Market Talk
– The U.S. dollar edged higher against a basket of currencies on Tuesday, shaking off some of the weakness of the previous session, but a revival in risk appetite in global financial markets kept a lid on the greenback’s gains.
– Data showed in September, the manufacturing sector remained on a reasonable footing despite the Federal Reserve’s efforts to limit demand through higher interest rates. Hawkish comments from Fed officials are also helping the greenback.
– The Japanese yen traded near a 32-year trough to the dollar at 149 yen, putting the major psychological barrier of 150 in focus and raising the possibility of the Bank of Japan doing more to support the battered currency after its first yen-buying intervention since 1998 on Sept. 22.
– The risk-sensitive New Zealand dollar rose about 0.63% to $0.5671, taking support from hotter-than-expected consumer inflation data which bolstered bets for further rate hikes. The Aussie edged up to $0.6320 and further away from its recent 2-1/2 year trough of $0.6170.
– Gold prices rose slightly on Wednesday, extending mild gains into a third session as pressure from the dollar abated, although hawkish signals from Federal Reserve officials prevented further gains.
Chart Focus XAG/USD – Silver
Key Points
1. Sell Silver recommendation.
2. Sell Silver at $18.70. Stop at 19.00 and profit target at $18.05
3. Expectations of rising U.S. interest rates and high inflation are both likely to aid the U.S. dollar
4. Price is capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Expectations of rising U.S. interest rates is likely to aid the U.S. dollar.
2. Data showed U.S. inflation will likely take much longer to cool than initially expected is also aiding the U.S. dollar
Technical Comments
1. Price is capped by the 20EMA, which is also hinting at a bearish price trend.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 18.50 | 18.25 | 17.95 |
| Resistance | 18.80 | 19.05 | 19.30 |
Technical Overview
USD/JPY – Price reached a fresh high at 149.41 at the time of this writing and price is hovering close to this high. 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 | 149.05 | 148.65 | 147.90 |
| Resistance | 149.50 | 150.00 | 150.50 |
EUR/USD – Price had a false break above the previous support turned resistance line at 0.9855 yesterday and has declined to a low of 0.9825 at the point of this writing. We are likely to see a test of the 20EMA support at 0.9810 in the next 24 hours. A break is likely to send price lower to 0.9675 in the next few days. Ability to hold above the support at 0.9810 is likely to send price higher to 0.9880. Stochastic is overbought but both 20EMA and MACD remain bullish.
| Support | 0.9810 | 0.9755 | 0.9705 |
| Resistance | 0.9855 | 0.9895 | 0.9925 |
GBP/USD – Price is currently testing the 20EMA line at 1.1285 after hitting a high of 1.1438 on Monday. If price break below the 20EMA support, price is likely to move lower to 1.1140. An ability to stay above the 20EMA support is likely to see another test of the high at 1.1438 again. We prefer the downside. Stochastic is declining and MCAD had earlier given a divergence warning of a potential high in price.
| Support | 1.1275 | 1.1225 | 1.1150 |
| Resistance | 1.1330 | 1.1385 | 1.1440 |
XAU/USD – Price is currently testing the previous Friday’s low at $1639.95. A break of this support is likely to send price lower to $1614.55 in the next few days. Ability to stay above this support could send price higher to $1660 in the next 24 hours. Stochastic has a bearish crossover and is hinting at a price decline. MACD is bearish and is hinting at a bearish price trend. 20EMA is pointing down and is hinting at a bearish price trend.
| Support | 1635.55 | 1626.50 | 1614.55 |
| Resistance | 1646.65 | 1658.55 | 1668.15 |
NZD/USD – We had a buy call on this pair overnight but price declined below our stop at 0.5660. We are out of this position with a loss of 35 pips. Stochastic is in the overbought zone and is hinting at a bearish price trend. However, MACD and 20EMA are both hinting of a bullish price trend. We think price is likely to test the 0.5775 resistance in the next 48 hours. Only a move below 0.5640 would negate our bullish view for the next 48 hours.
| Support | 0.5675 | 0.5645 | 0.5595 |
| Resistance | 0.5720 | 0.5760 | 0.5815 |