Market Talk
– The U.S. dollar was stuck near two-month lows on Wednesday U.S. job openings dropped to their lowest level in nearly two years in February, suggesting that labour market conditions were finally easing and bolstering views that the Federal Reserve is near the end of its monetary tightening cycle.
– Overnight JOLTS data showed job openings, a measure of labour demand, were down 632,000 to 9.9 million on the last day of February. Economists polled by Reuters had forecast 10.4 million openings.
– The euro was up 0.12% to $1.0965, hovering near two-month peaks it touched on Tuesday. Sterling was last trading at $1.2509, up 0.08% on the day, just shy of the ten month high it scaled on Tuesday. The Japanese yen strengthened 0.21% to 131.41 per dollar.
– The kiwi jumped to $0.6383 after a larger-than expected interest rate hike from the Reserve Bank of New Zealand. The RBNZ hiked interest by 50 basis points to a more than 14-year high of 5.25% on Wednesday while economist had forecasted a 25 basis point hike.
– Spot gold jumped about 2% on Tuesday to their highest in nearly two weeks at $2,025 after weak economic data bolstered views that the Federal Reserve is near the end of its tightening cycle.
Chart Focus USD/JPY
Key Points
1. Sell USD/JPY recommendation.
2. Sell USD/JPY at 132.10. Stop at 132.45 and profit target at 130.60
3. Weak US economic data and views that the Federal Reserve is near the end of its monetary tightening cycle are likely to weigh on the US dollar.
4. Price is likely to be capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Weak US economic data is likely to weigh on the U.S. dollar.
2. Views that the Federal Reserve is near the end of its monetary tightening cycle is likely to weigh on the US dollar.
Technical Comments
1. Price is likely to be capped by the 20EMA which is also hinting at a price decline.
2. MACD is bearish and is hinting at a price decline.
Technical Overview
USD/CHF – Price broke below the low of 0.9070 but this low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. Stochastic is in the oversold zone and is also hinting at a limited downside ahead. However, 20EMA is hinting at a strong bearish price trend. We could see a corrective rally back to 0.9115 before the decline resume again.
| Support | 0.9015 | 0.8965 | 0.8925 |
| Resistance | 0.9065 | 0.9095 | 0.9140 |
EUR/USD – Overnight price reached a high of 1.0972 but MACD is showing sign of weakness and hinting at a possible price high. Stochastic is also in the overbought zone and is hinting at a limited price upside. However, 20EMA is hinting at a strong bullish price trend. We are bullish but in the next 24 hours, we could see a corrective decline to 1.0925 before the rally resumes again.
| Support | 1.0925 | 1.0875 | 1.0825 |
| Resistance | 1.0975 | 1.1030 | 1.1070 |
GBP/USD – Price reached a high of 1.2524 last night and could be coming off in the next 24 hours in a correction. The trend remains bullish as indicated by the 20EMA line which is hinting at a strong bullish price trend. MACD also remains bullish and is hinting at a bullish price trend. Stochastic is in the overbought zone and is hinting at a possible price decline. Above 1.2524 would hint at a continuation of the price rally to 1.2600.
| Support | 1.2475 | 1.2425 | 1.2385 |
| Resistance | 1.2525 | 1.2595 | 1.2660 |
XAU/USD – Price broke out of a triangle chart pattern overnight and reached a high of $2025.00. Stochastic is hinting at a continuation of this rally. MACD is also bullish and hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. The triangle chart pattern is also hinting at a price rally. We could see price moving up to test the previous high of $2070 to $2074 in the next few days.
| Support | 2018.20 | 2003.20 | 1995.10 |
| Resistance | 2032.60 | 2049.70 | 2059.10 |
EUR/JPY – We had a buy call yesterday at 144.40 but price decline to a low of 143.80, taking out our stop at 144.10 along the way. It is possible price may have reached a low as MACD remains bullish. However, Stochastic is hinting at a continuation of the price decline. 20EMA is neutral. We remain bullish on this pair and are looking for a price rally to 145.60. A move below 143.55 would negate our bullish view.
| Support | 143.80 | 143.15 | 142.70 |
| Resistance | 144.40 | 144.95 | 145.60 |