Market Talk
– The U.S. dollar was little changed against a basket of major currencies on Friday, as jitters in currency and bond markets persisted aiding the safe haven dollar. Hawkish talk from Fed officials, worries about global recession and rising geopolitical risk also aided greenback.
– Data showed the number of Americans filing new claims for unemployment benefits fell to a five-month low last week as the labour market remains resilient despite the Fed’s aggressive interest rate hikes. A strong labour market gives the Fed more leeway to hike rate.
– The British pound posted its largest one-day percentage gain since March 2020 in volatile trading on Thursday, rallying from record lows hit on Monday, after the Bank of England conducted a second day of bond buying to stabilize financial markets.
– The euro reached a high of 0.9808 on Friday, after German inflation jumped to 10.9% in September which was higher than expectation, reinforcing the case for another 75 basis-point increase at the next European Central Bank policy meeting.
– Gold prices were largely flat on Friday Asian trades, as elevated Treasury yields and concerns over the U.S. Federal Reserve’s aggressive monetary policy pressured the yellow metal, but a drop in the U.S. dollar supported the precious metal.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9750. Stop at 0.9720 and profit target at 0.9850
3. U.S. Federal Reserve’s aggressive monetary policy and interest rate differential are both in the greenback favour.
4. A potential Double Bottom and a bullish MACD are both hinting at a possible price low.
Fundamental Comments
1. U.S. Federal Reserve’s aggressive monetary policy is likely to support the greenback
2. Interest rate differential is in the US dollar favour.
Technical Comments
1. A potential Double Bottom chart pattern is hinting at a price rally.
2. MACD is turning up and is hinting at a possible price bottom.
Key Levels
| Support | 0.9735 | 0.9695 | 0.9655 |
| Resistance | 0.9780 | 0.9805 | 0.9855 |
Technical Overview
USD/JPY – Price moved in a tight range for the past 24 hours, supported by rising US Treasury yields but capped by fears of a BOJ intervention again. We are likely to see price move in a tight range for today as well with the topside at 144.75 and the support at 143.90. Stochastic is in the middle of its range and MACD remains bullish. 20EMA is also hinting at a bullish price trend.
| Support | 144.40 | 143.80 | 143.30 |
| Resistance | 144.90 | 145.35 | 145.90 |
EUR/USD – Price rallied to a high of 0.9843 after reaching a low of 0.9535 on Wednesday after a divergence warning from the MACD indicator of a potential price low. If price holds above the support at 0.9760, we are likely to see a rally to the Fibonacci 161.8% price projection target at 0.9885. Stochastic is in the overbought zone but both MACD and 20EMA are hinting at a bullish price trend.
| Support | 0.9760 | 0.9715 | 0.9670 |
| Resistance | 0.9825 | 0.9860 | 0.9910 |
GBP/USD – Price reached a high of 1.1208 overnight and there is possibility to a price move to 1.1360 if price can hold above 1.0920. There is also a strong resistance at 1.1260 and a break of this level is the first sign of a rally to 1.1360. Although stochastic is in the overbought zone, 20EMA is hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. We prefer a move to 1.1360.
| Support | 1.1115 | 1.1060 | 1.1030 |
| Resistance | 1.1180 | 1.1230 | 1.1270 |
XAU/USD – Price has rallied to a high of $1674 at the point of this writing and we think price can continue on this rally to the Fibonacci 161.8% price projection target at $1692.15 in the next 48 hours. Stochastic is in the overbought zone and is hinting at a limited upside. However, both MACD and 20EMA are hinting at a bullish price trend. There is also strong resistance at $1684.95 which may cap this rally.
| Support | 1662.45 | 1652.55 | 1642.75 |
| Resistance | 1675.10 | 1684.85 | 1692.15 |
USD/CAD – We had a buy recommendation at 1.3675 yesterday which was filled when price declined to a low of 1.3655. Our view remains unchanged for today and we would recommend keeping stop at 1.3640 and profit order at 1.3790. Stochastic has moved off the oversold zone and is hinting at a price rally. MACD remains bullish. 20EMA is also hinting at a bullish price trend. All 3 indicators are hinting at a bullish price trend.
| Support | 1.3675 | 1.3635 | 1.3595 |
| Resistance | 1.3735 | 1.3775 | 1.3820 |