Market Talk
– The U.S. dollar sank more than 1% against a basket of peers on Wednesday as weakening economic data firmed views that the Federal Reserve will slow the pace of its rate hiking cycle, sending the euro back above parity with the greenback for the first time in a month.
– Sterling was at $1.1645, holding overnight gains in early Asia trade, helped by the British government’s delay in the announcement of its plan to repair the country’s public finances to Nov. 17, on the basis of ensuring that the programme reflected the latest and most accurate economic forecasts.
– The euro peaked at $1.0094, its highest since Sept. 13. The main focus on Thursday will be a rate decision by the European Central Bank, with markets expecting it to deliver a 75 basis points rate hike.
– The Bank of Canada announced a smaller-than-expected interest rate hike and said it was getting closer to the end of its historic tightening campaign. The Canadian dollar last traded at 1.3575 per U.S. dollar in Asian trades on Thursday.
– Gold prices traded near their highest level in two weeks on Thursday, briefly hitting an over two-week high of $1,675.03, with the yellow metal rallying as the dollar retreated on growing expectations that the Federal Reserve will soften its hawkish stance this year.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation.
2. Sell USD/CAD at 1.3610. Stop at 1.3645 and profit target at 1.3505
3. Expectations that the Federal Reserve will slow the pace of its rate hiking cycle and a rise in crude oil price are both aiding the Canadian dollar.
4. Price is likely to be capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Expectations of a slower pace of rate hikes are weighing on the U.S. dollar.
2. Interest rate was hiked overnight by the Bank of Canada aiding the Canadian dollar.
Technical Comments
1. Price is likely to be capped by the 20EMA which is hinting at a bearish price trend.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 1.3535 | 1.3495 | 1.3460 |
| Resistance | 1.3595 | 1.3635 | 1.3675 |
Technical Overview
USD/JPY – Price was capped below the 20EMA line and we saw a bigger than expected decline to a low of 145.31 this morning. Both MACD and stochastic indicators are not giving any divergence warnings, hinting that price could go lower. 20EMA is also pointing down with a steep slope, hinting at a strong bearish price trend. The next support level is at 144.70 and price could be heading there in the next 24 hours.
| Support | 144.75 | 144.10 | 143.50 |
| Resistance | 145.40 | 146.00 | 146.60 |
EUR/USD – Price broke above a downtrend channel that has existed since early February 2022 on Tuesday and has been climbing since that breakout. Price has reached a high of 1.0093 this morning and looks like it will continue higher to 1.0185 in the next 48 hours. Stochastic is in the overbought zone but both MACD and 20EMA are hinting at a strong bullish price trend. Only a price move back into the downtrend channel will negate the current bullish price trend.
| Support | 1.0045 | 0.9995 | 0.9945 |
| Resistance | 1.0095 | 1.0160 | 1.0195 |
GBP/USD – Price continues to climb, reaching a high of 1.1645 this morning. Stochastic is in the overbought zone and MACD is bullish and hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. We think price should continue its climb higher to the Fibonacci 161.8% price projection target at 1.1740 in the next 1-2 days. A price decline below 1.1430 would indicate a top in place and a bearish price trend.
| Support | 1.1540 | 1.1495 | 1.1430 |
| Resistance | 1.1605 | 1.1645 | 1.1695 |
XAU/USD – We had a buy recommendation at $1645 from Tuesday which was filled. Yesterday, we had left stop at cost at $1645 and profit order at $1682. MACD is showing possible divergence with price, warning of a possible price high. Stochastic is close to the overbought zone, hinting at a limited upside. However, 20EMA remains bullish. For today, we would recommend lifting stop higher to $1648 and also lower profit order to $1675.
| Support | 1660.55 | 1649.65 | 1637.55 |
| Resistance | 1674.80 | 1685.35 | 1694.05 |
USD/CHF – We had a sell call at 0.9940 yesterday but price only reached a high of 0.9927 and our entry order was not filled. Price had declined overnight to a low of 0.9840 and we think this may be the low. MACD is also hinting with divergence of a possible price low while stochastic is in the oversold zone and hinting at a limited downside. 20EMA remains bearish. If price can move above the 20EMA line, it will confirm the low.
| Support | 0.9840 | 0.9805 | 0.9775 |
| Resistance | 0.9885 | 0.9925 | 0.9960 |