Market Talk
– The U.S. dollar eased against major peers on Tuesday, after the sharp decline in the U.S. service sector PMI stoked hopes that the Federal Reserve will slow its pace of rate hikes while Sterling gained after Rishi Sunak was set to become Britain’s next prime minister, seeking to restore stability to a country reeling from years of political and economic turmoil.
– The latest U.S. business activity report signalled that the U.S. Federal Reserve’s rate rises have started to take effect, and that the Fed might hike rates by less than the 75 basis points previously expected at its Nov 1-2 policy meeting.
– The Chinese yuan tumbled for the third straight session to trade close to its December 2007 lows after Xi Jinping’s new leadership team raised worries that a more powerful Party leadership will increasingly prioritize the state at the cost of the private sector.
– Sterling fell to 1.1279 against the greenback but remains well above its all-time low of $1.0327 seen last month. The euro was last up 0.18% at $0.9880. The Japanese yen was little changed at 148.85 after Friday BOJ intervention.
– Gold prices were pressured near key support levels on Tuesday as the dollar steadied from recent losses amid growing uncertainty over the path of U.S. monetary policy. While hopes of a potential dovish tilt by the Federal Reserve somewhat benefited gold prices last week, markets are still pricing at 75 basis points hike in next week.
Chart Focus XAU/USD – Gold
Key Points
1. Buy Gold recommendation.
2. Buy Gold at $1645. Stop at $1637 and profit target at $1682.
3. Expectation of a dovish Fed and a slower pace of rate hike are both likely to weight on the U.S. dollar.
4. Price is supported by the 20EMA and Fibonacci 50% correction point with MACD hinting at a bullish price trend.
Fundamental Comments
1. Latest US data is pointing to the Fed slowing its pace of rate hikes, which is likely to weigh on the US dollar.
2. A dovish tilt by the Fed is also likely to benefit gold
Technical Comments
1. Price is supported by the 20EMA as well as the Fibonacci 50% correction point.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1643.60 | 1634.45 | 1625.10 |
| Resistance | 1654.90 | 1670.60 | 1682.50 |
Technical Overview
USD/JPY – Price reached a high of 151.94 last Friday before a suspected BOJ intervention send price crashing to a low of 145.31. Price has recovered to 148.90 but is still below the 20EMA line. MACD remains bearish and is hinting at a price decline. Stochastic is in the middle of its range and is neutral at the moment. We are expecting price to move above the 20EMA and later in the week, back to test the previous high of 151.94.
| Support | 148.65 | 148.20 | 147.60 |
| Resistance | 149.05 | 149.70 | 150.30 |
EUR/USD – Price reached a high of 0.9898 this morning. The high was also the edge of the downtrend channel that started in early Feb of 2022. If price stays below 0.9898, we are likely to see a price decline to 0.9795 in the next 24 hours. Above 0.9898, price is likely to target 1.0000. Stochastic is in the overbought zone but both MACD and 20EMA are hinting at a bullish price trend.
| Support | 0.9855 | 0.9805 | 0.9750 |
| Resistance | 0.9900 | 0.9960 | 0.9995 |
GBP/USD – Price is currently sitting on the 20EMA after reaching a high of 1.1407 on early Monday morning. A break of the 20EMA is likely to send price lower to 1.1060. An ability to stay above 1.1270, we are likely to see a rally to 1.1407 again. Stochastic is near to the overbought zone and both MACD and 20EMA are bullish and hinting at a price rally in the next 48 hours.
| Support | 1.1270 | 1.1225 | 1.1170 |
| Resistance | 1.1325 | 1.1380 | 1.1410 |
XAG/USD – Price is currently near to the 20EMA after reaching a high of $19.46 on early Monday morning. If price can stay above the 20EMA, we are likely to see a continuation of the rally to $19.95 in the next 24 hours. If price falls below the 20EMA, it is likely to test the previous low at $18.20. Stochastic and 20EMA are both hinting at a bullish price trend. MACD remains bullish and we are in favour of a test to the previous high.
| Support | 19.00 | 18.60 | 18.20 |
| Resistance | 19.35 | 19.65 | 19.95 |
NZD/USD – Price is sitting just above the 20EMA and if it can stay above this support, we are likely to see another rally to test the previous high at 0.5800 again. However, a decline below the 20EMA support is likely to send price down to 0.5550. MACD remains bullish and is hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. Stochastic is neutral at the moment.
| Support | 0.5690 | 0.5655 | 0.5595 |
| Resistance | 0.5725 | 0.5765 | 0.5800 |