Author: Nicholas

FX Commentary – U.S. Dollar Hovered Near 1-Month High Amid Expectations Of Higher U.S. Rates

Nicholas

Market Talk
– The U.S. dollar hovered near a one-month peak on Tuesday as traders raised their forecasts of U.S. Federal Reserve interest rate levels needed to tame inflation, as a stubbornly resilient labour market remains largely immune to aggressive rate hikes.

– U.S. Treasury yields have risen on the back of higher rate expectations with benchmark 10-year yields last at 3.6305%, sending the Japanese yen pinned near Monday’s one-month low of 132.90 per dollar.

– The British pound tumbled to a one-month low of $1.2006 in the previous session. It was last 0.09% higher at $1.2033. The euro gained 0.06% to $1.0733, having slid to $1.0709 in the previous session, the lowest since Jan. 9.

– Reserve Bank of Australia raised its cash rate 25 basis points to a decade-high of 3.35% on Tuesday and reiterated that further increases would be needed, a more hawkish policy tilt than many had expected. The Aussie shot up to 0.6940, recouping overnight losses.

– Gold prices steadied at $1873 per ounce, near a one-month low on Tuesday amid continued pressure from strength in the greenback and rising Treasury yields. Focus is turning to economic cues from a talk by Federal Reserve Chair Jerome Powell later in the day after stronger-than-expected U.S. jobs data saw markets broadly shift their expectations for interest rate hikes by the Fed.


Chart Focus EUR/USD

Key Points

1. Sell EUR/USD recommendation.

2. Sell EUR/USD at 1.0795. Stop at 1.0825 and profit target at 1.0705.

3. Expectations of more interest rate hikes from the Fed and rising yield are aiding the U.S. dollar.

4. Price is likely to be capped by the strong resistance with MACD hinting at a bearish price trend.

Fundamental Comments

1. Expectations of more interest rate hikes from the Fed are aiding the U.S. dollar.

2. Rising US Treasury yield is weighing on the Euro dollar.

Technical Comments

1. Price is likely to be capped by the previous support turned resistance line and the 20EMA line.

2. MACD remains bearish and is hinting at a bearish price trend.



Key Levels

Support1.07051.06701.0630
Resistance1.07451.07951.0835










Technical Overview

USD/JPY – Price was unable to move above 132.90 and we have seen a price decline to 132.13 at the point of this writing. We are likely to see the decline continues to 131.55 in the next 24 hours. Stochastic and MACD are both hinting at a price decline after reaching an extreme level. 20EMA continues to hint at a bullish price trend. We favour a decline to 131.55 before a rally takes price higher above 133 in the next few days ahead.

Support131.95131.55131.05
Resistance132.40132.90133.30

USD/CAD – We had a buy call yesterday at 1.3370 but price only declined to a low of 1.3400 and our entry order was not filled. Price had reached a high of 1.3475 overnight and has turned down. Stochastic and MACD are both also hinting that price could move lower. However, 20EMA is hinting at a bullish price trend. We think any price decline could be supported at 1.3375 and we can see another rally in the next few days to 1.3520.

Support1.33951.33451.3295
Resistance1.34451.34801.3520

GBP/USD – Price reached a low of 1.2005 overnight and the decline has stopped for the moment with price hovering around the overnight low. We think this pause in decline is only temporary and a decline to 1.1900 is likely in the next few days. Trend indicators, both MACD and 20EMA are hinting at a bearish price trend. Price will need to move above 1.2130 to negate this bearish price trend for the next few days.

Support1.20051.19501.1905
Resistance1.20751.21251.2180

XAU/USD – Price has declined below last week low of $1900.55, reaching an overnight low of $1860.65. We are likely to see a continuation of this bearish price trend to $1843 in the next 48 hours. While both trend indicators are confirming the bearish price trend, stochastic is hinting at a corrective price rally to get into a short position. The corrective rally can bring price higher to $1881.70. From this price level, we see a decline to $1843.

Support1871.601860.651843.60
Resistance1881.701896.551909.50

AUD/USD – Price has declined to a low of 0.6854 overnight. A 25 basis points hike by the RBA has lifted price to 0.6950 this morning. Price is likely to face a strong resistance at 0.6975. We do not think price can move above this resistance. We think price is likely to decline back to 0.6855 again in the next few days. Both MACD and 20EMA are hinting at a strong bearish price trend. Stochastic is hinting at a price rally to 0.6975 to get into a short position.

Support0.69050.68550.6790
Resistance0.69500.69950.7045

FX Commentary – U.S. Dollar Jumped On Upbeat U.S. Labour Data

Nicholas

Market Talk
– The U.S. dollar jumped on Friday after upbeat economic data from the United States lessened the risk of recession, but also suggested the Federal Reserve would have to hike interest rate further and keep rates up for longer.

