Market Talk
– The greenback struggled to advance on Wednesday even though Federal Reserve policymakers reiterated their commitment last month to fighting inflation. The Aussie dollar rallied after China eased its restrictions on imports of Australian coal.
– Minutes of the Federal Reserve’s December meeting released last night showed that policymakers unanimously supported raising interest rates at a slower pace, offering some relief to markets battered by rising borrowing costs.
– The euro rose 0.54% to $1.0605 overnight after Euro zone business activity contracted less than initially thought at the end of last year, according to a survey, suggesting the bloc’s recession may not be as deep as expected. Sterling was last trading at $1.2057.
– The Australian dollar rallied 1.7% overnight on news that China’s state planner has allowed three central government-backed utilities and its top steel maker to resume coal imports from Australia, marking the first such move since Beijing imposed an unofficial ban on coal trade with Canberra in 2020.
– Gold prices held steady at $1854.90 per ounce on Thursday, hovering close to a near seven-month high scaled in the previous session, while market participants prepared for U.S. jobs data that could influence the Federal Reserve’s policy trajectory.
Chart Focus AUD/USD
Key Points
1. Buy AUD/USD recommendation.
2. Buy AUD/USD at 0.6800. Stop at 0.6765 and profit target at 0.6885
3. A slower pace of US interest rate hikes and the lifting of a coal ban are both aiding the Aussie dollar.
4. Price is likely to be supported by the 20EMA line with MACD hinting at a bullish price trend.
Fundamental Comments
1. A slower pace of U.S. interest rate hikes is weighing on the U.S. dollar.
2. The lifting of a coal ban by China is aiding the Aussie dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA and a previous resistance turned support line.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6800 | 0.6765 | 0.6720 |
| Resistance | 0.6840 | 0.6885 | 0.6915 |
Technical Overview
USD/JPY – Price reached a low of 129.50 on Tuesday but this low was accompanied by a MACD divergence warning. Price has since rallied to a high of 132.71 last night. Stochastic is in the overbought zone but 20EMA is hinting at a bullish price trend. MACD is also turning bullish. We think price can continue to move higher despite the overbought condition. We think price can move up to 133.40 in the next 48 hours.
| Support | 131.95 | 131.45 | 130.70 |
| Resistance | 132.70 | 133.35 | 133.90 |
EUR/USD – The price rally off the low at 1.0518 was capped by the declining 20EMA line. Stochastic is in the middle of its range but is about to turn lower, hinting at a price decline. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. We see price going lower to 1.0515 again in the next 24 hours. However, a move above 1.0635 would hint at a rally to 1.0715. We prefer the bearish price move for today.
| Support | 1.0595 | 1.0560 | 1.0515 |
| Resistance | 1.0635 | 1.0680 | 1.0715 |
GBP/USD – The rally off the low of 1.1899 was capped by a previous resistance point at 1.2085. Stochastic is also in the overbought zone and is about to have a bearish crossover, hinting at a price decline. MACD remains bullish. 20EMA is neutral. If price fails to move above 1.2085 today, we are likely to see 1.1900 tested again in the next 24 hours. Above 1.2085, price is likely to test the previous high of 1.2125.
| Support | 1.2020 | 1.1955 | 1.1920 |
| Resistance | 1.2085 | 1.2125 | 1.2190 |
XAU/USD – Price continued its rally from the previous week and reached a high of $1865.15 yesterday. Stochastic is the overbought zone and is hinting at a limited upside but 20EMA is hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. Our view remains the same as yesterday. We see price going up to $1878.45 in the next 24 hours. We may see a corrective decline but this decline should be supported by the 20EMA line at $1842.40.
| Support | 1849.85 | 1838.40 | 1827.30 |
| Resistance | 1858.90 | 1865.10 | 1878.45 |
USD/CHF – We had a buy recommendation yesterday at 0.9305. However, our call was wrong and we got stop out at 0.9270. Price reached a low of 0.9252 but MACD remains bullish and is hinting at a bullish price trend. Stochastic is near to the oversold zone and is about to have a bullish crossover. Stochastic is hinting at a price rally. 20EMA is flat and neutral. Our view remains the same as yesterday. We see a rally to 0.9400 in the next 48 hours.
| Support | 0.9270 | 0.9225 | 0.9175 |
| Resistance | 0.9315 | 0.9355 | 0.9400 |