Market Talk
– The dollar fought for a footing in choppy trade on Thursday, with support from upbeat U.S. data and hawkish policymaker comments, while the prospect of higher energy prices helped exporters’ currencies and weighed on those of importers.
– U.S. services industry posted another month of expansion in September. Data showed labour market figures were solid and the trade deficit narrowed. Hawkish comments from Fed officials who reiterated policymakers’ focus on inflation fighting and dismissed market hopes for rate cuts in 2023 also boosted the greenback.
– The euro has now made two unsuccessful attempts to regain parity this week but was last traded below parity at $0.9916. Sterling’s rebound from record lows has paused just below $1.15. Sterling last bought $1.1367.
– The yen, which has been held steady by the risk of further Japanese intervention, sat at 144.57 per dollar. The New Zealand dollar extended a post rate-hike bounce on Thursday and dragged its Australian cousin along for the ride.
– Gold prices were little changed on Thursday at $1720, pausing from a recent rally after hawkish comments from Federal Reserve officials and signs of strength in the U.S. economy dented expectations for a dovish pivot by the central bank.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 0.9885. Stop at 0.9855 and profit target at 0.9995
3. Expectations of a jumbo rate hike and an improvement in risk sentiment are both aiding the Euro.
4. Price is supported by the 20EMA with both MACD and 20EMA hinting at a bullish price trend.
Fundamental Comments
1. Expectations of a jumbo rate hike later this morning are aiding the Euro.
2. An improvement in risk sentiment is weighing on the U.S. dollar.
Technical Comments
1. Price is supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.9895 | 0.9860 | 0.9825 |
| Resistance | 0.9935 | 0.9995 | 1.0050 |
Technical Overview
USD/JPY – After a decline to the low at 143.51 on Tuesday, we have seen a price rally to 144.84 overnight. We think price is likely to continue higher to 145.00 again in the next 1-2 days ahead. However, fear of an intervention is likely to keep this pair in a range of 143.50 to 145.00 until the NFP on Friday. Stochastic is rising but both MACD and 20EMA are neutral and hinting at a sideways range movement.
| Support | 144.40 | 143.85 | 143.45 |
| Resistance | 144.85 | 145.30 | 145.90 |
XAG/USD – We had a buy call at 20.35 yesterday but price fell to a low of $19.93, taking out our stop at $19.95. Our view remains unchanged from yesterday. Price has since moved higher to $20.85 and we are expecting the rally to continue to $21.25 in the next 48 hours. Stochastic is neutral. MACD and 20EMA are hinting at a bullish price trend. Only a price move below $19.93 would negate our bullish view.
| Support | 20.50 | 20.15 | 19.70 |
| Resistance | 20.90 | 21.20 | 21.55 |
GBP/USD – Price reached a high of 1.1495 overnight but that high was accompanied by a divergence warning from the MACD indicator. This is a hint of a possible price peak and a decline ahead. The decline is currently supported by the 20EMA at 1.1285. Stochastic is declining and hinting at a price decline. Both MACD and 20EMA have yet to turn bearish. We think that price is likely to move lower to 1.1065 in the next few days.
| Support | 1.1305 | 1.1270 | 1.1225 |
| Resistance | 1.1360 | 1.1420 | 1.1465 |
XAU/USD – Price broke above a downtrend channel that has been in force since 8 March 2022 yesterday. This breakout is likely to send price to test the previous high resistance at $1734.85. Stochastic is close to the overbought zone and is hinting at a limited upside. However, both 20EMA and MACD are hinting at a strong bullish price trend. We are also looking at a test of $1734.85 but a move below $1700 would negate our bullish view.
| Support | 1719.80 | 1702.55 | 1687.70 |
| Resistance | 1729.00 | 1745.30 | 1758.20 |
USD/CAD – We have a sell recommendation at 1.3635 on Tuesday and yesterday, we had recommended lowering stop to cost at 1.3635 while keeping profit order at 1.3460. Price reached a high of 1.3695 overnight and our stop at cost was triggered. However, our view remains unchanged and we are looking at a price decline to 1.3500. Stochastic is rising but both MACD and 20EMA are bearish and hinting at a bearish price trend.
| Support | 1.3555 | 1.3505 | 1.3455 |
| Resistance | 1.3610 | 1.3650 | 1.3695 |