Market Talk
– The U.S. dollar edged back from a near two-decade peak against a basket of major currencies on Thursday as investors awaited a speech by Federal Reserve Chair Jerome Powell the following day for fresh clues on the path for monetary policy.
– Investors across financial markets are bracing for the U.S. central bank to reiterate its commitment to tame inflation or signal a “pivot” to subdued interest rate hikes. Powell will address the annual global central banking conference at Jackson Hole on Friday.
– In early Thursday Asian trade, the yield on benchmark 10-year Treasury notes rose to 3.1095% compared with its U.S. close of 3.106% on Wednesday. The greenback edged 0.01% lower against the yen to 137.09. It is still some distance from its high this year of 139.39 in mid-July.
– The euro was down 0.06% against the U.S. dollar at $0.9961, after hitting a 20-year low of $0.9900 on Tuesday. The single currency has been hurt by growth concerns as the region faces an energy crisis.
– Gold prices rose to $1,756.20 per ounce on Thursday, supported by a pullback in the dollar, while investors awaited guidance on interest rates by the U.S. Federal Reserve from a key central bankers’ meet at Jackson Hole, Wyoming this week.
Chart Focus GBP/USD
Key Points
1. Buy GBP/USD recommendation.
2. Buy GBP/USD at 1.1835. Stop at 1.1800 and profit target at 1.1925
3. A poor set of US data and a scale back in US interest rate expectations are both likely to weigh on the US dollar.
4. Price has bounced up above the 20EMA with MACD divergence which is a hint of a possible price low and reversal.
Fundamental Comments
1. A set of poor US data overnight is likely to weigh on the US dollar.
2. A scale back in US interest rate expectations is also likely to weigh on the US dollar.
Technical Comments
1. Price has bounced up above the 20EMA line which is hinting at a price rally.
2. MACD has a divergence warning of a possible price low.
Key Levels
| Support | 1.1825 | 1.1795 | 1.1750 |
| Resistance | 1.1875 | 1.1930 | 1.1980 |
Technical Overview
USD/JPY – Price has moved below the 20EMA and could be moving lower to the previous resistance turned support line at 135.55 in the next few days. Stochastic is in the middle of its range and is neutral at the moment. MACD remains bullish but looks weak at the moment. 20EMA has also turned bearish. We see price moving lower to 135.55 in another correction in the next few days ahead.
| Support | 136.40 | 135.80 | 135.30 |
| Resistance | 136.85 | 137.25 | 137.70 |
EUR/USD – Price has managed to stay above the previous low of 0.9900 on Tuesday in an overnight decline. Price has also managed to move above the 20EMA line and is approaching the top of a possible Double Bottom chart pattern. A move above 1.0015 could lead to a price move to 1.0130 in the next few days. Stochastic, 20EMA and MACD are all hinting at a price rally. A move below 0.9950 would negate our bullish view for the next few days.
| Support | 0.9965 | 0.9900 | 0.9875 |
| Resistance | 1.0015 | 1.0070 | 1.0120 |
AUD/USD – Price has moved above a Double Bottoms chart pattern with MACD also hinting at a bullish price trend. Stochastic is supporting the bullish trend as well with both of its lines moving up and hinting at a price rally. 20EMA has also turned bullish and is hinting at a bullish price trend. Price is likely to move up to the previous support turned resistance line at 0.7070 in the next couple of days. A break below 0.6920 is likely to negate our bullish view.
| Support | 0.6955 | 0.6910 | 0.6875 |
| Resistance | 0.6990 | 0.7045 | 0.7070 |
XAU/USD – Price has moved up to $1758.68 this morning which is also the Fibonacci 38% of the decline from the high at $$1807.65 to the low at $1727.70. Stochastic is rising and hinting at a price rally. Both MACD and 20EMA are also pointing up and hinting at a price rally. Price is likely to move higher to the Fibonacci 50% correction point at $1768 before the decline resumes. However a break above $1772.50 would negate our bearish view for the next few days.
| Support | 1748.70 | 1738.95 | 1727.70 |
| Resistance | 1759.75 | 1772.45 | 1782.90 |
XAG/USD – We had a sell call at $19.15 yesterday which was filled when price rose to a high of $19.33. Stochastic is rising and is hinting at a continuation of the rally. 20EMA has turned bullish while MACD is about to turn bullish. Price has also moved above the 20EMA, hinting at a change in trend. Our sell call may be at risk. For today, we would recommend keeping stop at $19.45 and profit order at $18.65.
| Support | 19.10 | 18.85 | 18.40 |
| Resistance | 19.50 | 19.80 | 20.05 |