Market Talk
– The U.S. dollar advanced on Wednesday, recovering from two-month lows hit in the previous session, as investors lightened their short positions to book profits ahead of the all-important U.S. non-farm payrolls report on Friday.
– Overnight, the ADP National Employment report showed U.S. private employers hired fewer workers than expected in March, suggesting a cooling labour market. The jobs data supported the view that the Federal Reserve may not need to raise rates much further.
– The greenback posted its third daily loss against the yen to 131.15 as Treasury yields extended their decline. The euro edged up to 1.0970 while sterling was last trading at 1.2455, down 0.35% on the day.
– The New Zealand dollar rose 0.1% versus the greenback to $0.6316, rallying by as much as 1.1% to a two-month high of $0.6379 after the Reserve Bank of New Zealand unexpectedly raised interest rates by 50 bps to a more than 14-year high of 5.25%.
– Gold touched its highest in one year as recent U.S. economic data fanned fears of a slowdown and spurred bets the Federal Reserve may ease up on rate hikes. Gold was last trading at $2013.50.
Chart Focus USD/CHF
Key Points
1. Sell USD/CHF recommendation.
2. Sell USD/CHF at 0.9090. Stop at 0.9125 and profit target at 0.9005
3. Weak US job data and views that the Fed is near the end of its monetary tightening cycle is 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 job 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/JPY – We had a sell recommendation yesterday at 132.10 but price did not reached our entry price. Price only reached a high of 131.77 and declined to 130.59 overnight. The low was below the Fibonacci 62% correction point of the rally from 129.63 to the high at 133.75. Stochastic and MACD are both hinting at a price rally. However, 20EMA is hinting at a strong bearish price trend. We think there could be a corrective rally to 131.70 in the next 24 hours.
| Support | 130.95 | 130.60 | 130.05 |
| Resistance | 131.50 | 132.20 | 132.85 |
EUR/USD – The overnight decline off the high at 1.0972 had moved below the 20EMA line, hinting at a bearish price trend. However, price is currently being supported by a previous support level. If price can hold above this support level, we can see a test back to the previous high at 1.0972. If price fails to hold above this support, we are likely to see a price decline to 1.0785. We prefer the bullish view.
| Support | 1.0885 | 1.0845 | 1.0785 |
| Resistance | 1.0930 | 1.0975 | 1.1030 |
GBP/USD – Price had reached a high of 1.2524 on Tuesday and declined to the 20EMA support at 1.2435 overnight. MACD is hinting at a price rally in the next 24 hours. 20EMA is also hinting at a price rally. However, stochastic is hinting that the decline may not be over as yet. We prefer to go with the MACD and we think price is likely to be support at 1.2435 and we are likely to see a rally to 1.2525 again in the next 24 hours.
| Support | 1.2435 | 1.2380 | 1.2330 |
| Resistance | 1.2485 | 1.2525 | 1.2580 |
XAU/USD – Price broke out of a triangle chart pattern on Tuesday and reached a overnight high of $2032.16. We think price is likely to continue higher but in the next 24-48 hours, we are likely to see a corrective decline back to the 20EMA line $2003 or the Triangle support at $19935. Stochastic is hinting at a price decline but both MACD and 20EMA are hinting at a bullish price trend.
| Support | 2003.20. | 1990.45 | 1976.80 |
| Resistance | 2021.20 | 2032.20 | 2049.70 |
NZD/USD – Price had risen to a high of 0.6375 yesterday after an unexpected 50 basis points hike by the RBNZ. The rally failed to sustain and we have seen a price decline below the 20EMA at 0.6295. We are likely to see a continuation of this decline to 0.6205 in the next 48 hours. Stochastic is hinting at a price decline. MACD is also hinting at a possible price decline while 20EMA has already turned down.
| Support | 0.6270 | 0.6235 | 0.6180 |
| Resistance | 0.6305 | 0.6350 | 0.6375 |