Market Talk
– The U.S. dollar extended losses despite a 25 basis points hike by the Fed. Federal Reserve Chair Jerome Powell said a “disinflationary” process was underway, boosting risk appetite and hopes that the U.S. central bank will soon end its monetary tightening streak. The U.S. central bank also warned of further monetary policy tightening.
– The U.S. central bank announced an expected 25 basis points interest rate increase after a year of larger hikes and said it had turned a key corner in the fight against a high inflation rate. But policymakers projected “ongoing increases” in borrowing costs would still be needed.
– The focus will now switch to European Central Bank and Bank of England meetings and the interest rate path the two central banks are likely to take. The euro was up at $1.1011 while sterling was last trading at $1.2372, ahead of central banks’ meeting later on Thursday.
– The Australian dollar rallied to an eight-month high on Thursday at $0.7158, its highest since early June 2022. The kiwi was hovering at $0.6523, having also jumped 1.1% overnight.
– Gold prices jumped to $1983.69 an ounce as the dollar fell even after the Federal Reserve raised its target interest rate by a quarter of a percentage point and continued to promise “ongoing increases” in borrowing costs as part of its battle against inflation.
Chart Focus USD/JPY
Key Points
1. Sell USD/JPY recommendation.
2. Sell USD/JPY at 128.95. Stop at 129.30 and profit target at 127.80
3. The Fed slower pace of hikes has boosted risk appetite and is weighing on the U.S. dollar
4. Price has broken below its previous range support with MACD and 20EMA, both also hinting at a bearish price trend.
Fundamental Comments
1. Federal Reserve Chair Jerome Powell said a “disinflationary” process was underway, boosting risk appetite and is weighing on the U.S. dollar.
2. A slower pace of rate hike by the Fed is likely to weigh on the U.S. dollar.
Technical Comments
1. Price has broken below its previous range support, hinting at bearish price trend.
2. MACD and 20EMA are both hinting at a bearish price trend.
Key Levels
| Support | 128.40 | 127.95 | 127.55 |
| Resistance | 128.85 | 129.20 | 129.85 |
Technical Overview
EUR/USD – Price continued its overnight rally to reach a high of 1.1032 this morning. Stochastic is near to the overbought zone and is hinting at a limited upside. 20EMA is pointing up with a steep slope, hinting at a strong bullish price trend. MACD is also hinting at a strong bullish price trend. With the ECB expected to hike rate later today, we are expecting price to rally to a high of 1.1140 in the next 48 hours.
| Support | 1.0990 | 1.0940 | 1.0910 |
| Resistance | 1.1035 | 1.1070 | 1.1120 |
GBP/USD – Price reached a low of 1.2271 overnight and has bounced back up to 1.2401 this morning. We are expecting the rally to continue for today. Stochastic is rising from the oversold zone and is hinting at a bullish price trend. 20EMA is also turning up and hinting at a bullish price trend. MACD is also hinting at a bullish price trend after a bullish crossover. We see price moving to 1.2520 in the next 24 hours.
| Support | 1.2370 | 1.2335 | 1.2270 |
| Resistance | 1.2405 | 1.2445 | 1.2495 |
XAU/USD – Price reached a new fresh high at $1957.28 this morning. Stochastic is already in the overbought zone but 20EMA is pointing up with a steep slope, hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. There was also no MACD divergence warning on this fresh high, hinting that price can go higher. The next resistance is $1973.
| Support | 1949.15 | 1934.70 | 1923.55 |
| Resistance | 1957.30 | 1965.55 | 1981.30 |
EUR/AUD – We had a buy recommendation on Tuesday at 1.5360, which was filled when price declined to a low of 1.5356. Our view remains unchanged but we would recommend bringing stop to 1.5355 while keeping profit target at 1.5480 unchanged. MACD and 20EMA are both bullish and hinting at a bullish price trend. Stochastic is likely to turn up, hinting at a price rally.
| Support | 1.5385 | 1.5345 | 1.5305 |
| Resistance | 1.5430 | 1.5485 | 1.5520 |