Market Talk
– The US dollar remains weak on Monday morning after a weekend deal to rescue Credit Suisse and promises of liquidity from central banks offered little lasting respite from fears that a bigger banking crisis is brewing.
– Fears of a U.S. banking crisis saw investors begin pricing in a less hawkish Federal Reserve in the coming months, as the bank races to stem further pressure on the economy from rising interest rates. Last week, the ECB had raised interest rate by 50 basis points despite the banking crisis.
– The euro rose 0.66% to $1.0675. Sterling last traded at $1.2192, up 0.70%, while the dollar fell 0.39% against the Swiss franc. Earlier this week, the franc plunged the most against the dollar in one day since 2015, when the Swiss central bank loosened its currency peg.
– The Japanese yen, which tends to benefit in times of extreme market volatility or stress, strengthened 1.48% versus the greenback to 131.77 per dollar. The Aussie eased 0.1% to $0.6692, while the kiwi dollar also slipped to $0.6255, having hit a one-month high of $0.6309 earlier in the day
– Gold prices traded just below their strongest levels in 11 months on Monday as markets gauged the impact of emergency liquidity measures from the Federal Reserve and other major central banks amid increasing fears of a banking crisis.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9210. Stop at 0.9175 and profit target at 0.9330.
3. Credit Suisse saga and interest rate differential are both likely to weigh on the Swiss francs.
4. Price is likely to be supported by the 20EMA with MACD hinting at a bullish price trend.
Fundamental Comments
1. Credit Suisse saga is likely to weigh on the Swiss francs.
2. Interest rate differential is in the U.S. dollar favour.
Technical Comments
1. Price is likely to be supported by the 20EMA as well as the Fibonacci 50% correction point.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.9205 | 0.9170 | 0.9120 |
| Resistance | 0.9265 | 0.9300 | 0.9340 |
Technical Overview
USD/JPY – Price continued its decline, moving past the previous week’s low at 131.55 at the point of this writing. Stochastic is hinting that this price decline can continue. 20EMA is also hinting at a strong bearish price trend. MACD is also hinting at a bearish price trend. We think the price is likely to be limited to 131.05. If price can hold above this point, we see a rally back to 134.00 in the next few days.
| Support | 131.30 | 130.70 | 130.30 |
| Resistance | 131.80 | 132.55 | 133.20 |
EUR/USD – Price had reached a low of 1.0517 last Wednesday and we have seen a rally to 1.0690 this morning. We think price may have reached a high and we see a decline to 1.0590 in the next 48 hours. Stochastic is suggesting a possible price high in the making. MACD is also hinting at a price decline with its fast line turning down. However, 20EMA remains bullish. A move above 1.0690 would negate our bearish view and calls for a price move to 1.0759.
| Support | 1.0645 | 1.0590 | 1.0545 |
| Resistance | 1.0690 | 1.0735 | 1.0770 |
GBP/USD – Price has made a high at 1.2209 this morning but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. Stochastic is also in the overbought zone and hinting at a possible high as well. 20EMA remains bullish. We think price has made a high and we see a price decline to 1.2010 in the next few days. A move above 1.2210 would negate our bearish view.
| Support | 1.2165 | 1.2110 | 1.2060 |
| Resistance | 1.2210 | 1.2270 | 1.2310 |
XAU/USD – Price move above the previous week high at $1959.40 this morning to reach a high of $1991.95. Stochastic and MACD are hinting at a possible price high with divergence warnings. However, the 20EMA is hinting at a strong bullish price trend. We think price may be capped by the $2000 mark and we see a decline back to $1935 over the next few days. A move above $2000 is likely to hinting at a continuation of the rally to $2048.50.
| Support | 1980.55 | 1966.40 | 1951.45 |
| Resistance | 1998.10 | 2015.45 | 2032.45 |
AUD/USD – Price has reached a high of 0.6729 this morning but the MACD indicator has given a divergence with price, hinting at a possible price high. Stochastic is also turning down from the overbought zone and hinting at a bearish price trend ahead. However, 20EMA is hinting at a continuation of this bullish price trend. We think price may have reached a high and we are looking at a price decline back to 0.6590 in the next few days.
| Support | 0.6660 | 0.6625 | 0.6595 |
| Resistance | 0.6700 | 0.6730 | 0.6780 |