Market Talk
– The Japanese yen got a boost on Thursday on expectations that the Bank of Japan will review the side effects of its monetary easing, while the dollar declined to a seven-month low against the euro ahead of U.S. inflation data later in the day.
– The Japanese yen jumped nearly 0.7% to 131.58 per dollar in early Asia trade, following a Yomiuri report that the BOJ will review the side effects of its monetary easing at next week’s policy meetings and may take additional steps to correct distortions in the yield curve.
– The euro hit a seven-month high against the dollar but held within a narrow range as traders avoided making big moves ahead of U.S. inflation data on Thursday, which may offer a clearer picture of where U.S. interest rates are headed. Sterling was little changed at $1.2150.
– The Aussie rose 0.11% to $0.69135, after Australian inflation data released on Wednesday showed that annual inflation re-accelerated to 7.3% in November, underscoring the challenge facing the Reserve Bank of Australia as it tries to cool the economy. The kiwi edged up 0.13% to $0.6375.
– Gold prices were little changed on Thursday morning at $1879.80 per ounce as investors positioned themselves ahead of U.S. inflation data that could influence the Federal Reserve’s policy path.
Chart Focus USD/JPY
Key Points
1. Sell USD/JPY recommendation.
2. Sell USD/JPY at 132.15. Stop at 132.50 and profit target at 130.70.
3. Report that BOJ will look to ease its ultra-loose monetary policy and expectations of a slower pace of rate hikes are weighing on the US dollar.
4. Price is likely to be capped by the 20EMA and MACD is hinting at a short term bearish price trend.
Fundamental Comments
1. News report that the BOJ will look to ease its ultra-loose monetary policy is aiding the Japanese yen.
2. Expectations of a slower pace of US rate hikes are weighing on the US dollar
Technical Comments
1. Price is likely to be capped by the 20EMA, which is hinting at a short term bearish price trend.
2. MACD has turned bearish and is hinting at a short term bearish price trend.
Key Levels
| Support | 131.40 | 130.70 | 130.25 |
| Resistance | 131.80 | 132.25 | 132.85 |
Technical Overview
AUD/USD – We had a buy call Tuesday at 0.6875, which was filled. Yesterday, we had recommended moving stop to cost at 0.6875 and profit target at 0.6945. Unfortunately, price decline to a low of 0.6872 and our stop was triggered. We are out of this position at cost. Both MACD and 20EMA remain bullish and are hinting at a bullish price trend. Stochastic has a bullish crossover and is also hinting at a bullish price trend.
| Support | 0.6890 | 0.6860 | 0.6825 |
| Resistance | 0.6950 | 0.6895 | 0.7010 |
EUR/USD – Price had broken out from the flag chart pattern to reach a high of $1.0775 yesterday. Stochastic is in the overbought zone and is in hinting at a limited upside. However, both MACD and 20EMA remain bullish and are hinting at a bullish price trend. We may see the price rally to $1.0930 in the next few days. A price move below 1.0690 would negate our bullish price trend.
| Support | 1.0745 | 1.0710 | 1.0680 |
| Resistance | 1.0790 | 1.0815 | 1.0850 |
GBP/USD – Price currently is still consolidating within a potential Flag chart pattern. Price reached a low of $1.2100 and was supported by the 20EMA. Both MACD and 20EMA remain bullish. Stochastic is supporting the bullish trend, if the price is able to break above the flag chart pattern, we may see the price move higher to this week’s high at $1.2225 in the next 48 hours.
| Support | 1.2125 | 1.2080 | 1.2030 |
| Resistance | 1.2185 | 1.2210 | 1.2250 |
XAU/USD – Price reached a low of $1867 yesterday but was supported by 20EMA, and to rebound close to the previous day’s high at $1886.55. 20EMA remains bullish and is hinting at a bullish price trend. MACD has a divergence warning of a possible price high. Stochastic is declining and hinting at a price decline. We see a price correction before it resumes its upside momentum again.
| Support | 1878.50 | 1867.70 | 1856.90 |
| Resistance | 1892.25 | 1910.00 | 1928.70 |
AUD/JPY – Price reached a high of $91.65 yesterday morning which is almost near to this week’s high at $91.80. Price has since fallen to a low of $90.91 as of writing which hit our stop-at cost at $91.05. We are out of this position with no profit or loss. The price has moved below the 20EMA, hinting at a change in trend. Both MACD and Stochastic are moving lower and hinting at a price decline. If our next support $90.75 is violated, we are likely to see the price decline to $90.30 in the next few days.
| Support | 90.75 | 90.30 | 89.80 |
| Resistance | 91.65 | 92.10 | 92.40 |