Market Talk
– The US dollar strengthened on Wednesday after U.S. Federal Reserve meeting minutes from the Federal Reserve’s February meeting added to expectations that further rate hikes are in the pipeline to squeeze inflation. Minutes showed the Federal Reserve intents to use a slower pace of interest-rate hikes to tame persistently high inflation going forward.
– The minutes from the Fed’s Jan. 31 to Feb. 1 meeting said most of the officials supported the quarter-point increase because a slower pace “would better allow them to assess the economy’s progress” toward reducing inflation to their 2% target. But “a few” participants outright favoured a larger 50 bps increase at the meeting.
– The Aussie edged up 0.4% to $0.6833, recouping some of the 0.7% loss overnight to as low as $0.6795. The kiwi was also up 0.4% at $0.6247 as a hawkish Reserve Bank of New Zealand, which delivered a half-point hike a day before, offset fears tied to the Fed rate outlook.
– Sterling slipped down 0.58% to $1.2036, while the euro fell 0.44% to $1.0600. The Canadian dollar was lower against the greenback, dragged down by crude oil price, which declined to a 1-week low in the previous day.
– Gold prices moved little on Thursday at $1827.95, but were nursing losses for the week as the dollar hit a six-week high on fears of a hawkish Federal Reserve, with focus now turning to upcoming economic data for more cues on the U.S. economy and monetary policy.
Chart Focus XAU/USD – Gold
Key Points
1. Buy Gold recommendation.
2. Buy Gold at $1825.50. Stop at $1818.00 and profit target at $1847.50.
3. A stubborn US inflation could aid Gold as a hedge against inflation as the pace of interest rate slows.
4. Price has managed to bounce off a recent low, hinting at a strong price support and stochastic is hinting at a price rally ahead.
Fundamental Comments
1. The decline may have priced in the next Fed hike in March.
2. A stubborn US inflation could aid Gold as a hedge against inflation.
Technical Comments
1. Price has managed to bounce off a recent low, hinting at a strong price support.
2. Stochastic is hinting at a price rally ahead.
Key Levels
| Support | 1829.60 | 1818.85 | 1803.70 |
| Resistance | 1838.70 | 1847.45 | 1860.00 |
Technical Overview
USD/JPY – Price reached a high of 135.22 on Tuesday and seems to have lost its upward momentum. Price has been moving in a sideways manner for the past 48 hours. Stochastic and MACD are also hinting at a sideways movement. 20EMA is hinting at a price rally. We think price may have reached a temporary high and a price correction lower to 133.60 is likely in the next 48 hours.
| Support | 134.55 | 134.05 | 133.60 |
| Resistance | 134.95 | 135.25 | 135.95 |
EUR/USD – Price continues its decline and reached a low of 1.0598 overnight. However this low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. As this is the second divergence warning, the chance of a turnaround in price is higher. We see price moving higher to 1.0705 in the next 48 hours. Stochastic and MACD are hinting at a price rally but 20EMA is still hinting at a bearish price trend.
| Support | 1.0595 | 1.0540 | 1.0485 |
| Resistance | 1.0635 | 1.0690 | 1.0725 |
GBP/USD – Yesterday we had a sell call at 1.2120, which was filled when price reached a high of 1.2127. Price had declined overnight to a low of 1.2033 and our profit order was filled. We are out of this position with a 70 pips profit. 20EMA is hinting at a price decline but MACD and stochastic are both hinting at a price rally ahead. Fibonacci ratio is also hinting that the price decline may be over. We think price may move higher to 1.2145 and above in the next 24 hours.
| Support | 1.2030 | 1.1995 | 1.1955 |
| Resistance | 1.2080 | 1.2120 | 1.2160 |
XAG/USD – Price reached a new weekly low at $21.43 overnight but this low was higher than the previous week’s low at $21.17. This could be a hint that the current decline is just a correction and we are likely to see a rally to $21.95 in the next 24 hours. We could also see a price move to $22.30 in the next few days. Stochastic and MACD are confirming the rising price trend but 20EMA remains bearish.
| Support | 21.45 | 21.15 | 20.80 |
| Resistance | 21.70 | 22.00 | 22.30 |
AUD/USD – Price reached a low of 0.6794 overnight and this low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. A bullish Engulfing candlestick price pattern is also hinting at a possible price low. Stochastic is hinting at a rising price trend but 20EMA is hinting at a bearish price trend. We favour a price rally to 0.6920 in the next 72 hours.
| Support | 0.6795 | 0.6750 | 0.6715 |
| Resistance | 0.6840 | 0.6885 | 0.6935 |