Market Talk
– The U.S. dollar struggled for direction on Friday as fears of an economic slowdown dented risk sentiment, while the yen slipped as speculation continue to swirl that the Bank of Japan will eventually move away from its ultra-easy policy.
– US data on Thursday showed new claims for unemployment benefits unexpectedly fell last week, pointing to another month of solid job growth and continued labour market tightness. However, other U.S. data on Thursday indicated the world’s biggest economy was slowing down after multiple hefty interest rate hikes from the Federal Reserve.
– The euro was up 0.11% to $1.0839, after European Central Bank president Christine Lagarde pushed up euro zone bond yields slightly by telling the World Economic Forum’s Davos gathering the bank would stay the course with rate hikes.
– The greenback gained against the yen to 128.85, a day after the Bank of Japan’s decision to stand pat on its ultra-loose monetary policy. Sterling was last trading at $1.239 while the Australian dollar rose 0.14% versus the U.S. currency to $0.692.
– Gold prices rose over 1% to $1924.09, close to its 9-month peak of $1929 on Thursday, supported by a weaker dollar and some safe-haven demand as weak U.S. economic readings and hawkish comments from Federal Reserve officials fuelled recession worries.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation.
2. Sell AUD/USD at 0.6935. Stop at 0.6965 and profit target at 0.6870
3. Renewed concerns about a US recession and a decline in Aussie labour data are both likely to aid the safe haven U.S. dollar
4. Price is likely to be capped by the 20EMA line with MACD also hinting at a bearish price trend.
Fundamental Comments
1. A dip in December Aussie Labour data is hinting the economy is slowing down and weighing on the Aussie dollar.
2. Renewed concerns about a US recession is aiding the safe haven U.S. dollar.
Technical Comments
1. Price is likely to be capped by the 20EMA line which is also hinting at a bearish price trend.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 0.6900 | 0.6870 | 0.6825 |
| Resistance | 0.6935 | 0.6965 | 0.7005 |
Technical Overview
USD/JPY – Yesterday, we were looking for a decline to 127.21 but we were wrong. Price has been supported above 127.80 and has since moved higher to 129. Stochastic is moving up from the oversold zone and is hinting at a price rally. Both MACD and 20EMA are bullish and hinting at a price rally as well. We think price could be moving higher to 130.80 in the next 48 hours.
| Support | 128.70 | 128.25 | 127.75 |
| Resistance | 129.35 | 129.90 | 130.30 |
EUR/USD – Price has moved up slightly overnight but we think price is likely to be capped around the previous highs of 1.0875 and from there; we are likely to see a decline back to 1.0765. Stochastic is moving higher and hinting at a bullish price trend. Both MACD and 20EMA are hinting at a mildly bullish price trend. Above 1.0875 would hint at a rally to 1.0930. Below 1.0765 would hint at a decline to 1.0665.
| Support | 1.0815 | 1.0765 | 1.0725 |
| Resistance | 1.0845 | 1.0890 | 1.0930 |
GBP/USD – Price moved to a high of 1.2435 on Wednesday and a decline was supported by the 20EMA at 1.2310. As long as price is supported by the 20EMA, we are likely to see another test of the week’s high at 1.2435. A move below 1.2310 would hint at a decline to 1.2165. Stochastic is neutral. MACD is bullish and hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend.
| Support | 1.2355 | 1.2310 | 1.2245 |
| Resistance | 1.2395 | 1.2435 | 1.2490 |
XAU/USD – Price reached another new high this week at $1934.90 but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. Stochastic is also near to the overbought zone hinting at a limited price upside. 20EMA remains bullish and is hinting at a bullish price trend. A price move below $1905 would confirm the high and hint at a decline to $1882.45 in the next few days.
| Support | 1922.90 | 1913.85 | 1900.80 |
| Resistance | 1934.90 | 1946.20 | 1958.95 |
USD/CAD – We had a buy recommendation at 1.3445 yesterday. Price declined to a low of 1.3444 and our entry order was filled. Our view remains the same as yesterday. We are looking for a price rally to 1.3550 in the next couple of days. Stochastic is moving lower, hinting at a price decline. MACD and 20EMA are hinting at a bullish price trend. We recommend keeping stop at 1.3415 and profit order at 1.3545.
| Support | 1.3445 | 1.3390 | 1.3350 |
| Resistance | 1.3475 | 1.3515 | 1.3550 |