Market Talk
– The euro and sterling slipped against the dollar on Friday as markets took a dovish cue from policymakers at the European Central Bank and the Bank of England, who said inflationary pressures in their economies have become more manageable.
– Focus will be on tonight Non-farm Payroll. Analysts expect 185,000 jobs were added last month, the lowest since January 2021, unemployment edged up to 3.6%, and hourly wage inflation to stay flat at 0.3% on a monthly basis, suggesting the strong labour market might have started to ease up.
– The pound slid to a more than two-week trough of $1.2203 in Asia trade. It had fallen 1.2% in the previous session despite a 50 basis point hike, after BoE comment’s that tide was turning in its battle against high inflation.
– The euro edged down to $1.0897, after tumbling 0.7% on Thursday to move further away from its 10-month peak of $1.1034. President Christine Lagarde acknowledged the euro zone outlook had become less worrisome for growth and inflation.
– Gold prices inched higher on Friday after pulling back sharply from nine-month highs in the prior session as the dollar rebounded in anticipation of key nonfarm payrolls data, while other economic readings showed some strength in the labour market.
Chart Focus EUR/JPY
Key Points
1. Sell EUR/JPY recommendations.
2. Sell EUR/JPY at 140.60. Stop at 140.95 and profit target at 139.70.
3. The European Central Bank has hinted at a potential pause in their rate hike which may weigh on the euro.
4. Price is likely to be capped by the previous support turned resistance line with both MACD and 20EMA also hinting at a bearish price trend.
Fundamental Comments
1. The European Central Bank hinted at a potential pause in their rate hike cycle this year which will mean less aggressive interest rate hikes.
2. A slower pace of rate hike will likely weigh on the Euro.
Technical Comments
1. Price has broken below its previous range support, hinting at a bearish price trend.
2. Both MACD and 20EMA are hinting at a bearish price trend.
Key Levels
| Support | 140.10 | 139.60 | 139.15 |
| Resistance | 140.60 | 141.10 | 141.60 |
Technical Overview
USD/JPY – We had a sell recommendation yesterday at $128.95, which was filled when the price moved to a high of $129.12. Price is below the 20EMA and MACD has remained below the zero line. Both trend indicators are hinting at a bearish price trend. However, stochastic currently is in the oversold zone and is hinting at a limited downside. Our view remains bearish and we would recommend moving stop to cost at $128.95 and the profit target remaining at $127.80.
| Support | 128.40 | 128.05 | 127.75 |
| Resistance | 128.85 | 129.20 | 129.85 |
EUR/USD – Price reached a low of $1.0884 overnight which is just above the Fibonacci 62% correction point of the rally from $1.0801 to the high at $1.1032. Stochastic is pointing downwards, hinting at a price decline. 20EMA is neutral at the moment while MACD remains bullish. If the price is able to sustain above the Fibonacci 62% correction point, at $1.0885, we are likely to see a rally back to the high at $1.1032 again in the next couple of days
| Support | 1.0885 | 1.0845 | 1.0800 |
| Resistance | 1.0930 | 1.0975 | 1.1030 |
GBP/USD – Price moved to a low at $1.2228 overnight but was supported by the lower trend line of the descending channel. Stochastic is moving lower and is hinting at a price decline. Price has moved below the 20EMA and MACD remained below the zero line. Both trend indicators are hinting at a possible bearish price trend. If the price is able to sustain within the descending channel, we may see a possible rebound in the price to $1.2335
| Support | 1.2210 | 1.2170 | 1.2130 |
| Resistance | 1.2255 | 1.2295 | 1.2335 |
XAU/USD – Price had a correction to a low of $1911.58 overnight after reaching a new fresh high at $1959.70 on the same day. Stochastic is declining and hinting at a price decline. MACD has a bearish crossover and is hinting at a possible bearish price trend. Price has moved below the 20EMA, hinting at a change in trend. Price could be on the way to this week’s low at $1900.27 and it is possible we could see this low tested in the next 48 hours.
| Support | 1904.70 | 1892.10 | 1880.30 |
| Resistance | 1923.00 | 1934.70 | 1942.10 |
EUR/ AUD – We had a buy recommendation at $1.5360 on Tuesday and yesterday, we recommended lifting stop higher at $1.5355 and a profit order at $1.5480. Unfortunately, the price move to a low of $1.5331 and triggered our stop at $1.5355. We are out of this position with a 5 pips loss. Stochastic is likely to turn up, hinting at a price rally. Price has moved above the 20EMA, hinting bullish trend. MACD remains bullish.
| Support | 1.5385 | 1.5345 | 1.5305 |
| Resistance | 1.5440 | 1.5485 | 1.5520 |