Market Talk
– The U.S. dollar hovered on Tuesday just above a one-week low reached overnight versus major peers after hitting a two-decade high hit last week, as traders pared bets on how aggressive the Federal Reserve would be in raising rates at its meeting next week.
– The euro slipped to $1.0135 on Tuesday morning, after putting on around 0.6% overnight. The common currency had slid as low as $0.9952 on Thursday for the first time since December 2002, pressured by uncertainty about a potential energy supply crunch in the euro zone.
– The greenback was little changed at 138.135 yen, not too far from Thursday’s peak at 139.38, a level not seen since September 1998. The Australian dollar was at 0.6820, after climbing to a one-week high at $0.6853 on Monday, from as low as $0.6682 on Thursday, the weakest in more than two years.
– Sterling eased to $1.1935, pulling away from Monday’s one-week high of $1.2032. It slumped to $1.1761 on Thursday for the first time since March 2020 as Britain faces an acrimonious and divisive contest to replace ousted Prime Minister Boris Johnson.
– Gold edged lower on Tuesday morning in Asia, after recovering some ground on Monday, lifted by a retreat in the dollar as the market toned down the chances of a 100-basis-point rate hike by the U.S. Federal Reserve next week.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.6165. Stop at 0.6135 and profit target at 0.6250.
3. Expectation of more rates hikes after inflation data surged to a three-decade high is aiding the kiwi dollar.
4. Price is supported by the Fibonacci 38% correction point as well as the 20EMA line with MACD hinting at a bullish price trend.
Fundamental Comments
1. Inflation data that surged to a three-decade high in New Zealand is prompting rate hikes from the RBNZ.
2. Current interest rate differential is in the kiwi favour.
Technical Comments
1. Price is supported by the Fibonacci 38% correction point as well as the 20EMA line.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6165 | 0.6115 | 0.6060 |
| Resistance | 0.6195 | 0.6250 | 0.6290 |
Technical Overview
USD/JPY – We had a buy call at 138.10 which was filled when price declined to a low of 137.99 overnight. While price has stayed in a tight range overnight, our view remains the same and we would recommend keeping stop order at 137.85 and profit order at 139.35. Stochastic is near to the oversold zone and is hinting at a limited downside. MACD and 20EMA remain bullish and is hinting at a bullish price trend.
| Support | 137.90 | 137.55 | 136.95 |
| Resistance | 138.40 | 138.90 | 139.55 |
EUR/USD – From a low of 0.9952 last Thursday, we saw a rally to a high of 1.0200 overnight. The rally may be over and we may see a pullback in price in the next couple of days before the rally resumes. Stochastic is also in the overbought zone, hinting at a price correction ahead. However both MACD and 20EMA remain bullish and are both hinting at a bullish price trend. As long as price can stay above 1.0045, the trend can remain bullish for the short term.
| Support | 1.0110 | 1.0070 | 1.0010 |
| Resistance | 1.0160 | 1.0200 | 1.0245 |
GBP/USD – From a low last Thursday at 1.1760, we saw a price rally to a high of 1.2033 overnight. Stochastic has also reached the overbought zone and is hinting at a limited upside. We are likely to see a correction back to the 20EMA support at 1.1910. The trend remains bullish as both MACD and 20EMA are hinting at a bullish price trend. However, a price decline below 1.1865 is likely to negate our bullish view for the next couple of days.
| Support | 1.1895 | 1.1860 | 1.1805 |
| Resistance | 1.1960 | 1.2035 | 1.2090 |
XAU/USD – Price, after reaching a low of $1697.38 last Thursday, had climbed to a high of $1723.72 overnight. Price will need to move above this resistance point of $1723.70, if not; we might see another decline back to test the previous low of $1697.38 in the next few days. Stochastic is starting to turn down and both 20EMA and MACD had remained bearish. All 3 indicators are hinting at a price decline.
| Support | 1697.35 | 1686.45 | 1676.55 |
| Resistance | 1710.80 | 1723.75 | 1733.95 |
AUD/USD – Price is likely to be supported by the 20EMA as well as the Fibonacci 38% correction point of the advance from 0.6752 to 0.6854. As long as price stays above this point, we are likely to see another rally to the previous high at 0.6890 in the next couple of days. Stochastic is already in the overbought zone and is hinting at a limited upside. However, MACD and 20EMA are both hinting at a bullish price trend.
| Support | 0.6785 | 0.6745 | 0.6680 |
| Resistance | 0.6855 | 0.6895 | 0.6960 |