Market Talk
– The U.S. dollar rose to fresh 20-year highs against the euro as rising energy prices cast a long shadow over the euro zone’s economy but bolstered the U.S. currency’s safe-haven appeal. The greenback was also aided by the Fed’s June meeting minutes established a more “restrictive” monetary policy.
– The euro was about flat at $1.0184 after sinking as low as $1.0161 on Wednesday, for the first time since late 2002 as Europe’s energy woes cast a long shadow over the zone economic outlook.
– The U.S. dollar eased 0.07% to 135.79 yen, consolidating around that level after pulling back from a 24-year high at 137.00 at the end of last month. Benchmark 10-year Treasury yields slipped to 2.904% in Tokyo trading on Thursday from as high as 2.935% overnight.
– Sterling was little changed at $1.1924, after an overnight dip to the lowest since March 2020 at $1.1877, with British Prime Minister Boris Johnson fighting to keep his job amid a mounting rebellion within his party.
– Gold prices edged up slightly to $1745 on Thursday from nine-month lows touched in the previous session. The yellow metal was hurt by a stronger dollar and the Federal Reserve’s June meeting minutes which established a more “restrictive” monetary policy.
Chart Focus GBP/USD
Key Points
1. Sell GBP/USD recommendation.
2. Sell GBP/USD at 1.1985. Stop at 1.2020 and profit target at 1.1880.
3. Political uncertainty in UK and Interest rate differential are in the greenback’s favour.
4. Price is facing a strong resistance with MACD hinting at a bearish price trend.
Fundamental Comments
1. Political uncertainty in UK is weighing on the British pound.
2. Interest rate differential is in the greenback’s favour.
Technical Comments
1. Price is facing a strong resistance provided by the 20EMA as well as the previous support turned resistance line.
2. MACD is bearish and is hinting at a bearish price trend.
Key Levels
| Support | 1.1930 | 1.1895 | 1.1865 |
| Resistance | 1.1980 | 1.2005 | 1.2055 |
Technical Overview
USD/JPY – A decline in US Treasury yields and fear of a recession in Europe led to the yen gaining ground to 134.92 overnight but price has again moved higher to 136.12 this morning. Stochastic is still pointing up, hinting at a bullish price trend. MACD and 20EMA are neutral at the moment. We may see price consolidate around this this week range of 136.35 to 134.75 in the next 1-2 days.
| Support | 135.70 | 135.35 | 134.75 |
| Resistance | 136.15 | 136.70 | 137.00 |
EUR/USD -Soaring gas prices in Europe have fueled recession concern sending the euro to a fresh 20-year low at 1.0165. 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. MACD is also hinting at a strong bearish price trend but stochastic is in the oversold zone and hinting at a limited downside. We think price is likely to be capped by the 20EMA line at 1.0280 and we may see another decline lower to 1.0165 again in the next 1-2 days.
| Support | 1.0195 | 1.0165 | 1.0100 |
| Resistance | 1.0220 | 1.0275 | 1.0305 |
USD/CHF – Price reached a high of 0.9743 yesterday and price is currently moving towards the 20EMA at 0.9665. We think price is likely to be supported by the 20EMA line and we are likely to see a rally to 0.9815 in the next few days. Stochastic is moving lower, hinting at a price correction. Both MACD and 20EMA remains bullish and are hinting at a bullish price trend. A move below 0.9630 would negate our bearish view.
| Support | 0.9670 | 0.9625 | 0.9590 |
| Resistance | 0.9710 | 0.9745 | 0.9795 |
XAU/USD – Price broke below last Friday’s low at $1784.38 and reached a low of $1732.05 overnight. This low is also the Fibonacci 161% price projection target of the previous decline from $1857.40 to the low at $1784.38. The strong decline has sent stochastic into the oversold zone but both MACD and 20EMA are hinting at a strong bearish price trend ahead. We think price likely to be capped at $1765 and we are likely to test the low again in the next 1-2 days.
| Support | 1732.05 | 1721.60 | 1704.70 |
| Resistance | 1749.95 | 1764.20 | 1772.70 |
USD/CAD – We had a buy call yesterday at 1.3010, which was filled when price declined to a low of 1.2999. Our view remains the same as yesterday. Although stochastic is in the overbought zone, 20EMA has a steep slope hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. We would recommend keeping stop order at 1.2980 and profit target at 1.3135 for today.
| Support | 1.2995 | 1.2965 | 1.2920 |
| Resistance | 1.3035 | 1.3080 | 1.3140 |