Market Talk
– The U.S. dollar dipped on Wednesday after Federal Reserve Chairman Jerome Powell said that the U.S. central bank could scale back the pace of its interest rate hikes “as soon as December,” helping to put the dollar on track for its worst month since 2010.
– Powell said at the Brookings Institution in Washington that “we think that slowing down at this point is a good way to balance the risks.” But Powell warned that U.S. interest rates will peak at much higher levels than previously expected, largely due to inflation remaining stubbornly high.
– The euro rose 0.95% against the U.S. currency to $1.0424. A European survey on Wednesday showed that euro zone inflation eased far more than expected in November, raising hopes that sky-high price growth is now past its peak and bolstering, sealing the case for a slowdown in European Central Bank rate hikes next month.
– The Australian dollar was up 1.67% at $0.6799, on hopes that China will ease stringent COVID restrictions which have raised concerns about global growth. The southern city of Guangzhou became the latest to announce an easing of curbs on Wednesday.
– Gold prices rose as the non-yielding asset races to end its best month since mid-2020 on slower U.S. rate hike expectations, further reinforced by Federal Reserve Chair Jerome Powell’s comments. Silver climbed to a high of $22.39 on Thursday.
Chart Focus USD/JPY
Key Points
1. Sell USD/JPY recommendation.
2. Sell USD/JPY at 137.40. Stop at 137.75 and profit target at 136.30
3. Powell’s comments about a slower pace of interest rate hike and a decline in US Treasury yields are weighing on the U.S. dollar.
4. Price is likely to face a strong resistance at the previous support turned resistance line with MACD hinting at a bearish price trend.
Fundamental Comments
1. Powell’s comments about a slower pace of interest rate hike starting in December 2022 is likely to weigh on the U.S. dollar.
2. A decline in US Treasury yields is also weighing on the U.S. dollar.
Technical Comments
1. Price is likely to face a strong resistance at the previous support turned resistance line.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 136.45 | 135.80 | 135.40 |
| Resistance | 137.00 | 137.50 | 138.10 |
Technical Overview
USD/CAD – We had a buy call at 1.3535 yesterday but our call was wrong. Price declined to a low of 1.3401 as well as below the 20EMA, hinting at a change to a bearish price trend. Stochastic is declining but has yet to reach the oversold zone, hinting at a continuation of the price decline. MACD and 20EMA are both hinting at a bearish price trend. Only a move above 1.3500 would negate this bearish view.
| Support | 1.3405 | 1.3360 | 1.3315 |
| Resistance | 1.3440 | 1.3485 | 1.3545 |
EUR/USD – Price reached a high this morning of 1.0447 following Powell’s comment. Stochastic is hinting price can go higher. MACD is also hinting that price can move higher. Price is also above the 20EMA which is hinting at a bullish price trend. We think price can go higher to the previous high at 1.0496 in the next 24 hours. There is a possibility of price going up to 1.0540 over the next 48 hours.
| Support | 1.0395 | 1.0355 | 1.0310 |
| Resistance | 1.0450 | 1.0495 | 1.0540 |
GBP/USD – Price continues to move higher after reaching a low of 1.1900 on 30 November 2022. We are likely to see price continues higher to the previous high at 1.2152 in the next 48 hours. Stochastic is hinting at a price rally. 20EMA is also hinting at a bullish price trend. MACD is mixed as both its lines are on different sides of the zero line. A move below the 20EMA at 1.2020 would negate our bullish view.
| Support | 1.2060 | 1.2005 | 1.1940 |
| Resistance | 1.2120 | 1.2155 | 1.2195 |
XAU/USD – Price move up to $1779.95 this morning and looks set to test the previous high of $1786.45 in the next 24 hours. This high is also the Fibonacci 161.8% of the rally from the low at $1725.35 to the high at $1763.55. A move above this resistance is likely to send price higher to $1800. Stochastic is rising and hinting at a price rally. MACD is bullish and is hinting at a bullish price trend.
| Support | 1773.25 | 1763.35 | 1747.45 |
| Resistance | 1786.85 | 1800.00 | 1807.75 |
XAU/USD – Last Friday, we had a buy call at $21.15 which was filled. Yesterday, we left orders for stop at $20.80 and profit order at $21.75. Price went above $22 and we are out of this position with a $0.60 profit. Stochastic is rising and is hinting at more price upsides ahead. MACD is also rising and hinting at a bullish price trend. 20EMA is hinting at a strong bullish price trend. Price has also taken out the previous high at$22.24. The next resistance lies at $22.45.
| Support | 22.00 | 21.75 | 21.40 |
| Resistance | 22.45 | 22.95 | 23.30 |