FX Commentary – U.S. Dollar Rallied On Strong Overnight U.S. Retail Sales Data

Market Talk
– The U.S. dollar advanced on Thursday after strong U.S. retail sales data, underpinned the resilience of the world’s largest economy, cementing the case that the Federal Reserve still has further to go in tightening rates.

– The Australian dollar slid after data on Thursday showed that employment surprised in January by falling for a second straight month, while the jobless rate jumped to its highest since last May. The Aussie dollar hit an intraday low of $0.6868 in the aftermath, and last bought $0.6872.

– Sterling fell to $1.2015, after sliding more than 1% in the previous session after British inflation slowed more than expected in January. There were signs of cooling price pressure in parts of the economy watched closely by the Bank of England, data released on Wednesday showed.

– The euro was little changed at $1.0687, while the yen rose marginally to 134.07 per dollar, The Japanese yen found support after the nomination of Kazuo Ueda as the next central bank governor raised market hopes that the 71-year-old could end super-low interest rates in Japan sooner than initially expected.

– Gold prices fell on Wednesday to their lowest levels in more than a month after data on U.S. consumer prices showed inflation accelerated in January, flaring concerns of a tighter Federal Reserve monetary policy this year. Gold was at $1,835.00 per ounce in Asian morning trading.

Chart Focus GBP/USD

Key Points

1. Sell GBP/USD recommendation.

2. Sell GBP/USD at 1.2075. Stop at 1.2110 and profit target at 1.1965

3. Divergent in data are hinting at an increase in interest rate differential favouring the U.S. dollar.

4. Price is likely to be capped by the 20EMA line with MACD hinting at a bearish price trend.

Fundamental Comments

1. A slower British inflation data is hinting at a slower place of rate hike.

2. A strong US retail sales data is hinting at more rate hikes from the Fed.

Technical Comments

1. Price is likely to be capped by the declining 20EMA line, which is hinting at a bearish price trend.

2. MACD remains bearish and is hinting at a bearish price trend.

Key Levels


Technical Overview

USD/JPY – Price moved above 133.00 yesterday, hinting that this break above is likely to send price higher to 134.75. Price is currently close to 134.00 and we think the overnight rally is likely to continue today towards 134.75. Stochastic indicator, MACD and 20EMA are all hinting at a price rally ahead which confirms with our bullish view. Only a move below 132.85 would negate our bullish view.


EUR/USD – We had a sell recommendation at 1.0730 yesterday which was filled when price reached a high of 1.0732. Price had declined lower to 1.0660, missing our profit order at 1.0655. Currently price is capped by the 20EMA at 1.0715. Above this resistance, our bearish view will be negated. We remain bearish on the euro and would recommend lowering stop to 1.0720 while keeping profit order at 1.0655.


USD/CHF – Price reached a high of 0.9262 overnight which was slightly higher than Monday’s high of 0.9259. There is a possible of a Double Top chart formation if price were to drop below 0.9155. Price is currently supported by the 20EMA line at 0.9215 and as long as price stays above this support, we are likely to see another rally that could bring price above 0.9261 in the next 48 hours. Below 0.9215 would hint at 0.9055.


XAU/USD – Our view remains the same as yesterday, where we are looking for a decline to $1823.55. Price had reached a low of $1830.48 overnight. The low was also accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. 20EMA is hinting at a bearish price trend and we think there could be another decline below $1830.48 to $1823 in the next 48 hours.


NZD/USD – Price reached a low of 0.6250 yesterday and this low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. Price is currently capped by the falling 20EMA line at 0.6310. A move above this point would confirm the low and hint at a rally to 0.6385 in the next couple of days. Stochastic and MACD are hinting at an opposite direction compared to the 20EMA line. We prefer the bullish view.


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