Market Talk
– The U.S. dollar regained its footing on Thursday ahead of key U.S. inflation data due later in the day, as results so far for the U.S. midterm elections showed little evidence of a “red wave” resounding Republican victory that some expected, leaving investors to focus on upcoming inflation data.
– The U.S. consumer price index (CPI) report for October is due at 1330 GMT. Economists expect core inflation to decline both on a monthly and annual basis. Data is likely to determine the Fed likely action after the greenback lost some steam over the past few weeks on hopes that the Fed could scale back on its hefty interest rate hikes as soon as December.
– The greenback surged overnight against the Japanese yen, pushing the yen away from a roughly two-week high hit in the previous session. The yen last bought 146.28 per dollar. The Aussie was last up 0.05% at $0.6434 while the kiwi gained 0.11% to $0.5890. Both had fallen over 1% overnight.
– The euro hobbled just above parity at $1.0016, some distance from its near-two-month high hit earlier in the week at 1.0095. Sterling last stood at $1.1360, after sliding 1.6% overnight.
– Spot gold was flat at $1,706.76 per ounce on Thursday as cautious investors held to the sidelines and awaited key U.S. inflation report to gauge the size of the Federal Reserve’s future interest rate hikes.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.0015. Stop at 0.9985 and profit target at 1.0090
3. A climb in German bond yields and expectations of further European Central Bank tightening are both aiding the Euro dollar.
4. Price is supported by the 20EMA with MACD hinting at a bullish price trend
Fundamental Comments
1. A climb in German bond yields is aiding the Euro dollar.
2. Expectations of further European Central Bank tightening is also aiding the Euro dollar.
Technical Comments
1. Price is supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.0015 | 0.9970 | 0.9925 |
| Resistance | 1.0045 | 1.0095 | 1.0120 |
Technical Overview
USD/JPY – Price declined overnight to a low of 145.15. This is close to the previous low of 145.09 two weeks ago. Price managed to hold above this support and we saw a rally to 146.77. Currently, price is capped by the 20EMA line and if price is able to move above, we are likely to see another rally to 147.60 in the next 1-2 days. Stochastic is rising and hinting of a price rally but both MACD and 20EMA remains bearish,
| Support | 145.90 | 145.45 | 145.00 |
| Resistance | 146.40 | 146.90 | 147.55 |
AUD/USD – Price reached a high of 0.6550 on Tuesday but that high was accompanied by a divergence warning from the MACD indicator. Price has since declined to a low which is just above the important support at 0.6405. A break of this support is likely to send price down to 0.6275. Stochastic is in the oversold zone but 20EMA is bearish. MACD is also hinting at a bearish price trend.
| Support | 0.6405 | 0.6360 | 0.6310 |
| Resistance | 0.6455 | 0.6495 | 0.6550 |
GBP/USD – Price reached a high of 1.1598 but that high was accompanied by a divergence warning from the MACD and stochastic indicators, hinting at a potential price high. We have since seen a decline to 1.1333. If price is capped by the 20EMA line at 1.1430, we are likely to see a continuation of the decline to 1.1145 in the next 1-2 days ahead. Stochastic is near to the oversold zone and is hinting at a limited downside. However 20EMA is hinting at a bearish price trend.
| Support | 1.1385 | 1.1335 | 1.1285 |
| Resistance | 1.1440 | 1.1510 | 1.1565 |
XAU/USD – Price reached another new high at $1721.37 overnight. Stochastic is in the overbought zone but both MACD and 20EMA are both very strong and are hinting at a strong bullish price trend. If price can stay above $1693, we are likely to see another rally to test the overnight high at $1721.37. However, a price move below $1693 is likely to send price lower to the previous low support at $1666.
| Support | 1702.15 | 1692.80 | 1681.50 |
| Resistance | 1712.75 | 1729.05 | 1740.40 |
USD/CAD – We had a buy call yesterday at 1.3435 which was filled when price declined to a low of 1.3410. Price has moved up to a high of 1.3546, just below our profit target at 1.3550. Our view remains the same as yesterday. We would recommend shifting stop higher to 1.3495 while keeping profit target at 1.3550. Stochastic is rising and hinting price could move above 1.3550. 20EMA is bullish.
| Support | 1.3515 | 1.3475 | 1.3425 |
| Resistance | 1.3555 | 1.3590 | 1.3635 |