Market Talk
– The U.S. dollar was little changed on Monday morning after declining in the previous week as traders weighed improving U.S. inflation data against comments from Federal Reserve officials who cautioned the battle against rising prices was far from over.
– U.S. import prices declined for the first time in seven months in July on lower costs for fuel and non-fuel products, data showed on Friday. It was the third report in a week to hint inflation may have topped out after consumer prices and producer prices cooled in July, data on Wednesday and Thursday showed.
– The euro was down 0.53% at $1.0262 weighed down by Europe’s struggles with the war in Ukraine, the hunt for non-Russian energy sources and a hit to the German economy from scant rainfall. The dollar was up 0.39% against Japan’s currency, with the greenback at 133.49 yen.
– The British pound fell 0.6% to $1.2141 versus the dollar. Data showed UK GDP contracted by less than forecast in June, even though an extra public holiday had been expected to cause a big drag.
– Gold prices drifted higher helped by a drop in U.S. Treasury yields and setting the metal on path for a fourth straight week of gains, as investors took stock of the recent inflation data out of the United States
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.6390. Stop at 0.6360 and profit target at 0.6465
3. Weak U.S. import prices and a decline in US Treasury yields are both weighing on the U.S. dollar.
4. Price is likely to be supported by the 20EMA line as well as the Fibonacci 38% correction point with MACD hinting at a bullish price trend.
Fundamental Comments
1. Weak U.S. import prices add weighs to expectation of a less aggressive Fed hike cycle weighing on the U.S. dollar.
2. A decline in US Treasury yields is weighing on the U.S. dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA line as well as the Fibonacci 38% correction point.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6400 | 0.6370 | 0.6315 |
| Resistance | 0.6465 | 0.6500 | 0.6555 |
Technical Overview
USD/JPY – Price breached the Fibonacci 62% correction point and was capped by the 20EMA at 133.60. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. Stochastic is pointing to a price rally. We think price is likely to move lower if it is capped by the resistance point at 133.60. We see price test first the previous low at 131.72 before eventually testing the previous low at 130.38
| Support | 132.95 | 132.45 | 131.95 |
| Resistance | 133.40 | 133.85 | 134.35 |
EUR/USD – Price reached a high at 1.0368 on Wednesday with a Shooting Star candlestick price pattern, which is a trend reversal candlestick price pattern. Price has since declined below 1.0275 triggering a Double Top chart pattern confirmation. We are likely to see price continue lower to 1.0150 in the next few days. 20EMA is hinting at a bearish price trend. Stochastic is moving lower and is hinting at a price decline. A move above 1.0085 would negate our bearish view.
| Support | 1.0225 | 1.0170 | 1.0120 |
| Resistance | 1.0270 | 1.0300 | 1.0355 |
GBP/USD – Price was capped by the 20EMA at 1.2150 and we think price could be on a decline back to the previous low at 1.2025 in the next few days. Stochastic is declining and is hinting at a price decline. 20EMA is also hinting at a price decline. MACD may be turning bearish with the fast line already below the zero line. Only a move above 1.2200 would negate our bearish view for the next few days.
| Support | 1.2095 | 1.2060 | 1.2000 |
| Resistance | 1.2150 | 1.2215 | 1.2260 |
XAU/USD – Price reached a high of $1807.80 on Wednesday with 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 but MACD is flat and neutral at the moment. 20EMA is flat and neutral and is supporting price at the moment. We think price has reached a high and could be heading lower to $1754 over the next few days if price were to move below the 20EMA.
| Support | 1790.05 | 1779.45 | 1764.25 |
| Resistance | 1802.50 | 1814.20 | 1824.65 |
USD/CHF – We had a buy recommendation at 0.9405 on Friday which was filled when price declined to a low of 0.9292. Stochastic is moving up from the oversold zone, hinting at a price rally. However, both MACD and 20EMA remain bearish and are hinting at a bearish price trend. Our view remains unchanged and we would recommend keeping stop at 0.9375 and profit order at 0.9505.
| Support | 0.9390 | 0.9360 | 0.9320 |
| Resistance | 0.9440 | 0.9470 | 0.9505 |