Market Talk
– The U.S. dollar fell across the board for a second straight day on Friday, as investors favoured riskier currencies following signs U.S. inflation is cooling that boosted the case for the Federal Reserve to ease off its hefty interest rate hikes.
– The University of Michigan’s preliminary November reading on the overall index on consumer sentiment showed sentiment fell in November, pulled down by persistent worries about inflation and higher borrowing costs, which also hinted at a sharp slowdown in spending on goods, a survey showed on Friday.
– The Japanese yen weakened 0.24% versus the greenback to 139.12 per dollar, having strengthened 5.4% last week against the dollar as benchmark 10-year U.S. Treasury yields fell.
– The euro was last down 0.2% at $1.0331. Sterling was last trading at $1.1798, down 0.31% on the day ahead of British Chancellor’s budget on Thursday where he is expected to set out tax rises and spending cuts.
– Spot gold slipped 0.5% to $1,761.86 per ounce on Monday from a three-month peak hit in the previous session, as the greenback and U.S. bond yields edged up after a top U.S. central banker warned that the Federal Reserve was not softening its fight against inflation.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.6025. Stop at 0.5995 and profit target at 0.6125
3. Signs of a cooler inflation and a decline in benchmark 10-year Treasury yield are weighing on the U.S. dollar.
4. Price is supported by a previous resistance turned support line and the 20EMA with MACD hinting at a bullish price trend.
Fundamental Comments
1. Signs of a cooler inflation have boosted the case for the Fed to ease off its hefty interest rate hikes which is weighing on the U.S. dollar.
2. Decline in benchmark 10-year Treasury yield is weighing on the U.S. dollar.
Technical Comments
1. Price is likely to be supported at the previous resistance turned support line as well as the 20EMA.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6045 | 0.6000 | 0.5945 |
| Resistance | 0.6095 | 0.6130 | 0.6160 |
Technical Overview
USD/JPY – Price declined to a low of 138.45 late last Friday and we have seen a rise to 139.90 this morning as Stochastic is deep in the oversold zone. MACD is also turning up, hinting at a price rise as well. However, 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. We are expecting a small corrective rally which is likely to be capped by the falling 20EMA and from there, we are likely to see another decline to test the previous week’s low.
| Support | 139.05 | 138.45 | 138.05 |
| Resistance | 139.60 | 140.00 | 140.85 |
EUR/USD – After a two-day rally, price reached a high of 1.0363 and we are likely to see a corrective decline in the next 24 hours as Stochastic is deep in the overbought zone and hinting at a price decline. However, both MACD and 20EMA are hinting at a strong bullish price trend. Any corrective decline needs to hold above 1.0190 for a re-test of the previous week high at 1.0363. A move below 1.0190 would negate the bullish price trend.
| Support | 1.0295 | 1.0255 | 1.0215 |
| Resistance | 1.0335 | 1.0365 | 1.0400 |
GBP/USD – The two-day rally reached a high of 1.1854 last Friday and we are likely to see a corrective decline to the 20EMA support line at 1.1640 in the next 24 hours. Stochastic is in the overbought zone and is hinting at a price decline. However, both 20EMA and MACD are both hinting at a strong bullish price trend. There is also a resistance turned support line near to the MACD support.
| Support | 1.1740 | 1.1690 | 1.1635 |
| Resistance | 1.1790 | 1.1855 | 1.1905 |
XAU/USD – Price reached a high last Friday at $1772.61 and has declined to a low of $1757.85 this morning. We are expecting the decline to continue lower to $1743.35 in the next 24 hours, before the price rally resumes again. Stochastic is deep in the overbought zone and is in need to a correction. However, both 20EMA and MACD are bullish. A move below $1743 would negate our bullish view for the next few days.
| Support | 1753.40 | 1743.35 | 1729.05 |
| Resistance | 1766.05 | 1782.75 | 1799.15 |
XAG/USD – We had a sell recommendation at $21.90 last Friday and it was filled when price rallied to a high of $22.05. Price is currently supported by the 20EMA line at $21.40. We are likely to see price continues its decline to the 20.90 in the next 24 hours. Stochastic is hinting at a price decline and MACD has a divergence. We would recommend lowering stop to breakeven at 21.90 while keeping profit order at 21.00.
| Support | 21.25 | 20.85 | 20.50 |
| Resistance | 21.70 | 22.05 | 22.45 |