Market Talk
– The U.S. dollar was flat on Friday following a 1% loss on Wednesday day when data showed U.S. inflation was not as hot as anticipated in July, prompting traders to dial back future rate hike expectations by the Federal Reserve.
– U.S. producers prices data overnight offered signs inflation could be moderating, as producer prices unexpectedly fell in July amid a drop in the cost for energy products, while jobless claims rose for a second straight week.
– The euro was last up 0.23% at $1.0322, while the yen dipped 0.06% to 132.95 yen after a rise of more than 1% on Wednesday. Sterling slid 0.18% versus the dollar to $1.2195, giving back some of its more than 1% gain from Wednesday.
– The Australian and New Zealand dollars were on track for their strongest weekly gains of the year on Friday, riding a pickup in risk sentiment after softer U.S. economic data hosed down expectations of faster interest rate hikes.
– Gold prices steadied around $1,789.80 per ounce on Friday and were on track for their fourth consecutive weekly gain, as broader weakness in the dollar countered pressure from an uptick in the Treasury yields and prospects of U.S. interest rate hikes.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9405. Stop at 0.9375 and profit target at 0.9505.
3. An uptick in US Treasury yields and interest rate differential are both aiding the U.S. dollar.
4. Price has bounced up from a second low, hinting at a possible Double Bottom chart formation and MACD is also warning of a possible low with a divergence.
Fundamental Comments
1. An uptick in US Treasury yields is aiding the U.S. dollar.
2. Interest rate differential is in the U.S. dollar favour.
Technical Comments
1. Price has bounced up from a second low, hinting at a possible Double Bottom chart formation.
2. MACD is warning with a divergence of a possible price low and a reversal.
Key Levels
| Support | 0.9395 | 0.9365 | 0.9320 |
| Resistance | 0.9440 | 0.9470 | 0.9505 |
Technical Overview
USD/JPY – Price reached a low of 132.02 on Wednesday, which was the Fibonacci 62% correction point of the rally from the low of 130.38 to the high at 135.57. Price has managed to move higher but is capped by the 20EMA at the moment at 133.50. Price will need to move above this resistance. Failure to move above this resistance is likely to send price lower to 132.02 again as both MACD and 20EMA remains bearish. Stochastic is rising up from the oversold zone.
| Support | 133.00 | 132.50 | 131.90 |
| Resistance | 133.50 | 133.90 | 134.30 |
EUR/USD – Price reached a high at 1.0368 on Wednesday with a Shooting Star candlestick price pattern. This is a trend reversal candlestick price pattern, which is hinting at a price decline to the previous resistance turned support line and the 20EMA line at 1.0275. If price can stay above this support, we are likely to see another rally to test the high at 1.0368. A move below 1.0275 is likely to send price lower to 1.0150.
| Support | 1.0275 | 1.0240 | 1.0200 |
| Resistance | 1.0325 | 1.0365 | 1.0395 |
GBP/USD – We had a buy order at 1.2150 overnight but our order was not filled as price only declined to a low of 1.2176. Price has started to move higher and we are expecting the price movement to continue higher to 1.2275 in the next 48 hours. MACD remains bullish and 20EMA is also hinting at a bullish price trend. Stochastic is near to the overbought zone and is hinting at a limited upside.
| Support | 1.2175 | 1.2140 | 1.2090 |
| Resistance | 1.2215 | 1.2260 | 1.2295 |
XAU/USD – Price reached a high of $1807.80 on Wednesday and this high was also accompanied by a divergence warning from the from the MACD indicator. This is a warning of a possible price high. Stochastic is hinting at a price rally and MACD is also hinting at a bullish price trend. However, 20EMA is flat and neutral at the moment. We think price has reached a high and could be heading lower to $1754 over the next few days.
| Support | 1784.90 | 1776.90 | 1764.60 |
| Resistance | 1799.15 | 1807.80 | 1824.65 |
XAG/USD – Price made high at $20.83 on Wednesday but this high was accompanied by a divergence warning from the MACD indicator, warning of a possible price high. Price has since broken below the support at $20.33, confirming a Double Top chart pattern, which calls for a price decline to $19.83. 20EMA has turned bearish and is capping price rally. Stochastic and MACD are both hinting at a possible price rally. If price is capped at $20.50, we see price moving to $19.83 in the next 1-2 days.
| Support | 20.20 | 19.90 | 19.55 |
| Resistance | 20.50 | 20.85 | 21.10 |