Market Talk
– The yen surged on Friday, adding to earlier gains on speculation the Bank of Japan (BOJ) will revise its ultra-loose monetary policy, while the dollar edged up against most other major currencies, rising off of a seven-month low.
– The University of Michigan Surveys on Friday showed that U.S. consumers are becoming more confident that price pressures will ease considerably over the next 12 months with one-year inflation expectations falling in January to the lowest level since the spring of 2021.
– The Japanese yen rose to a more than seven-month peak on Monday, as expectations that the BOJ would make further tweaks to, or fully abandon, its yield control policy when it announces its monetary policy decision on Wednesday. The yen jumped to a high of 127.24 per dollar, and last bought 127.58 per dollar.
– The Australian dollar broke past the psychologically important level of 70 cents on Monday, hitting an intraday high of $0.7019, its highest since Aug. 17, buoyed by a retreat in the safe-haven U.S. dollar and expectations of higher commodity prices as a result of China’s rapid reopening.
– Spot gold rose 1.3% to $1,920.70 per ounce on Friday, the highest since end-April 2022. The yellow metal continues its rally to a high of $1928.65 on Monday’s morning, as cooling U.S. inflation raised hopes for a slower pace of interest rate hikes from the Federal Reserve.
Chart Focus AUD/JPY
Key Points
1. Sell AUD/JPY recommendation.
2. Sell AUD/JPY at 89.90. Stop at 90.20 and profit target at 88.65.
3. Speculation the Bank of Japan (BOJ) will revise its ultra-loose monetary policy is aiding the yen.
4. Price is likely to face stiff resistance at the Fibonacci 50% correction point and the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Speculation the Bank of Japan (BOJ) will revise its ultra-loose monetary policy is aiding the yen.
2. A change in the BOJ monetary is likely to hint that the interest rate differential between the two currencies has peaked.
Technical Comments
1. Price is likely to face stiff resistance at the Fibonacci 50% correction point and the 20EMA.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 89.00 | 88.55 | 88.00 |
| Resistance | 89.55 | 90.10 | 90.50 |
Technical Overview
USD/JPY – Price reached a low of $127.21 this morning, which is just above the Fibonacci 161.8% projection point from the high of $134.34 to $132.86. 20EMA is still pointing lower, hinting at a price decline. MACD is supporting the bearish trend as well. However, stochastic is in the oversold zone and is hinting at a limited downside. If the price is unable to sustain above the $127.21 level, we are likely to see the decline resume to the next low at $126.35
| Support | 127.20 | 126.85 | 126.30 |
| Resistance | 127.95 | 128.50 | 129.15 |
EUR/USD – Price moved to a high at $1.0873 this morning, which broke above last week’s high at $1.0867. This high was accompanied by a divergence warning from the MACD indicator. Stochastic is in the overbought zone and is hinting at a limited upside. 20EMA remained bullish and is hinting at a bullish price trend. Price may need to break and sustain above the $1.08670 level to resume its upside momentum for 1.0930.
| Support | 1.0830 | 1.0780 | 1.0745 |
| Resistance | 1.0875 | 1.0930 | 1.0995 |
GBP/USD – Price broke above last week’s high at $1.2247 and reached a high of $1.2288 today as at the time of this writing. Both MACD and 20EMA are pointing up and hinting at a price rally. However, stochastic is still in the overbought zone and is hinting at a limited upside. We remained bullish in our view. Price is likely to continue to move higher to $1.2300 in the next 48 hours. A move below 1.2140 would negate our bullish view.
| Support | 1.2220 | 1.2180 | 1.2100 |
| Resistance | 1.2285 | 1.2355 | 1.2400 |
XAU/USD – We saw a price rally to $1928.65 this morning and the price could be in a corrective decline at the moment to $1916.56. 20EMA is pointing higher, hinting at a bullish price trend. MACD remains bullish and hinting at a bullish price trend. However, stochastic is rising into the overbought zone, hinting at a limited upside. Price is likely to have some correction to $1900 in the next 24 hours.
| Support | 1911.80 | 1892.10 | 1879.85 |
| Resistance | 1928.65 | 1939.30 | 1955.60 |
USD/CAD – We had a buy recommendation at $1.3360 last Friday which was filled. Unfortunately, the price declined to a low of $1.3320 and triggered our stop at $1.3330. We are out of this position with a 30 pips loss. While stochastic is pointing higher hinting at a price rally, 20EMA is hinting at a bearish price trend. MACD is hinting with divergence of a possible price low. We see price going up to 1.3450 in the next 24 hours.
| Support | 1.3350 | 1.3310 | 1.3275 |
| Resistance | 1.3395 | 1.3445 | 1.3485 |