Market Talk
– The U.S. dollar gained against its major peers after a U.S. consumer spending data increased faster than expected. Friday’s data showed inflationary pressures remained elevated and were likely to invite more rate hike pain from the Federal Reserve.
– The euro remained near the previous week high, supported by expectations for another jumbo European Central Bank rate hike later this month following a red-hot inflation data that showed euro zone inflation zoomed past forecasts to hit a new record high of 10.0% in September.
– Sterling also remained near the previous week high on Monday Asian trading. The pound had rebounded strongly at the end of last week from 1.0325 when the Bank of England bought gilts to restore order after new Prime Minister Liz Truss’s tax cutting plans triggered financial chaos.
– The yen breached the key level of 145 a dollar on Monday despite Finance Minister Shunichi Suzuki’s comments that Japan stood ready for “decisive” steps in the foreign exchange market if excessive yen moves persisted. The Australian and New Zealand dollars gained ground on Monday ahead of expected rate hikes from their respective central banks later in the week.
– Gold prices steadied above a major support level on Monday as growing risks of an economic recession spurred some safe haven demand for the yellow metal. Bullion prices also benefited from an easing dollar, which retreated from 20-year highs.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 0.9780. Stop at 0.9745 and profit target at 0.9880.
3. A red-hot Euro inflation data and expectations for another jumbo ECB rate hike are aiding the single currency.
4. Price is supported by the 20EMA with MACD hinting at a bullish price trend.
Fundamental Comments
1. Expectations for another jumbo European Central Bank rate hike are aiding the single currency.
2. A red-hot Euro inflation data is also aiding the single currency.
Technical Comments
1. Price is supported by the 20EMA which is hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend
Key Levels
| Support | 0.9775 | 0.9735 | 0.9690 |
| Resistance | 0.9825 | 0.9855 | 0.9885 |
Technical Overview
USD/JPY – Price moved to a high of 145.30 this morning and has remained above the support at 144.90. We think price is likely to continue higher to the previous high at 145.90, where there is likely to be a BOJ intervention. Stochastic is hinting at a price rally. 20EMA is also hinting at a bullish price trend. MACD remains bullish but is flat. We remain bullish for 145.90 but remain cautious of a BOJ intervention.
| Support | 144.90 | 144.40 | 143.80 |
| Resistance | 145.30 | 145.90 | 146.35 |
USD/CHF – We had a buy call at 0.9750 on Friday but price only reached a low of 0.9758 and our entry order was not filled. Price has since moved higher to 0.9884 at the point of this writing. Stochastic is rising and hinting at a price rally. 20EMA is also hinting at a bullish price trend but MACD is neutral at the moment. We think price could continue higher to the previous week high at 0.9965 in the next few days. A move below 0.9800 would negate our bullish view.
| Support | 0.9855 | 0.9805 | 0.9780 |
| Resistance | 0.9900 | 0.9935 | 0.9965 |
GBP/USD – Price reached a high of 1.1280 on Monday morning and looks like it can continue to move higher to the next resistance at 1.1365 in the next couple of days. Stochastic remained strong despite being in the overbought zone. MACD remains bullish and is hinting at a bullish price trend. 20EMA is also hinting at a strong bullish price trend. Only a move below 1.0925 would negate our bullish view.
| Support | 1.1165 | 1.1090 | 1.1020 |
| Resistance | 1.1225 | 1.1275 | 1.1335 |
XAU/USD – Price reached a high of $1675 on Friday which was also the Fibonacci 127% of the price move from $1614.60 to $1662.08. MACD is showing a divergence, hinting at a possible price high. Stochastic is also turning down from the overbought zone. However, 20EMA remains bullish and is hinting at a bullish price trend. We think price has reached a high and a decline to $1641.25 is likely in the next couple of days.
| Support | 1659.65 | 1641.25 | 1632.85 |
| Resistance | 1668.25 | 1677.80 | 1692.15 |
USD/CAD – We had a buy recommendation at 1.3675 on Thursday which was filled. On Friday, we had recommended keeping stop at 1.3640 and profit order at 1.3790. Price reached a high of 1.3833 last Friday and our profit order was filled. We are out with a 115 pips profit. MACD is hinting with divergence of a possible price high. Stochastic is in the overbought zone but 20EMA remained bullish. We think price may have reached a high and a decline to 1.3595 is likely.
| Support | 1.3730 | 1.3690 | 1.3655 |
| Resistance | 1.3780 | 1.3820 | 1.3850 |