Market Talk
– The U.S. dollar made a tentative start to the week on Monday as investors awaited testimony from Federal Reserve Chair Jerome Powell and looked towards for a February jobs report that will likely influence how hawkish the U.S. central bank will be.
– The spotlight will be firmly on the February jobs report scheduled for Friday and Fed Chair Jerome Powell’s testimony to congress on Tuesday and Wednesday. Citibank strategists expect Powell to indicate a preference for a 25 bps hike but leave all options on the table, since he will speak before the jobs data are released.
– The euro was down 0.02% to $1.0632, having gained 0.8% last week. The Japanese yen strengthened 0.01% to 135.85 per dollar, while sterling was last trading at $1.203, down 0.08% on the day.
– The offshore Chinese yuan opened at 6.9072 per dollar and was last changing hands at 6.9067. On Sunday, China set a modest target for 2023 economic growth of around 5% as it kicked off the annual session of its National People’s Congress.
– Gold prices were mixed on Monday amid some uncertainty over U.S. monetary policy. Bullion prices were aided by a drop in the dollar last week, breaking a five-week losing spree as traders reassessed their expectations for U.S. interest rate hikes this year.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.6205. Stop at 0.6170 and profit target at 0.6305.
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 | 0.6200 | 0.6170 | 0.6130 |
| Resistance | 0.6240 | 0.6275 | 0.6310 |
Technical Overview
USD/JPY – After price reached a high at 137.09 last Thursday, price has been on a decline. There is an important support at 135.25. If price can stay above this support, we are likely to see another test of the 137.10 high. However, if price fails to hold above the support, price is likely to decline to a previous low at 134.60. Both MACD and 20EMA are hinting at a price decline but stochastic is hinting at a price rally.
| Support | 135.60 | 135.25 | 134.60 |
| Resistance | 136.10 | 136.65 | 137.10 |
EUR/USD – Price has been moving in a narrow range since last Wednesday and today is the fourth day of the narrow range movement. The 20EMA is hinting at a price rally that is likely to send price above the high at 1.0690. Stochastic and MACD are also hinting at a price rally. However, if price moves below 1.0570, it is likely to decline to 1.0530 in the next few days. We favour the upside.
| Support | 1.0610 | 1.0565 | 1.0530 |
| Resistance | 1.0655 | 1.0690 | 1.0730 |
GBP/USD – After testing the low of 1.1915 on three different days, price has bounced up above the 20EMA and we are likely to see this rally continues towards the previous high at 1.2140. Stochastic is moving higher and hinting at a price rally. Both 20EMA and MACD are also hinting at a price rally. We see price going up to 1.2140 in the next couple of days. A move below 1.1910 would negate our bullish view.
| Support | 1.2000 | 1.1960 | 1.1910 |
| Resistance | 1.2050 | 1.2090 | 1.2145 |
XAU/USD – Price has been moving higher since bottoming out on 28 February at $1804.50. Price has reached a high of $1856.40 this morning but this high was accompanied by a divergence warning from the MACD indicator as well as the stochastic indicator. Price may have reached a high and we see price moving low to $1825-$1830 again in the next few days. 20EMA remains bullish so the decline may be a correction of the recent rally.
| Support | 1838.75 | 1825.70 | 1818.95 |
| Resistance | 1856.50 | 1870.05 | 1885.20 |
USD/CHF – After reaching a high at 0.9439, price has been on a decline. The decline has reached a previous low at 0.9340. A move below this support point would confirm a top in place and a decline lower to 0.9285. Both MACD and 20EMA are supporting this price decline with a bearish price trend hint. However, stochastic is close to the oversold zone and is hinting at a limited downside and a price bounce from this support. We break a move to 0.9285.
| Support | 0.9340 | 0.9300 | 0.9255 |
| Resistance | 0.9375 | 0.9405 | 0.9440 |