Market Talk
– The U.S. dollar stayed near a three-week low versus major peers on Wednesday as more signs of economic weakness in the United States fanned speculation about a less hawkish Federal Reserve. Data overnight showed that U.S. home prices sank in August amid recent signs that Fed rate increases are already working to slow the world’s biggest economy.
– Sterling eased to $1.1448, but hung close to the six-week peak of $1.1500, a level last seen on Sept. 15, reached on Tuesday after new British Prime Minister Rishi Sunak pledged to lead the country out of an economic crisis.
– The euro also remained near a six-week high, trading less than half a cent from parity with the greenback. The European Central Bank decided policy on Thursday and is widely expected to raise rates by 75 basis points.
– The greenback reached a 32-year top at 151.94 yen on Friday, but was then beaten back as far as 144.55 amid two bouts of suspected Bank of Japan intervention either side of the weekend. The yen was last trading at 148.10.
– Gold prices hovered near key support levels at $1650 on Wednesday. The near-term outlook for gold remains subdued, with markets pricing in a nearly 100% chance of a 75 basis point interest rate hike by the Fed next week.
Chart Focus USD/CHF
Key Points
1. Sell USD/CHF recommendation.
2. Sell USD/CHF at 0.9940. Stop at 0.9975 and profit target at 0.9850
3. A decline in US Treasury yields and more signs of economic weakness are both weighing on the U.S. dollar.
4. Price has broken below a short-term trendline with MACD hinting at a bearish price trend.
Fundamental Comments
1. As more signs of economic weakness in the U.S. fanned speculation about a less hawkish Federal Reserve, weighing on the U.S. dollar.
2. A decline in US Treasury yields is also weighing on the U.S. dollar.
Technical Comments
1. Price has broken below a short-term trendline, indicating a bearish price trend.
2. MACD is bearish and hinting at a bearish price trend.
Key Levels
| Support | 0.9915 | 0.9875 | 0.9840 |
| Resistance | 0.9955 | 1.0000 | 1.0030 |
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. The recovery has so far been capped by the 20EMA and as long as price stays below the 20EMA line, we are likely to see a decline to 147.25 in the next 1-2 days. Stochastic is hinting at a price decline. MACD is bearish and is hinting at a bearish price trend. Only a price move above the 20EMA will negate the bearish price trend.
| Support | 147.80 | 147.25 | 146.60 |
| Resistance | 148.40 | 148.90 | 149.40 |
EUR/USD – Price broke above a downtrend channel that had been in place since February 2022, changing the chart outlook to bullish. We are likely to see price test the 4 October 2022 high at 0.9998 in the next 24 hours. Stochastic is in the overbought zone and is hinting at a limited upside. However, both MACD and 20EMA are hinting at a strong bullish price trend. A move back into the channel will negate our bullish view and indicate a false breakout.
| Support | 0.9945 | 0.9900 | 0.9855 |
| Resistance | 1.0000 | 1.0050 | 1.0090 |
GBP/USD – Price reached a high at 1.1498, which was the same as the high on 5 October. Price is currently trying to push above this resistance and a break is likely to send price higher to 1.1740 in the next few days. Stochastic has yet to reach the overbought zone and hinting there is room for upside. MACD and 20EMA are both bullish and hinting at a bullish price trend. Only a price move below 1.1240 would negate our bullish view for the next few days.
| Support | 1.1430 | 1.1390 | 1.1320 |
| Resistance | 1.1500 | 1.1590 | 1.1635 |
XAU/USD – We had a buy recommendation at $1645 yesterday which was filled when price declined to a low of $1638.10. Stochastic is moving higher and is hinting at a price rally. MACD is also hinting at a bullish price trend. As long as price stays above the 20EMA, we see price moving up to $1682. We would recommend keeping profit target at $1682 and lifting stop loss order to cost at $1645.
| Support | 1649.65 | 1638.10 | 1627.60 |
| Resistance | 1662.15 | 1671.70 | 1682.50 |
NZD/USD – Price managed to stay above the 20EMA line overnight and is currently moving higher to test the previous high at 0.5800. Stochastic is close to the overbought zone, hinting there could be more upside ahead. MACD is bullish and hinting at a bullish price trend. 20EMA is pointing higher and hinting at a strong bullish price trend. Above 0.5800, the next resistance lies at 0.5925.
| Support | 0.5765 | 0.5725 | 0.5690 |
| Resistance | 0.5800 | 0.5855 | 0.5885 |