Market Talk
– The U.S. dollar dipped against a basket of major currencies as better than expected earnings from Bank of America helped to boost risk appetite and dented the safe haven dollar. Sterling jumped on Monday after new UK finance minister did a U-turn.
– Risk sentiment improved overnight when Bank of America reported a smaller-than-expected drop in quarterly profit and said that its U.S. consumer client spending remained strong, even if it was slowing.
– The U.S. currency weakened 0.13% to 148.82 yen after pushing to 149.10 late on Monday for the first time since August 1990. Investors are also focused on whether the Bank of Japan would intervene as the Japanese currency falls to its weakest level against the dollar in 32 years.
– Sterling was last up at $1.1398, after earlier reaching $1.1440, the highest since October 5, after Britain’s new finance minister ditched most of the government’s “mini-budget”. The euro added 0.14% to $0.9859, and touched $0.98655 for the first time since Oct. 6.
– Gold prices moved little on Tuesday, hovering around key support levels as the dollar retreated from recent highs. Risk from looming Federal Reserve interest rate hike persisted and is likely to cap any rally in the yellow metal.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.5695. Stop at 0.5660 and profit target at 0.5795.
3. A weaker US dollar and an improvement in risk sentiment are driving demand away from the safe haven U.S. dollar.
4. Price has triggered a breakout with MACD hinting at a bullish price trend.
Fundamental Comments
1. A softer US dollar is weighing on the U.S. dollar.
2. A stronger US equity market and an improvement in risk sentiment are driving demand away from the safe haven U.S. dollar
Technical Comments
1. Price has moved above its recent high, hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.5680 | 0.5645 | 0.5595 |
| Resistance | 0.5730 | 0.5770 | 0.5815 |
Technical Overview
USD/JPY – Price reached a fresh 32-year high at 149.09 overnight and price is hovering close to this high on Tuesday’s morning. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a bullish price trend. 20EMA is pointing up with a steep slope, hinting at a strong bullish price trend. The next target lies at 150.00. We remain bullish but are cautious of BOJ intervention.
| Support | 148.65 | 147.90 | 147.35 |
| Resistance | 149.10 | 149.50 | 150.00 |
EUR/USD – Price broke above the previous support turned resistance line at 0.9855 and we could be on the way to test the 8-month downtrend channel line at 0.9300 in the next couple of days. Stochastic is rising but is inside the overbought zone. MACD is rising as well and is hinting at a bullish price trend. 20EMA is pointing up with a steep slope hinting at a strong bullish price trend.
| Support | 0.9845 | 0.9805 | 0.9755 |
| Resistance | 0.9895 | 0.9925 | 0.9965 |
GBP/USD – Last Friday’s decline was supported by the 20EMA and price has since moved higher. The rally continues and the rally reached a high of 1.1438 overnight. Stochastic and MACD are both showing a divergence with price, hinting at a possible price high in the making. However, 20EMA is still hinting at a bullish price trend. We are looking for a move back to 1.1140 in the next few days.
| Support | 1.1330 | 1.1275 | 1.1205 |
| Resistance | 1.1385 | 1.1440 | 1.1495 |
XAU/USD – Price reached a low of $1639.95 last Friday and we have seen a rally to $1668.15 overnight. Price continues to move within the high at $1668.15 to the low at $1639.95. We are likely to see price continues within this range for the next couple of days. Stochastic is near to the oversold zone but both MACD and 20EMA remains in a bearish price trend. Price will need to move above $1682 to negate the current bearish price trend.
| Support | 1646.65 | 1635.55 | 1626.60 |
| Resistance | 1658.55 | 1668.15 | 1682.35 |
USD/CAD – We had a buy call on this pair overnight but our call was wrong. Price has declined below the rising uptrend line, hinting at a start of a bearish price trend to 1.3500 in the next few days. However, stochastic is near to the oversold zone and is hinting at a limited downside. MACD remains bearish and is hinting at a price decline. 20EMA is pointing down and is also hinting at a bearish price trend.
| Support | 1.3650 | 1.3595 | 1.3565 |
| Resistance | 1.3700 | 1.3760 | 1.3800 |