Market Talk
– The U.S. dollar was firm on Tuesday ahead of the release of U.S. inflation data later in the global day and the final Federal Reserve meeting of the year later in the week, with investors waiting to update interest rate outlooks.
– US inflation data will shed light on whether the Fed may shift to smaller increase in borrowing cost after a small surprise to the downside last month, unleashed a wave of bond-buying and dollar selling on the expectation that inflation had peaked.
– The greenback edged up 0.8% on the yen overnight and was steady at 137.60 yen on Tuesday. The Australian and New Zealand dollars recovered some overnight losses on Tuesday, though both appeared to lack firm direction ahead of U.S. data.
– The euro was steady at $1.0541, as was sterling at $1.2269. The Swiss franc was at 0.9360 per dollar as traders eyed Thursday meetings of the European Central Bank, Bank of England and Swiss National Bank.
– Gold prices edged up to $1785.70 on Tuesday, helped by a softer U.S. dollar, as market maintained caution ahead of U.S. inflation data and the Federal Reserve’s policy decision
Chart Focus AUD/JPY
Key Points
1. Buy AUD/JPY recommendation.
2. Buy AUD/JPY at 92.70. Stop at 92.35 and profit target at 93.80
3. An improvement in risk appetite and interest rate differential are both in the Aussie favour.
4. Price is above the 20EMA and is moving higher, with MACD confirming the bullish price trend.
Fundamental Comments
1. An improvement in risk appetite is weighing on the safe haven yen
2. Interest rate differential is in the Aussie dollar favour.
Technical Comments
1. Price is above the 20EMA and is moving higher, hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 93.00 | 92.60 | 92.05 |
| Resistance | 93.45 | 93.85 | 94.15 |
Technical Overview
USD/JPY – Price broke above the resistance at 137.85 to reach a high of 137.97 this morning. Stochastic is in the overbought zone and is hinting at a limited upside. Stochastic is also hinting that price may not be able to break above the resistance at 138.00. However both 20EMA and MACD are hinting at a bullish price trend ahead. However, the next direction is likely to be decided by US data tonight.
| Support | 137.30 | 136.90 | 136.60 |
| Resistance | 138.00 | 138.35 | 138.85 |
EUR/USD – Price continues to move within the range from 1.0445 to 1.0560. This range has persisted for the last 7 days and looks likely to continue, at least until U.S. inflation data later tonight. Stochastic is in the middle of its range and is pointing lower, hinting at a price decline. Both MACD and 20EMA are hinting at a bullish price trend ahead. We continue to view price moving with the current range.
| Support | 1.0525 | 1.0490 | 1.0445 |
| Resistance | 1.0555 | 1.0595 | 1.0640 |
GBP/USD – Price continues to stay above the 20EMA line support at 1.2245. Despite staying above the 20EMA line, price has not been able to test the previous high of 1.2345. Stochastic is moving down, hinting at a price decline. MACD remains bullish and 20EMA is also hinting at a bullish price trend. We think price may be near to a peak and could be heading lower in the next few days.
| Support | 1.2260 | 1.2200 | 1.2155 |
| Resistance | 1.2300 | 1.2350 | 1.2405 |
XAU/USD – Price moved below the 20EMA line yesterday but there was no big price decline to test the previous support at $1765.75. Price only decline to a low of $1777.43 and is heading back up to test the 20EMA line again. Stochastic is near to the oversold zone and is hinting at a price rally to $1795. 20EMA remains bearish. 20EMA is also hinting at a bearish price trend.
| Support | 1777.40 | 1765.75 | 1757.20 |
| Resistance | 1787.30 | 1795.40 | 1809.80 |
USD/CHF – We had a buy order at 0.9350 yesterday but price went to a low of 0.9351 and our entry order was not filled. Price had little movement overnight and we think there is also likely to be little movement ahead of tonight U.S. inflation data. The next direction is likely to be decided by the US data. Stochastic is rising and hinting at a price rally. However, both MACD and 20EMA are hinting at a price decline.
| Support | 0.9335 | 0.9285 | 0.9255 |
| Resistance | 0.9370 | 0.9425 | 0.9455 |