Market Talk
– The U.S. dollar took a breather from its surging rally on Friday as markets digested yet more hawkish Fed speak, while the euro hung on to parity, helped by an outsized rate hike from the European Central Bank.
– The ECB on Thursday raised its key interest rates by an unprecedented 75 basis points and promised further hikes to come in its fight against inflation, even as the bloc is likely heading towards a winter recession and gas rationing. The euro was up 0.52% at $1.0050 on Friday morning in Asian trades.
– Against the Japanese yen, the dollar was last down 0.29% to 143.69, but is up nearly 3% on the week, the largest weekly gain since June. Sterling was last up 0.43% to $1.1547, reversing its losses from the previous session.
– The Aussie was up 0.55% to $0.6788 on Friday morning, two days after the RBA hike rates while the kiwi was up 0.47% to $0.6084, though the two antipodean currencies were on track for another weekly loss.
– Gold rose 0.7% to $1,719.65 on Friday supported by a dip in the dollar and was set for eking out small weekly gains, though persistent jitters over the U.S. Federal Reserve continuing on an aggressive interest rate-hike path weighed on sentiment.
Chart Focus XAG/USD
Key Points
1. Sell XAG/USD recommendation.
2. Sell XAG /USD at $18.90. Stop at $19.20 and profit target at $18.40.
3. Hawkish signals from the Fed and a rally in the U.S. Treasury yields is likely to weigh on silver.
4. Price is likely to be capped by the previous support turned resistance with stochastic hinting at a limited upside
Fundamental Comments
1. Hawkish signals from the Federal Reserve are weighing on silver.
2. A rally in the U.S. Treasury yields is likely to weigh on silver.
Technical Comments
1. Price is likely to be capped by the previous support turned resistance around $18.85.
2. Stochastic is in the overbought zone and is hinting at a limited upside
Key Levels
| Support | 18.40 | 18.05 | 17.80 |
| Resistance | 18.90 | 19.40 | 19.90 |
Technical Overview
USD/JPY – We had a buy recommendation yesterday at $143.10 which was filled. Price had also declined beyond our stop loss at 142.70. We lost 40 pips on this trade. We are likely to see price declines to the Fibonacci 38% correction point at 141.45 in the next few days. Stochastic and 20EMA are both hinting at a bearish price trend. MACD remains bullish at the moment.
| Support | 142.50 | 141.85 | 141.45 |
| Resistance | 143.10 | 143.60 | 144.15 |
EUR/USD – Price broke above yesterday’s high and we saw a continuation of the rally to 1.0083. 20EMA is pointing higher hinting at a bullish price trend. MACD is also hinting at a bullish price trend. However, stochastic is in the overbought zone and is hinting at a limited upside. As long as the price sustains above $1.0030, we are likely to see the price rally continues to the next higher resistance at $1.0120 in the next 24 hours.
| Support | 1.0045 | 1.0015 | 0.9985 |
| Resistance | 1.0090 | 1.0125 | 1.0160 |
GBP/USD – Price continued its rally and is approaching the resistance at $1.1610. We see the rally continuing higher above the current resistance and a test the next resistance at $1.1690 in the next 24 hours. Stochastic is rising and hinting at a price rally. 20EMA is bullish and is hinting a bullish price trend. MACD is also bullish and hinting at a bullish price trend. Only a price move below 1.1510 would negate our bullish view.
| Support | 1.1575 | 1.1530 | 1.1480 |
| Resistance | 1.1615 | 1.1655 | 1.1695 |
XAU/USD – Price was capped at the previous support turned resistance around $1727.25 overnight. The price has since declined to as low as $1703.84. Price has again move up and is trying to test the support turned resistance line at $1727.25 again. A break of this resistance is likely to send price higher to $1742. MACD and 20EMA are hinting at a bullish price trend. Stochastic is hinting at a possible price decline.
| Support | 1713.40 | 1702.25 | 1688.30 |
| Resistance | 1727.25 | 1745.30 | 1758.30 |
USD/CAD – Price broke below the Flag pattern and moved to a low of $1.3010 at the point of this writing. We are likely to see the decline continues to the next support level at 1.2970 in the next 24 hours. Only a move above 1.3075 would negate our bearish price view. Stochastic is moving lower and hinting at a price decline. 20EMA and MACD are both hinting at a possible bearish price trend.
| Support | 1.2970 | 1.2945 | 1.2890 |
| Resistance | 1.3020 | 1.3075 | 1.3145 |