Market Talk
– The U.S. dollar holds on to its gain on Friday Asian hours, after climbing for a second straight session overnight, as investors bet on another strong U.S. non-farm payrolls report that should keep the Federal Reserve on an aggressive tightening path for some time.
– U.S. non-farm payrolls for September are due to be released on Friday, with economists forecasting a headline print of 250,000 new jobs, compared with 315,000 in August. Hawkish comment from Fed officials kept the greenback strong.
– A Reuters report on Thursday, citing provisional figures, that the German government expects Europe’s largest economy to slide into recession next year, contracting 0.4% as an energy crisis, rising prices and supply bottlenecks take their toll, sending the Euro below 0.9800.
– Against the yen, the dollar rose 0.3% to 145.05. It hit a session high of 145.13, not far from a 24-year peak of 145.90 yen touched on Sept. 22, which triggered a yen-buying intervention from Japanese authorities. Sterling was down 1.5% versus the dollar at $1.1151
– Gold prices moved little on Friday as investors awaited key U.S. nonfarm payrolls data for more cues on the world’s largest economy, but were headed for a second straight week of gains as pressure from the dollar eased.
Chart Focus EUR/AUD
Key Points
1. Sell EUR/AUD recommendation.
2. Sell EUR/AUD at 1.5310. Stop at 1.5340 and profit target at 1.5180.
3. Worries over a recession and interest rate differential are both likely to weigh on the single currency.
4. A possible Double Tops chart with MACD divergence is hinting at a price high and a likely decline.
Fundamental Comments
1. Worries over a recession in Europe are likely to weigh on the Euro.
2. Interest rate differential is in the Aussie favour.
Technical Comments
1. A possible Double Tops chart pattern is hinting at a price high.
2. MACD has a divergence hinting at a possible price high.
Key Levels
| Support | 1.5255 | 1.5195 | 1.5160 |
| Resistance | 1.5320 | 1.5385 | 1.5420 |
Technical Overview
USD/JPY – After a decline to the low at 143.51 on Tuesday, we have seen a price rally to 145.13 overnight. We think price is likely to continue higher to 145.30 again and later the 145.90 high. The bigger direction is likely to be decided by NFP tonight. Stochastic is already in the overbought zone. 20EMA and MACD are both hinting at a bullish price trend ahead. Watch the NFP for clues to the next direction.
| Support | 144.85 | 144.40 | 143.85 |
| Resistance | 145.30 | 145.90 | 146.30 |
EUR/USD – We had a buy call yesterday at 0.9885 but our call was wrong. Price has since declined below 0.9800 to a low of $0.9785 this morning. We are now expecting the decline to continue towards the previous support at 0.9750. Tonight NFP will also decide on the next price direction. Stochastic is declining but is close to the oversold zone. 20EMA his bearish while MACD is neutral at the moment.
| Support | 0.9785 | 0.9750 | 0.9695 |
| Resistance | 0.9860 | 0.9895 | 1.0050 |
GBP/USD – Price reached a high of 1.1495 on Wednesday 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. Price has since declined to a low of 1.1115. We are expecting the decline to continue lower to 1.1065 in the next few days. Stochastic is near to the oversold zone but both MACD and 20EMA are hinting at a strong bearish price trend.
| Support | 1.1140 | 1.1085 | 1.1015 |
| Resistance | 1.1190 | 1.1230 | 1.1270 |
XAU/USD – Price broke above a downtrend channel that has been in force since 8 March 2022 on Wednesday but the follow through has been weak. Price has not managed to move above the $1729 but has been declining lower. Price is currently supported by the 20EMA line at $1708.20. A break of this support is likely to send price lower to $1671.80. Stochastic is declining but both MACD and 20EMA are still hinting at a bullish price trend.
| Support | 1700.40 | 1687.70 | 1671.80 |
| Resistance | 1715.10 | 1729.00 | 1745.30 |
NZD/USD – Price reached a high of 0.5813 yesterday but a bearish Engulfing candlestick price pattern on the 4-hourly chart has sent price lower. Price is currently just above a 2-week uptrending price channel. A break of this channel is likely to send price lower to 0.5563 in the next few days. Stochastic is near to the oversold zone but both 20EMA and MACD are hinting at a bearish price trend.
| Support | 0.5635 | 0.5590 | 0.5560 |
| Resistance | 0.5675 | 0.5725 | 0.5760 |