Market Talk
– The U.S. dollar wobbled on Wednesday after Federal Reserve Chair Jerome Powell failed to offer fresh signs of a hawkish pushback against a resilient labour market in the United States, leading investors to bet that interest rates may not rise much further.
– In an eagerly awaited speech earlier on Tuesday, the Fed’s Powell reiterated that disinflation has begun but warned that Friday’s eye-popping jobs report showed why the battle against inflation will “take quite a bit of time.”
– The euro was last at $1.0732, after falling to $1.0669 in the previous session, its lowest since Jan. 9. Sterling rose to $1.2057, rebounding from Tuesday’s one-month trough of $1.1961. The Japanese yen was flat at 131.08 per dollar on Wednesday morning, after surging 1.2% in the previous session.
– The Aussie continues to gain to $0.6967, after surging more than 1% on Tuesday aided by a 25 basis point hike from the Reserve Bank of Australia. The kiwi was 0.02% higher to $0.6326.
– Gold prices steadied at $1873 an ounce on Wednesday following somewhat mixed signals on monetary policy from the Fed. Bullion recovered from its recent low of $1860.31, as markets took a dovish view on overnight comments from U.S. Federal Reserve Chair Jerome Powell who did not revert to a hawkish stance after strong jobs data.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation.
2. Sell USD/CAD at 1.3400. Stop at 1.3430 and profit target at 1.3300
3. Fed Chair Powell’s dovish comment and an uptick in crude oil price are both aiding the Canadian dollar.
4. Price is likely to be capped by the 20EMA with stochastic and 20EMA both hinting at a continuation of the bearish price trend.
Fundamental Comments
1. Fed Chair Powell’s dovish comment is weighing on the U.S. dollar.
2. An uptick in crude oil price is aiding the Canadian dollar.
Technical Comments
1. Price is likely to be capped by the 20EMA, which is also hinting at a bearish price trend.
2. Stochastic is hinting at a continuation of the bearish price trend.
Key Levels
| Support | 1.3375 | 1.3345 | 1.3290 |
| Resistance | 1.3405 | 1.3445 | 1.3475 |
Technical Overview
USD/JPY – Price had declined to a low of 130.48 overnight, lower than our expectation but we continue to be bullish on this pair. We think the next price move would be to the topside at 132.90 again in the next few days as long as price stays above the overnight low of 130.48. Indicators are mixed and not giving a good clue at the moment. We remain as price has stayed above the Fibonacci 50% support.
| Support | 130.95 | 130.45 | 129.95 |
| Resistance | 131.50 | 132.25 | 132.90 |
EUR/USD – We had a sell recommendation yesterday at 1.0795 but price only reached a high of 1.0766. Our entry order was not filled. Price has declined to a low of 1.0668 overnight. The trend remains bearish. However, stochastic is hinting there might be a rally before the decline resumes. We favour a rally to test the important resistance point at 1.0805 which could decide the next direction.
| Support | 1.0705 | 1.0670 | 1.0630 |
| Resistance | 1.0745 | 1.0795 | 1.0835 |
GBP/USD – Price was capped by the falling 20EMA at 1.2093 and there is a possibility of a decline back to the previous low at 1.1960 in the next few days. Both 20EMA and MACD are bearish and hinting at a bearish price trend. We are bearish on this pair despite Powell’s dovish comment. If price fails to move above 1.2093, we think price is likely to head lower to 1.1960. A move above 1.2093 will hint at a rally to 1.2220.
| Support | 1.2000 | 1.1960 | 1.1925 |
| Resistance | 1.2060 | 1.2095 | 1.2145 |
XAU/USD – Price has been consolidation in a range of $1860.65 to 1884.15 since the beginning of this week. We are likely to see price consolidates in this range for another 24 hours. Price will need to move above $1885 in order to regain its bullish impetus. Failure to move above this resistance is likely to send price lower $1843. Our view remains the same as yesterday and we are looking for a decline to $1843.
| Support | 1873.40 | 1860.65 | 1843.60 |
| Resistance | 1884.15 | 1896.55 | 1909.50 |
NZD/USD – Price was capped by the falling 20EMA line at 0.6348 and trend indicators are hinting at a bearish price trend. However, stochastic is hinting at a price rally. We remains bullish on the U.S. dollar and we see another decline to 0.6265 in the next 48 hours if price is capped at 0.6350. A move above 0.6350 would hint at a rally to 0.6410 in the next 24 hours.
| Support | 0.6295 | 0.6265 | 0.6210 |
| Resistance | 0.6330 | 0.6360 | 0.6410 |