Market Talk
– The U.S. dollar fell across the board on Wednesday, weighed down by firmer commodity currencies that benefited from China’s strong manufacturing activity data. U.S. manufacturing activity contracted for a fourth straight month in February, adding weight on the US dollar.
– China’s yuan rose after data showed Chinese manufacturing activity and non-manufacturing activities expanded at its fastest pace in a decade. The Kiwi surged 1% to $0.6248, while the Aussie rose to 0.6752.
– The euro climbed 0.8% to $1.0660, boosted by the German inflation report. German consumer prices rose more than anticipated and pushed up European Central Bank rate hike expectations after the data pointed to no let-up in stubborn cost pressures.
– Sterling traded little changed on the day at $1.2016, after Bank of England Governor Andrew Bailey said it was possible the central bank had already come to the end of its rate-rising cycle. The Japanese yen was little changed at $136.20.
Gold prices hovered at an over one-week high on Thursday as a February rally in the U.S. dollar appeared to have run out of steam, benefiting the yellow metal. Spot Gold hovered around $1837.35 an ounce.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.6210. Stop at 0.6180 and profit target at 0.6310.
3. A strong China PMI data and a weak U.S. manufacturing activity are aiding the Kiwi.
4. Price is likely to be supported by the 20EMA line with MACD hinting at a bullish price trend.
Fundamental Comments
1. A strong China PMI is aiding the Kiwi.
2. A weak U.S. manufacturing activity is weighing on the US dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA line.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6205 | 0.6170 | 0.6130 |
| Resistance | 0.6245 | 0.6275 | 0.6310 |
Technical Overview
USD/JPY – Price reached a low of 135.22, which was just below the support at 135.35. Price is likely to test the previous high at 136.90 and a move above this point is likely to send price higher to 137.70. Stochastic is hinting at a price rally but MACD is warning of a potential price high in the making. 20EMA is hinting at a price rally. We think price is likely to move up to 137.70 in the next couple of days.
| Support | 136.45 | 135.95 | 135.35 |
| Resistance | 136.90 | 137.35 | 137.75 |
EUR/USD – Price reached a high of 1.0691 overnight and has been on a decline. 20EMA line has a support at 1.0620 and if price can stay above this line, we are likely to see another rally to the previous high at 1.0691. However, a move below this support is likely to send price lower to 1.0560 in the next couple of days. Stochastic is hinting at a price decline but both MACD and 20EMA are hinting at a price rally.
| Support | 1.0620 | 1.0580 | 1.0535 |
| Resistance | 1.0655 | 1.0690 | 1.0735 |
GBP/USD – The overnight rally was capped by the falling 20EMA line at 1.2020 and we are likely to see a continuation of the decline to 1.1920 in the next 1-2 days. Stochastic is hinting at a price decline. 20EMA and MACD are both hinting at a bearish price trend. All the 3 indicators are supporting the bearish price view. A move above the 20EMA line at 1.2020 would negate our bearish view.
| Support | 1.1965 | 1.1920 | 1.1865 |
| Resistance | 1.2015 | 1.2065 | 1.2105 |
XAU/USD – Price is currently moving back towards the 20EMA line at $1828.55 after reaching a high of $1844.20 in the previous trading day. Stochastic is hinting at a price decline but both MACD and 20EMA are hinting at a bullish price trend. We think price should be able to stay above the 20EMA line support at $1828.30 and test the overnight high of $1844.20 in the next 48 hours. Below $1828.30 would hint at a move to $1804.50.
| Support | 1828.20 | 1818.90 | 1804.50 |
| Resistance | 1838.35 | 1847.55 | 1860.05 |
USD/CNH – Price reached a low of 6.8630 overnight and we are currently seeing a rally towards the 20EMA line at 6.9175. Price is likely to be capped by either the 20EMA line or the Fibonacci 50% correction point at $6.9260. We are likely to see a decline from this location back to 6.8630 or lower to 6.8540. Stochastic is hinting at a price rally but both 20EMA and MACD are hinting at a price decline.
| Support | 6.8995 | 6.8630 | 6.8415 |
| Resistance | 6.9170 | 6.9335 | 6.9610 |