Market Talks
– The U.S. dollar stood close to a three-month low on Friday morning as the prospect of the Federal Reserve slowing monetary policy tightening as soon as December, following the release of November’s FOMC meeting minutes, dominated investors’ minds.
– Minutes from the Fed’s November meeting released on Wednesday showed that a “substantial majority” of policymakers agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes.
– Sterling rose more than 0.5% overnight and last stood at $1.2112, close to its over three-month high of $1.2153 hit in the previous session and on track for a nearly 2% weekly gain. The euro slipped to $1.0404, but remained close to $1.0481, its highest level in over four months hit last week.
– The Japanese yen jumped roughly 0.7% overnight and last bought 138.60 per dollar. The Aussie slipped to $0.6753, after rising more than 0.4% overnight. The kiwi eased 0.19% to $0.6252, but that was not far off its three-month peak hit in the previous session.
– Gold prices firmed on Friday, gaining 0.3% to $1760.15 en route to a weekly gain, buoyed by the dollar’s retreat on a perceived dovish tilt in the U.S. Federal Reserve’s interest rate hike strategy. Silver eased to $21.46 but was still up about 2.7% for the week.
Chart Focus XAG/USD
Key Points
1. Buy silver recommendation.
2. Buy silver at $21.15. Stop at $20.80 and profit target at $22.10.
3. A perceived dovish tilt in the U.S. Federal Reserve’s interest rate hike strategy and a decline in U.S. Treasury yields are both weighing on the U.S. dollar.
4. Price is likely to be supported by the 20EMA with MACD hinting at a bullish price trend.
Fundamental Comments
1. A perceived dovish tilt in the U.S. Federal Reserve’s interest rate hike strategy is weighing on the U.S. dollar.
2. A decline in the US Treasury yields is weighing on the U.S. dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 21.10 | 20.90 | 20.55 |
| Resistance | 21.40 | 21.70 | 22.05 |
Technical Overview
USD/JPY – In our last update on Wednesday, we had a buy call at 141.45 but our call was wrong and we got stop out at 140.85. Price has since declined to 138.01 overnight. There could be more downside ahead as MACD has not given a divergence warning as yet. Stochastic is in the oversold zone but 20EMA is hinting at a bearish price trend. The next support lies at 137.70 and price could be heading to this support in the next 24 hours.
| Support | 138.35 | 137.70 | 137.15 |
| Resistance | 138.80 | 139.20 | 139.60 |
EUR/USD – Price has reached a high of 1.0448 overnight and the rally looks like it can continue higher to the previous high at 1.0480 in the next 24 hours. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. Only a price move below 1.0345 would negate our bullish view for the next 24 hours.
| Support | 1.0395 | 1.0340 | 1.0295 |
| Resistance | 1.0445 | 1.0480 | 1.0535 |
GBP/USD – Price reached a high of 1.2153 overnight and the rally looks like it can continue higher in the next 24 hours as MACD remains bullish and is hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. Stochastic is in the overbought zone and hinting at a limited upside. As long as price stays above the 20EMA at 1.2020, we are likely to see a rally to the next high at 1.2295 in the next few days.
| Support | 1.2090 | 1.2050 | 1.1990 |
| Resistance | 1.2130 | 1.2155 | 1.2195 |
XAU/USD – Price managed to rally after it had reached a low of $1731.45 on Wednesday. MACD remains bullish and is hinting at a price rally. 20EMA is also hinting at a bullish price trend. However, stochastic is in the overbought zone and is hinting at a limited upside. Price is currently just below the Fibonacci 62%. At this moment price could move in either direction but we prefer the upside.
| Support | 1751.20 | 1743.10 | 1731.45 |
| Resistance | 1760.80 | 1770.80 | 1785.60 |
NZD/USD – Price broke above its previous high at 0.6205 to a high of $0.6288 overnight. MACD remains bullish and is hinting at a price rally. 20EMA is also hinting at a bullish price trend ahead. However, stochastic is in the overbought zone and is hinting at a limited upside. We are looking at a small pullback to the 20EMA line at 0.6205 and if price can stay above this support, we are looking at a rally to 0.6380 in the next few days.
| Support | 0.6240 | 0.6200 | 0.6160 |
| Resistance | 0.6290 | 0.6340 | 0.6380 |