Market Talk
– The U.S. dollar nursed losses on Tuesday ahead of U.S. inflation data that could show some signs of softening. After falling 0.7% overnight, the largest daily decline since August, the dollar index stood firm at 108.2.
– U.S. inflation figures are due at 12.30 GMT and the consensus is for the core inflation rate last month to have risen 0.3% month-on-month, the same as in July. Recent dollar gains have slowed on market expectations that peaking inflation will mean less aggressive interest rate hikes from the Federal Reserve.
– The euro rose 0.08% to $1.0130, after hitting a nearly one-month high of $1.0198 in the previous session and gaining 0.76% overnight. Sterling edged up 0.07% to $1.1691, after rising 0.86% overnight, the largest daily increase in a month.
– The yen likewise eked out gains and last traded 0.2% higher at 142.53 per dollar, helped slightly by talk of intervention from Japanese officials. The New Zealand dollar fell 0.2% ahead of current account and GDP data due later this week.
– Gold prices moved little to $1,725.70 on Tuesday but held on to recent gains as investors awaited more signs that U.S. inflation was moving away from peaks hit this year.
Chart Focus USD/JPY
Key Points
1. Sell USD /JPY recommendations.
2. Sell USD /JPY at 142.75. Stop at 143.05 and profit target at 141.40.
3. Market expects U.S inflation is peaking which may weigh on the greenback.
4. Price is likely to be capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Market expects that U.S inflation is peaking which will mean less aggressive interest rate hikes from the Federal Reserve.
2. Easing in U.S inflation may weigh on the greenback.
Technical Comments
1. Price is likely to be capped by the 20EMA, which is also hinting at a bearish price trend.
2. MACD remains bearish and hinting at a bearish price trend.
Key Levels
| Support | 142.15 | 141.85 | 141.40 |
| Resistance | 142.85 | 143.50 | 144.15 |
Technical Overview
EUR/USD – Price is consolidating in the range from $1.0115 to $1.0145 after reaching a high of $1.0197 yesterday. Stochastic is declining and hinting at a price decline. However, both 20EMA and MACD remain bullish and hinting at a bullish price trend. We see price may have a correction to $1.0085 before the rally resume. However, a break below this level at $1.0085 would negate our bullish view.
| Support | 1.0115 | 1.0085 | 1.0055 |
| Resistance | 1.0160 | 1.0200 | 1.0240 |
GBP/USD – Price is consolidating and forming a potential Pennant pattern which is a continuation bullish pattern. While stochastic is in the overbought zone and is hinting at a limited upside potential, both 20EMA and MACD remains bullish and hinting at a bullish price trend. If the price can break out from the Pennant pattern, we are likely to see the price rally and test the previous support turned resistance at $1.1740.
| Support | 1.1665 | 1.1620 | 1.1575 |
| Resistance | 1.1740 | 1.1800 | 1.1850 |
XAU/USD – Price broke above the resistance of $1727.25 yesterday but failed to sustain and declined to a low of $1720.46 this morning. Stochastic is in the middle of its range and is neutral now. Price is still supported above the 20EMA which is hinting at a bullish price trend. MACD is also bullish and is hinting at a bullish price trend. Price may need to break and sustain above the $1727.25 resistance to regain its upside momentum.
| Support | 1711.10 | 1697.20 | 1688.55 |
| Resistance | 1727.25 | 1745.30 | 1758.30 |
XAG/USD – We had a short position last Friday at $18.90. Yesterday we kept our stop at $19.20 but lifted our profit target higher to $18.58. Unfortunately, the price rallied above $19.20 to a high of $19.98 overnight and we are out of this position with a $0.30 loss. Price is likely to have a correction to the support at $19.40 before it continues to move higher. Stochastic is in the overbought zone but both 20EMA and MACD are hinting at a bullish price trend.
| Support | 19.40 | 18.95 | 18.40 |
| Resistance | 19.90 | 20.35 | 20.80 |
AUD/USD – We had a buy recommendation yesterday at $0.6810 which was not filled as the lowest price yesterday are only $0.6822 before the price started to rally to a high at $0.6898. Stochastic is hinting at a bearish price trend but both 20EMA and MACD remain bullish and hinting at a bullish price trend. We are cautious as the price has reached the Fibonacci 61.8% resistance level at $0.6890, from $0.6698 to the high at $0.7008.
| Support | 0.6855 | 0.6820 | 0.6785 |
| Resistance | 0.6890 | 0.6925 | 0.6955 |