Market Talk
– The US dollar stood near recent peaks on Thursday as markets increased bets the Fed has more work to do in its aggressive tightening streak to curb red-hot inflation, while wariness of intervention kept the yen steady.
– U.S. producer prices fell for a second straight month in August as the cost of gasoline declined further, data showed on Wednesday, though that seemed cold comfort after Tuesday’s data already dashed hopes of cooling consumer prices.
– The Japanese currency hovered at 143.02 in Asia riding a boost from the strongest hints yet of possible market intervention by Japanese authorities. The kiwi jumped 0.2% to $0.6012, as official data showed gross domestic product (GDP) rose 1.7% in the June quarter, beating forecasts of a 1.0% gain
– The euro slipped 0.06% to $0.9972 despite some help from European Central Bank policymaker Francois Villeroy de Galhau who said on Wednesday that the bank’s neutral rate, estimated as below or close to 2% in nominal terms, could be reached by the end of the year. Sterling was down 0.05% to $1.1536.
– Gold prices slipped below the key $1,700 per ounce level, as expectations for steep rate hikes from the U.S. Federal Reserve took some sheen off the non-yielding precious metal.
Chart Focus GBP/USD
Key Points
1. Sell GBP/USD recommendation.
2. Sell GBP/USD at 1.1540. Stop at 1.1575 and profit target at 1.1460.
3. Expectation of an aggressive tightening by the Fed and an increase in US Treasury yields are both aiding the US dollar
4. Price is likely to be capped by the 20EMA with MACD hinting at a bearish price trend
Fundamental Comments
1. Expectation of an aggressive tightening by the Fed is aiding the US dollar.
2. An increase in US Treasury yield is also aiding the US dollar.
Technical Comments
1. Price is likely to be capped by the 20EMA, which is also hinting at a bearish price trend.
2. MACD is turning down which is a hint of a bearish price trend.
Key Levels
| Support | 1.1500 | 1.1460 | 1.1405 |
| Resistance | 1.1545 | 1.1575 | 1.1620 |
Technical Overview
USD/JPY – Price was again capped by the resistance at 144.99 and turned lower overnight. The decline reached 142.54 and we think this could be a low. Another rally is likely to bring price up to 144.99 again in the next 48 hours. 20EMA is hinting at a bullish price trend. Stochastic is turning up and is hinting at a bullish price trend. MACD is also bullish. Only a move below 142.50 would negate our bullish view for the next 1-2 days.
| Support | 143.25 | 142.75 | 142.20 |
| Resistance | 143.90 | 144.40 | 144.95 |
EUR/USD – The rally overnight was capped by the 20EMA and price has turned down again, reaching the lowest point this week at 0.9954. We think price will break below this support. We think price will go lower to the previous week low at 0.9863 again in the next 1-2 days. Stochastic is in the oversold zone but 20EMA is hinting at a strong bearish price trend. MACD is also hinting at a bearish price trend.
| Support | 0.9950 | 0.9910 | 0.9865 |
| Resistance | 1.0000 | 1.0055 | 1.0085 |
AUD/USD – Price reached a low of 0.6704 overnight, just above the previous week’s low of 0.6698. We are expecting price to be capped by the resistance at 0.6770. From this resistance, we are expecting price to decline past the previous week low of 0.6698 to 0.6647 in the next few days. Stochastic is rising from the oversold zone but is weak. Both 20EMA and MACD are hinting at a strong bearish price trend.
| Support | 0.6735 | 0.6695 | 0.6650 |
| Resistance | 0.6770 | 0.6815 | 0.6860 |
XAU/USD – Price broke below the low of 1 September 2022 at $1688.50 this morning. We are expecting the decline to continue lower to the 3 July low at $1674.75 in the next 48 hours. Stochastic is in the oversold zone but 20EMA is hinting at a strong bearish price trend. MACD is also hinting at a bearish price trend. We prefer to go with the trend indicators. Only a move above $1708 would negate our bearish view.
| Support | 1680.70 | 1674.75 | 1665.15 |
| Resistance | 1697.35 | 1708.25 | 1719.95 |
EUR/JPY – We had a sell call yesterday at 143.75 but price only reached a high of 143.56 and our entry order was not filled. Price declined to a low of 142.28 overnight and there was a Hammer candlestick price pattern hinting at a possible price low. Stochastic is also turning up from the oversold zone but both 20EMA and MACD are both hinting at a bearish price trend. We think price is likely to rally to 143.50 again in the next 24 hours.
| Support | 142.75 | 142.30 | 141.75 |
| Resistance | 143.15 | 143.75 | 144.45 |