Market Talk
– The U.S. dollar was on the front foot on Thursday after minutes from the Federal Reserve’s July meeting pointed to U.S. interest rates staying higher for longer to bring down inflation. Fed members had indicated that inflation was still far too high to consider reducing the pace of monetary policy tightening.
– Federal Reserve officials saw “little evidence” late last month that U.S. inflation pressures were easing, the minutes showed. The minutes flagged an eventual slowdown in the pace of hikes, but not a switch to cuts in 2023 that traders until recently had priced in to interest-rate futures.
– The Australian dollar fell 1.2% overnight and on Thursday hovered at $0.6930, just above Wednesday’s one-week low of $0.6912 dragged down by weaker-than-expected wage growth and on Australia’s interest rate outlook.
– The New Zealand dollar also fell, losing nearly 1% to unwind an initial jump after the central bank hiked interest rates and steepened its projected rate-hike track. The greenback held at $134.90 on Thursday while the euro bought $1.0184.
– Gold pared some losses but kept to a tight range on Thursday morning. Gold price had declined overnight after minutes from a Federal Reserve meeting showed the pace of future hikes would depend on incoming economic data, while the dollar also added pressure on gold prices.
Chart Focus XAG/USD – Silver
Key Points
1. Sell Silver recommendation.
2. Sell Silver at $19.95. Stop at $20.20 and profit target at $19.30
3. Federal Reserve’s July meeting minutes and high US Treasury yields are both likely to weigh on silver price.
4. A Double Tops chart pattern and trend indicators are both hinting at a price decline.
Fundamental Comments
1. Federal Reserve’s July meeting minutes overnight pointed to U.S. interest rates staying higher for longer which is likely to depress silver prices.
2. A high US Treasury yields is likely to weigh on Silver which has no yields.
Technical Comments
1. A Double Tops chart pattern is hinting at a price decline
2. 20EMA and MACD are both hinting at a bearish price trend.
Key Levels
| Support | 19.55 | 19.25 | 18.90 |
| Resistance | 19.80 | 20.05 | 20.30 |
Technical Overview
USD/JPY – Price reached a low of 133.90, above the 20EMA line at 133.75. We saw a rally overnight to 135.50 which was close to the previous high at 135.55. Stochastic is hinting that price is likely to decline but both 20EMA and MACD are hinting at a price rally. A break of the high at 135.57 would likely lead price to 137.45. Failure to move above 135.57 would likely lead to a decline to 131.90.
| Support | 134.70 | 134.20 | 133.85 |
| Resistance | 135.20 | 135.60 | 136.15 |
EUR/USD – We had a sell recommendation yesterday at 1.0195 which was filled when price reached a high of 1.0202. Our view remains unchanged. We would recommend keeping stop at 1.0225 and profit target at 1.0105. The 20EMA is currently capping price and if this holds, we are likely to see a test of the low at 1.0100 again. Stochastic is rising but MACD and 20EMA both are hinting at a bearish price trend.
| Support | 1.0160 | 1.0105 | 1.0075 |
| Resistance | 1.0205 | 1.0245 | 1.0280 |
GBP/USD – Price reached a low of 1.2007 on Tuesday and we saw a rally to 1.2141 yesterday. Price has since moved lower to 1.2027 and is likely to test the strong support at 1.2000. We think price is likely to decline to 1.1960 in the next few days if it breaks below 1.2000. Only a move above 1.2140 would negate our bearish view. Stochastic, 20EMA and MACD are all hinting at a price decline.
| Support | 1.2025 | 1.1990 | 1.1935 |
| Resistance | 1.2065 | 1.2100 | 1.2140 |
XAU/USD – Price was capped by the 20EMA at $1782 and we saw a decline to the low at $1759.65. Stochastic is in the oversold zone and is hinting at a price rally. However 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. MACD is also hinting at a bearish price trend. We think the downtrend is likely to continue to $1754.10. Only a move above $1782 will negate our bearish price view.
| Support | 1759.65 | 1747.45 | 1734.90 |
| Resistance | 1770.05 | 1782.10 | 1792.95 |
USD/CAD – Price reached a low of 1.2826 yesterday, which is just above the Fibonacci 62% correction point of the rally from 1.2755 to the high at 1.2933. Price stayed above this point, and we saw a rally back to 1.2935 late overnight. MACD is hinting with divergence of a possible high and stochastic is in the overbought zone. 20EMA is hinting at a bullish price trend but we think price may have hit a high and we are likely to see a correction back to 1.2825 again in the next 48 hours.
| Support | 1.2885 | 1.2825 | 1.2795 |
| Resistance | 1.2935 | 1.2985 | 1.3025 |