– The Labour Department’s closely watched employment report showed that nonfarm payrolls surged by 517,000 in the previous month. The department revised December data higher to show 260,000 jobs added instead of the previously reported 223,000. Average hourly earnings also rose for the second consecutive month, boosting the U.S. dollar.

– The greenback extended its rally on the yen to a three-week top of 132.60 on Monday amid reports the Japanese government had offered the job of central bank governor to the current deputy, Masayoshi Amamiya, who is considered by markets to be more dovish than some other contenders.

– The euro was huddled at $1.0791 after shedding 1.1% on Friday. Sterling fell 1.39% to $1.2055, the lowest since Jan. 6 and its worst day since Dec. 15. The Aussie was struggling at $0.6923, after slumping 2.2% on Friday while the kiwi dollar was hovering at $0.6320.

– Gold prices were muted on Monday, after plummeting 2.5% on Friday. A stronger-than-expected U.S. employment data ramped up fears that the Federal Reserve could keep hiking interest rates sending gold prices lower to $1860.45.


Chart Focus USD/CAD

Key Points

1. Buy USD/CAD recommendation.

2. Buy USD/CAD at 1.3370. Stop at 1.3340 and profit target at 1.3470.

3. A strong US labour data and a decline in crude oil prices are both likely to keep the U.S. dollar strong.

4. Price is likely to be supported by the 20EMA line, with both trend indicators hinting at a bullish price trend.

Fundamental Comments

1. A strong US labour data is hinting that the Fed is likely to hike rates further, keeping the dollar strong.

2. A decline in crude oil price is likely to keep the Canadian dollar weak.

Technical Comments

1. Price is likely to be supported by the 20EMA line, which is also hinting at a bullish price trend.

2. MACD is also hinting at a bullish price trend.



Key Levels

Support1.33901.33351.3295
Resistance1.34301.34751.3520










Technical Overview

USD/JPY – We had a sell recommendation from last Thursday at $128.95 and on Friday, we had shifted stop to cost at 128.95 and kept profit order at 127.80. Price went up above our stop last Friday and we are out of this position without a loss. Price will need to move above 132.86. If price is unable to move above this resistance, we see price going lower to 130.00 in the next 24 hours. We are in favour of the bearish price trend.

Support131.55131.05130.55
Resistance132.00132.40132.90

EUR/USD – Price has declined below last week low of 1.0801, triggering a bearish price trend. We are likely to see a continuation of this bearish price trend to 1.0710 in the next 48 hours. Trend indicators, MACD and 20EMA confirm this bearish price trend but Stochastic is hinting at a limited downside. We favour the bearish price and only a move above 1.0930 would negate our bearish view.

Support1.07651.07051.0650
Resistance1.08051.08551.0890

GBP/USD – Price reached a low of 1.2030 this morning but looks like it may have reached a low. Both stochastic and MACD are hinting that price has reached a low. However, 20EMA is hinting at a strong bearish price trend. We tend to favour the stochastic and MACD. We think price is likely to move up today to 1.2145 or to 1.2185. From this location, we see the start of another decline.

Support1.20301.19851.1935
Resistance1.20751.21251.2185

XAU/USD – Price has declined below last week low of $1900.55, triggering a bearish price trend. We are likely to see a continuation of this bearish price trend to $1843 in the next few days. However, Stochastic is hinting at a price rally to $1900 to go short. Trend indicators are hinting at a bearish price trend. We have the same view as the stochastic indicator and would prefer to get into a short position on a rally towards the 20EMA line at $1900.

Support1872.101860.651843.60
Resistance1882.201900.551918.85

EUR/JPY – Last Friday, we had a sell call on this pair but our call was wrong. Price has moved up higher to the previous high at 142.85. If price cannot move above this resistance, we are likely to see a decline back to 141.20 in the next 48 hours. However, if price moves above the previous high at 142.85, we are likely to see a move to 143.90. We favour the bearish side and see a decline to 141.20 for the next 24 hours.

Support141.85141.25140.75
Resistance142.35142.85143.30

CFD Trading –Sell 3M Company (MMM.NYS) @ $118.00. Stop @ $123.60 and Target @ $106.20.

Nicholas

Three M Company Stock Code MMM.NYS

Outlook

Price tested the lower edge of the cloud two days ago but was unable to move above the cloud, keeping the bearish outlook intact. Conversion and Base lines had a bearish crossover, hinting at a bearish price trend. Lagging Span is below price of 26 days ago and below the cloud, confirming the bearish price trend. MACD is bearish with both lines below the zero line. We think price is likely to move lower to the previous price low at $106.20 in the next 2-3 weeks.

Strategy                  

$118.00              Sell

$106.20              Price Target

$123.60              Risk Management Stop

3 weeks              Trade Duration

CFD Trading – Sell SPDR Select Sector Fund – Energy (XLE.NYS) @ $86.00. Stop @ $88.90 and Target @ $80.05.

