Market Talk
– The U.S. dollar was holding steady on Wednesday, ahead of another day when central bank policy takes centre stage for traders with the Federal Reserve’s minutes from its recent meeting due later in the global day.
– The New Zealand dollar rose on Wednesday after the country’s central bank hiked interest rates as expected and warned it would have to bring forward future tightening to head off inflation, a hawkish outcome that lifted the kiwi to $0.6356 and away from the week’s low of $0.6318
– The Australian dollar lagged behind at $0.7001 after wage data missed forecasts and led the market to lengthen the odds on another half-point rate hike in September. The euro was steady at $1.0169 after squeezing out small gains overnight, and sterling was last fetching $1.2106.
– The Japanese yen was at 134.1 in early Asia. The Japanese yen has been a major beneficiary of the softer dollar and firmed to as much as 131.70 per dollar last week, but has since given back some of those gains.
– Gold prices were largely unchanged around $1,775.35 an ounce in Wednesday Asian trade as a recovery in the stock market dented safe haven demand and an uptick in US Treasury yields weighs on the yellow metal.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.0195. Stop at 1.0225 and profit target at 1.0105
3. Europe’s struggles with the war in Ukraine, the hunt for non-Russian energy sources and interest rate differential are all against the euro dollar.
4. Price is likely to be capped by the 20EMA and a previous resistance point with MACD hinting at a bearish price trend.
Fundamental Comments
1. Europe’s struggles with the war in Ukraine, the hunt for non-Russian energy sources are both likely to weigh on the Euro.
2. Interest rate differential is in the U.S. dollar favour.
Technical Comments
1. Price is likely to be capped by the 20EMA and a previous resistance point.
2. MACD and 20EMA remains bearish and are hinting at a bearish price trend.
Key Levels
| Support | 1.0145 | 1.0105 | 1.0075 |
| Resistance | 1.0195 | 1.0240 | 1.0270 |
Technical Overview
USD/JPY – We had a buy recommendation yesterday at 133.43 but price only reached a low of 133.63 and our order was not filled. We saw a price rally to 134.68 overnight and price could be in a corrective decline at the moment to the 20EMA support at 133.75. We remain bullish and we think price is likely to make another attempt at the previous high of 134.68 in the next 48 hours. A move below 133.20 would negate our bullish view.
| Support | 133.95 | 133.25 | 132.70 |
| Resistance | 134.40 | 134.90 | 135.50 |
USD/CAD – Price reached a low of 1.2826 this morning and which is just above the Fibonacci 62% correction point of the rally from 1.2755 to the high at 1.2933. As long as price stays above this point, we are likely to see a rally back to 1.2933 again in the next couple of days. Stochastic is declining but MACD remains bullish and is hinting at a bullish price trend. 20EMA is neutral at the moment.
| Support | 1.2825 | 1.2795 | 1.2755 |
| Resistance | 1.2865 | 1.2895 | 1.2935 |
GBP/USD – Price reached a low of 1.2007 on Tuesday and we saw a rally to 1.2141 this morning. The overnight low was just above the previous low, preventing a support break and keeping the consolidation intact. However, we think price is likely to decline to 1.1960 in the next few days. While stochastic is pointing higher, both 20EMA and MACD are both hinting at a bearish price trend.
| Support | 1.2080 | 1.2050 | 1.2000 |
| Resistance | 1.2140 | 1.2180 | 1.2220 |
XAU/USD – Price reached a high of $1807.80 last Wednesday with a divergence warning from the from the MACD indicator. Price has since declined to a low of $1771.30 overnight. If price is capped by the 20EMA at $1782, we may see a decline to the previous low support at $1764.60 in the next 24 hours. However, Stochastic is in the oversold zone and is hinting at a limited downside. Both 20EMA and MACD remain bearish.
| Support | 1771.30 | 1759.95 | 1748.20 |
| Resistance | 1782.90 | 1792.95 | 1807.80 |
USD/CHF – We had a buy recommendation at 0.9405 last Friday and we had recommended keeping stop at 0.9375 and profit order at 0.9505. Our profit order was filled overnight when price reached a high of 0.9513. We are out of this position with a 100 pips profit. Stochastic is hinting at a bearish price trend but both MACD and 20EMA remain bullish and are hinting at a bullish price trend.
| Support | 0.9480 | 0.9450 | 0.9415 |
| Resistance | 0.9515 | 0.9545 | 0.9575 |