Market Talk
– The US dollar weakened and stayed not far from a two-week low ahead of key U.S. inflation data on Tuesday that might allow the Federal Reserve to consider whether to slow the pace of rate hikes at its Sept. 21 policy meeting with market pricing in a 75 basis point hike at the next FOMC.
– The greenback was flat at 142.71 yen, following its retreat from a 24-year high at 144.99 from Wednesday as U.S. long-term 10-year Treasury yields paused at around 3.315% in Tokyo trading after an ascent that took it to the highest since mid-June at 3.365% last week.
– The euro jumped to a more than three-week peak versus the dollar on Monday as European Central Bank officials pushed the case for further aggressive monetary tightening and hiked rate by 75 basis points. Sterling rose to $1.1648, it highest this month.
– The Australian and New Zealand dollars struggled to extend a rally on Monday, after outperforming their peers in the previous session. The Aussie was off 0.2% at $0.6832, after surging 1.4% to as high as $0.6877 in the previous session. The kiwi dollar was mostly unchanged at $0.6108, having also climbed 0.9% on Friday.
– Gold prices inched higher to $1,718.83 an ounce on Monday, retaining mild gains from last week as the dollar fell further from 20-year highs ahead of key U.S. inflation data due on Tuesday.
Chart Focus AUD/USD
Key Points
1. Buy AUD/USD recommendation.
2. Buy AUD/USD at 0.6810. Stop at 0.6780 and profit target at 0.6890
3. Recent U.S. dollar weakness and Aussie bond yields are both weighing on the U.S. dollar.
4. Price is likely to be supported by the 20EMA with the MACD hinting at a bullish price trend
Fundamental Comments
1. The greenback weakness ahead of inflation data is aiding the Aussie dollar.
2. Aussie 10-year bond yields have moved higher than the US 10-year Treasury yields aiding the Aussie dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6820 | 0.6785 | 0.6735 |
| Resistance | 0.6855 | 0.6890 | 0.6925 |
Technical Overview
USD/JPY – Price reached a low of $141.49 last Friday which is just above the Fibonacci 62% correction point from $139.05 to the high at $144.99 at $141.45. Price has crossed above the 20EMA line which is hinting at a bullish trend. Stochastic is rising and hinting at a price rally. MACD may be about to turn bullish. If the price able to sustain above the 20EMA at $142.94, we may see a rally to the resistance at 144.35 the next 48 hours.
| Support | 142.90 | 142.50 | 141.90 |
| Resistance | 143.50 | 144.15 | 144.60 |
EUR/USD – Price gapped up and moved to a high at $1.0094 at the point of this writing. Stochastic is in the overbought zone and hinting at a limited upside. Both 20EMA and MACD are pointing higher and hinting at a bullish price trend. Price could be on the way to testing the last week high at $1.0145 in the 24 hours. However, a break below $1.0015 would negate our bullish view for the next 24 hours.
| Support | 1.0075 | 1.0045 | 1.0015 |
| Resistance | 1.0115 | 1.0145 | 1.0185 |
GBP/USD – Price reached a low of $1.1490 last Friday and we saw a rebound to $1.1636 this morning. Price is currently attempting to break above the last week’s high at $1.1648. If the price is able to stay above $1.1600, we may see the continuation of the rally to the next higher resistance at $1.1648 or to 1.1695. Stochastic is in the overbought zone, while both 20EMA and MACD remain bullish and are hinting at a bullish price trend.
| Support | 1.1600 | 1.1550 | 1.1515 |
| Resistance | 1.1650 | 1.1695 | 1.1740 |
XAU/USD – Price attempted to break above the resistance at $1727.25 but was unsuccessful. Price declined below the 20EMA support at $1714.30, hinting at a change of trend. Stochastic is moving lower and hinting at a price decline. MACD remains bullish but looks weak at the moment while 20EMA is neutral at the moment. If the price is hold above $1713.40 support, we are likely to see the price test the resistance at $1727.25 again in the next 24 hours.
| Support | 1711.10 | 1697.20 | 1688.55 |
| Resistance | 1727.25 | 1745.30 | 1758.30 |
XAG/USD – We had a sell recommendation last Friday which was filled at $18.90 with a stop at $19.20 and a profit target at $18.40. Price has moved to a low of $18.56 which is near to our profit target but rebounded to a high of $18.99 this morning. Stochastic remains overbought and is hinting at a limited upside but both 20EMA and MACD remain bullish. We would recommend keeping stop at $19.20 and lifting profit target higher to $18.58.
| Support | 18.95 | 18.40 | 18.05 |
| Resistance | 19.20 | 19.60 | 19.90 |