gold prices edged lower on Monday, as an elevated U.S. dollar hurt demand for bullion and also outweighed support from weakening Treasury yields. Spot gold edged lower to $1,807.19 per ounce, after hitting a five-month low of $1,783.50 on Friday.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation.
2. Sell AUD/USD at 0.6850. Stop at 0.6885 and profit target at 0.6765
3. Investors’ pessimism about of a possible global recession and softer commodities prices are weighing on the Aussie dollar.
4. Price is likely to be capped by the previous support turned resistance line with MACD hinting at a bearish price trend.
Fundamental Comments
1. Investors’ pessimism about of a possible global recession is boosting demand for the safe haven greenback.
2. Lower commodities prices are weighing on the Aussie dollar.
Technical Comments
1. Price is likely to be capped by the previous support turned resistance line.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 0.6815 | 0.6765 | 0.6715 |
| Resistance | 0.6855 | 0.6915 | 0.6960 |
Technical Overview
USD/JPY – After reaching a high on 29 June, we have seen a price decline to a low of 134.73 on Friday. We think the price correction is not completed as yet. We are likely to see price continues lower to 134.40 or 134.05 in the next 1-2 days. Stochastic has reached the oversold zone but both MACD and 20EMA are hinting at a strong bearish price trend. A move above 136.00 would negate our bearish price view for the next few days.
| Support | 134.70 | 134.40 | 134.00 |
| Resistance | 135.25 | 135.70 | 136.00 |
EUR/USD – We had a sell order on Friday at 1.0480 but price only reached a high of 1.0474 and our order was not filled. Price had declined on Friday night to a low of 1.0365 and we think the decline could be temporary over. There were divergence warnings from both the MACD and stochastic indicators, warning of a possible price low. However, 20EMA remains bearish. We think price is likely to move higher to 1.0515 in the next few days. A move below 1.0365 would negate our bullish view.
| Support | 1.0405 | 1.0365 | 1.0340 |
| Resistance | 1.0445 | 1.0490 | 1.0535 |
GBP/USD – We saw a decline to a low of 1.1975 on Friday but we think the decline is likely to continue lower to 1.1930 in the next 1-2 days. Stochastic is showing a divergence warning but MACD do not have a divergence warning. 20EMA is also hinting at a bearish price trend. We think price is likely to be capped by the 20EMA line at 1.2125. If price moves above this resistance point, it could negate our bearish price view.
| Support | 1.2060 | 1.2005 | 1.1975 |
| Resistance | 1.2125 | 1.2190 | 1.2225 |
XAU/USD – Price declined to a low of $1784.38 on Friday night and we think the decline could be over. There was a divergence warning from the MACD indicator as well. We are likely to see price move higher towards $1820 in the next few days in a corrective rally move. A move below $1784.38 would negate our bullish view. Stochastic is hinting at a price rally but both MACD and 20EMA are hinting at a bearish price trend.
| Support | 1804.60 | 1795.70 | 1784.35 |
| Resistance | 1816.20 | 1829.50 | 1840.90 |
USD/CAD – We had a buy call on this pair at 1.2885 on Thursday, which was filled. We had left stop at 1.2840 and profit order at 1.3010 on Friday. After reaching a high of 1.2965, price has come back down to 1.2895 again. Our 3 indicators are inconclusive at the moment. We would recommend watching for 1 more day. For today, we would recommend moving stop higher to 1.2855 and moving profit order lower to 1.2990.
| Support | 1.2865 | 1.2820 | 1.2795 |
| Resistance | 1.2905 | 1.2965 | 1.3015 |