Market Talk
– The U.S. dollar slid against major currencies as the yield on the benchmark U.S. 10-year Treasury fell after U.S. data showed job openings fell in August by the most in nearly 2-1/2 years in August, in a sign the Fed’s mission to tame inflation by hiking rates was working to slow the economy.
– The kiwi leapt as much as 1.3% before falling back to flat at $0.5731 after the Reserve Bank of New Zealand lifted interest rates to a seven-year high and promised more pain to come as it struggles to cool red-hot inflation in an over-stretched economy.
– The hawkish commentary contrasted with a dovish turn by the Reserve Bank of Australia which down shifted to a quarter-point hike at its policy meeting on Tuesday. Rate rise in New Zealand poured cold water over hopes for a pause or slowdown in the U.S. Federal Reserve’s intentions for aggressive hikes.
– Sterling’s rally faltered as it fell 0.5% to $1.1425. Having recovered nearly 11% from week-ago record lows, sterling’s rally seems to be running out of steam. The euro fell 0.2% to $0.9963 but remained near a two-week high.
– Gold prices rose to a high of $1729.03 overnight, as the dollar and U.S. Treasury yields retreated, with investors hoping that the U.S. Federal Reserve could adopt a less aggressive approach to rate hikes.
Chart Focus XAG/USD – Silver
Key Points
1. Buy Silver recommendation.
2. Buy Silver at $20.35. Stop at $19.95 and profit target at $21.25
3. An improvement in risk sentiment and a decline in US Treasury yields are both weighing on the U.S. dollar.
4. Price is supported by the 20EMA as well as the Fibonacci 38% correction point with MACD hinting at a bullish price trend.
Fundamental Comments
1. A decline in benchmark 10-year yield is weighing on the U.S. dollar.
2. An improvement in risk sentiment is weighing on the safe haven U.S. dollar.
Technical Comments
1. Price is supported by the 20EMA as well as the Fibonacci 38% correction point of the rally.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 20.60 | 20.25 | 19.90 |
| Resistance | 20.90 | 21.20 | 21.55 |
Technical Overview
USD/JPY – Price had declined to a low of 143.51 overnight and could be moving lower to 142.95 in the next 48 hours if price remains capped by the 20EMA which is hinting at a bearish price trend. MACD has also turned bearish and is hinting at a bearish price trend. Stochastic is close to the oversold zone and is hinting at a limited downside ahead. Only a move above the 20EMA resistance at 144.55 would negate our bearish view.
| Support | 143.85 | 143.45 | 142.95 |
| Resistance | 144.30 | 144.70 | 145.30 |
EUR/USD – We have a buy recommendation at 0.9780 on Monday and yesterday we had left stop at at 0.9745 and profit order at 0.9880. Price rose to a high of 0.9999 overnight and we are out of this position with a 100 pips profit. Stochastic is in the overbought zone and is hinting at a limited upside. However both MACD and 20EMA are hinting at a strong bullish price trend. We see price moving higher to 1.0050 in the next 1-2 days.
| Support | 0.9950 | 0.9895 | 0.9845 |
| Resistance | 1.0000 | 1.0050 | 1.0105 |
GBP/USD – Price climbed to a high of 1.1498 this morning but the rally seems exhausted. There was also a divergence warning from the MACD indicator hinting at a possible price high. Stochastic is also in the overbought zone. However, 20EMA is hinting at a strong bullish price trend. We think price may have reached a high and we are looking at a decline back to 1.1065 in the next few days. If price goes above 1.1498, it could be heading towards 1.1550.
| Support | 1.1465 | 1.1405 | 1.1365 |
| Resistance | 1.1500 | 1.1550 | 1.1590 |
XAU/USD – Price broke above a downtrend channel that has been in force since 8 March 2022. This reversal means price has probably reached a low at $1614.58 and we are likely to see a price move to the Fibonacci 38% correction point of the previous decline at $1788.65 in the next couple of weeks. The immediate resistance lies at $1735 and this could be tested in the next 24 hours. Stochastic is in the oversold zone but both MACD and 20EMA are hinting at a strong bullish price trend.
| Support | 1717.25 | 1702.55 | 1687.40 |
| Resistance | 1729.00 | 1745.30 | 1758.20 |
USD/CAD – We have a sell recommendation at 1.3635 yesterday which was filled when price advanced to a high of 1.3663. Our view remains the same as yesterday. We would recommend lowering stop to cost at 1.3635 while keeping profit order at 1.3460. Stochastic is in the oversold zone and is hinting at a limited downside. However both MACD and 20EMA are hinting at a bearish price trend.
| Support | 1.3500 | 1.3455 | 1.3420 |
| Resistance | 1.3555 | 1.3605 | 1.3660 |