Market Talk
– The safe-haven U.S. dollar hovered near a one-week high on Tuesday while the Aussie, euro and Chinese yuan remained under pressure as weak global economic data regnited recession fears.
– Data showed U.S. single-family homebuilders’ confidence and New York state factory activity fell in August to their lowest levels since near the start of the COVID-19 pandemic, followed surprisingly weak Chinese activity data spanning industrial output, retail sales and fixed-asset investment as a nascent recovery.
– The Aussie and Kiwi dollars were fighting a rearguard action on Tuesday after dismal data from China and the United States rekindled worries about a global downturn and undermined commodity prices.
– Minutes of the RBA’s August policy meeting out on Tuesday reiterated that more hikes were likely, but that it was important to keep the economy on an “even keel” and that global risks were skewed to the downside.
– Gold prices inched lower on Tuesday after falling more than 1% in the previous session, weighed down by an uptick in the U.S. dollar and worries over further U.S. interest rate hikes.
Chart Focus
Key Points
1. Buy USD/JPY recommendation.
2. Buy USD/JPY recommendation at 133.43. Stop at 132.90 and profit target at 135.20.
3. Improving U.S. inflation data will likely to aid on the greenback.
4. Price moved above the 20EMA and Stochastic is hinting at potential upside ahead.
Fundamental Comments
1. Improving U.S. inflation data will likely to aid on the greenback.
2. BOJ sees risk of acceleration in price rise but not enough for any policy shift is likely to weigh on the yen.
Technical Comments
1. Price moved above the 20EMA after rebounding from the Fibonacci 62% correction point.
2. Stochastic is rising, suggesting the potential upside ahead.
Key Levels
| Support | 132.95 | 132.50 | 131.70 |
| Resistance | 133.55 | 133.90 | 134.45 |
Technical Overview
NZD/USD – Price has been retracing after reaching a high of $0.6467. It is now moving below the falling 20EMA, hinting at potential downside ahead. We are likely to see price continuing its decline to $0.6310 in the next few days. MACD has turned bearish and is hinting at the strong downward momentum.
| Support | 0.6345 | 0.6310 | 0.6275 |
| Resistance | 0.6380 | 0.6415 | 0.6465 |
AUD/USD – The Aussie corrected to the Fibonacci 50% correction point, coinciding with the resistance-turned-support level at $0.7000. Price slightly rebounded after reaching this support level, but it has to penetrate the 20EMA at $0.7050 for more upside. A further violation of its low of $0.7000 would hint for further decline to $0.6920.
| Support | 0.7000 | 0.6920 | 0.6870 |
| Resistance | 0.7050 | 0.7080 | 0.7140 |
GBP/USD – Price was capped by the key Fibonacci 62% correction point. It could be forming a potential Double Top chart pattern. The pound is on the way heading lower to its key neckline at 1.2000. Watch out for the key support level. A violation of 1.2000 would confirm the Double Top pattern and we can expect deeper downside to 1.1835.
| Support | 1.2035 | 1.2000 | 1.1890 |
| Resistance | 1.2100 | 1.2185 | 1.2280 |
XAU/USD – Gold has been on a corrective movement after reaching the Fibonacci 62% correction point. It has moved below the 20EMA, which has now become an overhead resistance point. Price could retest the 20EMA at 1786.55 again before its downward movement. Stochastic is falling and MACD has turned bearish.
| Support | 1786.55 | 1802.50 | 1807.20 |
| Resistance | 1772.85 | 1764.75 | 1754.55 |
EUR/USD – The price rally was capped by the Fibonacci 50% correction point, which is also the support-turned-resistance price zone. Price has moved below the falling 20EMA that hints at potential downside ahead as well. Look for a possible corrective rally to the 20EMA at 1.2180 for a directional downward movement. MACD remains bearish at the moment.
| Support | 1.0145 | 1.0095 | 0.9985 |
| Resistance | 1.0230 | 1.0270 | 1.0365 |