Nicholas

SPDR Select Sector Fund – Energy Select Sector Stock Code XLE.NYS

Outlook

Price closed below the cloud in the previous trading session, changing the chart outlook to bearish. Conversion line and Base line remained in a bullish crossover. Lagging Span is below price of 26 days ago but is inside the cloud at the moment.  MACD has bearish crossover and is hinting at a bearish price trend. If price stays below the cloud, it could be heading towards the previous support at $80.05 in the next 2-3 weeks.

Strategy                  

$86.00                Sell

$80.05                Price Target

$88.90                Risk Management Stop

3 weeks              Trade Duration

FX Commentary – Euro Declined After ECB Largarde Comment On Inflation.

Nicholas

Market Talk
– The euro and sterling slipped against the dollar on Friday as markets took a dovish cue from policymakers at the European Central Bank and the Bank of England, who said inflationary pressures in their economies have become more manageable.

– Focus will be on tonight Non-farm Payroll. Analysts expect 185,000 jobs were added last month, the lowest since January 2021, unemployment edged up to 3.6%, and hourly wage inflation to stay flat at 0.3% on a monthly basis, suggesting the strong labour market might have started to ease up.

– The pound slid to a more than two-week trough of $1.2203 in Asia trade. It had fallen 1.2% in the previous session despite a 50 basis point hike, after BoE comment’s that tide was turning in its battle against high inflation.

– The euro edged down to $1.0897, after tumbling 0.7% on Thursday to move further away from its 10-month peak of $1.1034. President Christine Lagarde acknowledged the euro zone outlook had become less worrisome for growth and inflation.

– Gold prices inched higher on Friday after pulling back sharply from nine-month highs in the prior session as the dollar rebounded in anticipation of key nonfarm payrolls data, while other economic readings showed some strength in the labour market.


Chart Focus EUR/JPY

Key Points

1. Sell EUR/JPY recommendations.

2. Sell EUR/JPY at 140.60. Stop at 140.95 and profit target at 139.70.

3. The European Central Bank has hinted at a potential pause in their rate hike which may weigh on the euro.

4. Price is likely to be capped by the previous support turned resistance line with both MACD and 20EMA also hinting at a bearish price trend.

Fundamental Comments

1. The European Central Bank hinted at a potential pause in their rate hike cycle this year which will mean less aggressive interest rate hikes.

2. A slower pace of rate hike will likely weigh on the Euro.

Technical Comments

1. Price has broken below its previous range support, hinting at a bearish price trend.

2. Both MACD and 20EMA are hinting at a bearish price trend.


Key Levels

Support140.10139.60139.15
Resistance140.60141.10141.60










Technical Overview

USD/JPY – We had a sell recommendation yesterday at $128.95, which was filled when the price moved to a high of $129.12. Price is below the 20EMA and MACD has remained below the zero line. Both trend indicators are hinting at a bearish price trend. However, stochastic currently is in the oversold zone and is hinting at a limited downside. Our view remains bearish and we would recommend moving stop to cost at $128.95 and the profit target remaining at $127.80.

Support128.40128.05127.75
Resistance128.85129.20129.85

EUR/USD – Price reached a low of $1.0884 overnight which is just above the Fibonacci 62% correction point of the rally from $1.0801 to the high at $1.1032. Stochastic is pointing downwards, hinting at a price decline. 20EMA is neutral at the moment while MACD remains bullish. If the price is able to sustain above the Fibonacci 62% correction point, at $1.0885, we are likely to see a rally back to the high at $1.1032 again in the next couple of days

Support1.08851.08451.0800
Resistance1.09301.09751.1030

GBP/USD – Price moved to a low at $1.2228 overnight but was supported by the lower trend line of the descending channel. Stochastic is moving lower and is hinting at a price decline. Price has moved below the 20EMA and MACD remained below the zero line. Both trend indicators are hinting at a possible bearish price trend. If the price is able to sustain within the descending channel, we may see a possible rebound in the price to $1.2335

Support1.22101.21701.2130
Resistance1.22551.22951.2335

XAU/USD – Price had a correction to a low of $1911.58 overnight after reaching a new fresh high at $1959.70 on the same day. Stochastic is declining and hinting at a price decline. MACD has a bearish crossover and is hinting at a possible bearish price trend. Price has moved below the 20EMA, hinting at a change in trend. Price could be on the way to this week’s low at $1900.27 and it is possible we could see this low tested in the next 48 hours.

Support1904.701892.101880.30
Resistance1923.001934.701942.10

EUR/ AUD – We had a buy recommendation at $1.5360 on Tuesday and yesterday, we recommended lifting stop higher at $1.5355 and a profit order at $1.5480. Unfortunately, the price move to a low of $1.5331 and triggered our stop at $1.5355. We are out of this position with a 5 pips loss. Stochastic is likely to turn up, hinting at a price rally. Price has moved above the 20EMA, hinting bullish trend. MACD remains bullish.

Support1.53851.53451.5305
Resistance1.54401.54851.5520