Price closed below the cloud in the previous trading session, changing the chart outlook to bearish. Conversion line and Base line remain in a bullish crossover . Lagging Span is above price of 26 days ago but is below the cloud at the moment. MACD is hinting at a bearish price trend. If price is unable to move above the cloud, it could be heading towards the support at $119.90 in the next 2-3 weeks.
Market Talk – The Japanese yen fell on Friday after the Bank of Japan (BOJ) stood pat on its ultra-easy monetary policy. The U.S. dollar was on track for a second straight monthly loss despite finding some support from data pointing to still-sticky inflation in the United States, which reinforced expectations for a 25-basis-point rate hike at next week’s FOMC meeting. .
– The Commerce Department reported on Thursday that U.S. economic growth slowed by more than expected in the first quarter, while a separate report from the Labour Department on Thursday showed initial claims for state unemployment benefits decreased 16,000. The labour report suggested a still-tight labour market and also underpinned next week’s rate increase expectations.
– In a closely watched decision, the BOJ on Friday announced it will maintain ultra-low interest rates, as expected, and made no tweaks to its yield curve control by a “unanimous vote”. However, the BOJ said it will remove forward guidance that pledges to keep interest rates at current or lower levels.
– The yen slid in volatile trade following the decision, and was last 0.5% lower against the dollar at 134.60. Sterling slipped 0.06% to $1.2492. The euro fell 0.1% to $1.1016, but remained near its recent one-year high.
– Gold prices fell slightly on Friday, extending losses into a third straight session as stronger-than-expected U.S. inflation and labour market data saw fears of more Federal Reserve rate hikes come back into focus.
– There will be no Forex Commentary for the next 3 weeks. Update will resume on 22 May.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation.
2. Buy USD/CAD at 1.3605. Stop at 1.3570 and profit target at 1.3725.
3. A Fed rate hike next week and declining crude oil prices are both weighing on the Canadian dollar.
4. Price is likely to be supported by the 20EMA line with MACD hinting at a bullish price trend.
Fundamental Comments
1. US labour overnight is suggesting a still-tight labour market and a likely rate hike in next week FOMC meeting.
2. The Canadian dollar is likely to be weighed down by a second weekly decline in crude oil price.
Technical Comments
1. Price is likely to be supported by the 20EMA line, which is also hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
Support
1.3570
1.3520
1.3475
Resistance
1.3645
1.3695
1.3730
Technical Overview
USD/JPY – We saw a price rally to a high of 134.92 this morning after Bank of Japan maintained its ultra-easy monetary policy after its monetary meeting. Stochastic is hinting at a continuation of this price rally. MACD and 20EMA are also hinting at a continuation of the price rally. If price can move above 135.13, we are likely to see a test of 137.90 in the next few days.
Support
134.70
134.35
132.80
Resistance
135.15
135.50
136.05
EUR/USD – We had a buy recommendation on Tuesday at 1.0995 and had recommended placing stop at 1.0960 and profit target at 1.1075. Our profit target was met when price reached a high of 1.1094 on Wednesday. A divergence at the price high is hinting at a price decline to 1.0985 in the next few days. Stochastic is also hinting at a price decline. However, MACD remains bullish and is hinting at a price rally.
Support
1.0990
1.0945
1.0910
Resistance
1.1035
1.1075
1.1095
GBP/USD – We had a sell recommendation on Wednesday but our call was wrong. Price went to a high of 1.2515 taking out our stop. MACD is hinting at a loss of momentum in the rally but stochastic is still pointing to a price rally. 20EMA is supporting the stochastic and calling for a price rally. However, we think price is likely to stay in a sideways range for the next 24 hours.
Support
1.2465
1.2425
1.2385
Resistance
1.2515
1.2545
1.2595
XAU/USD – Price failed to move higher and test its resistance at 2012.35 and we have seen price tested the support at $1973.95. Price has also moved below the 20EMA and we are likely to see another move to test the previous low at $1969.15 in the next couple of days. Stochastic is hinting at a price decline. Both MACD and 20EMA are hinting at a bearish price trend in the next few days.
Support
1969.10
1955.30
1949.65
Resistance
1984.75
1996.80
2003.70
EUR/AUD – Price reached a high of 1.6784 on Wednesday and the decline has reached a low of 1.6603 this morning. The low was supported by the 20EMA line and if this support holds, we are likely to see price test the previous high again at 1.6784 in the next few days. Stochastic is neutral but MACD is hinting at a bullish price trend. 20EMA is also hinting at a price rally. A Price move below 1.6525 would negate our bullish price view.
After reaching a high at $1.52, price went into a correction. The correction is currently supported by the conversion line and is above the cloud, keeping the uptrend intact. Conversion and Base lines remain in a bullish crossover and is hinting at a bullish price trend. Lagging Span is above price of 26 days ago but is inside the cloud. MACD is bullish, with both lines above the zero line. MACD is hinting at a bullish price trend. We think price is likely to move higher to the previous price resistance at $1.52 in the next 2-3 weeks.
Price, after reaching a high at 12.90 on 20 April 2023, went into a correction. The correction was supported by the Base line and the upper edge of the cloud, keeping the bullish price trend intact. Conversion line and Base line remain in a bullish crossover and is hinting at a bullish price trend. Lagging Span is above price of 26 days ago but is below the cloud at the moment. MACD is above the zero line and is hinting at a bullish price trend. If price is able to stay above the cloud, it could be heading towards the previous resistance high at $12.90 in the next 2-3 weeks.
Market Talk – The safe-haven U.S. dollar and yen rose on Tuesday as market sentiment turned risk-averse amid renewed worries about the U.S. banking sector and the outlook for the global economy, which knocked the euro off a nearly 10-month high.
– U.S. consumer confidence index fell to 101.3 – the lowest since July 2022 – from a revised 104.0 in March. The U.S. Richmond Fed manufacturing index was down at -10 in April, the fourth straight month of contraction. Both surveys negated strong U.S. housing data which beat estimates with a 9.6% rise in March to a one-year high of 683,000 after net revisions.
– The yen firmed 0.6% to 133.49 per dollar even as the BOJ’s new governor Kazuo Ueda signaled he was in no hurry to change monetary policy. The euro declined to $1.0969, having risen 1.2% so far in April. Sterling was down 0.6% at $1.2403, but was close to a 10-month high of $1.2545 reached earlier this month.
– The Australian dollar took a further knock on Wednesday, declining to $0.6614, the weakest level since mid-March after a downward surprise in core inflation lessened the pressure for another hike in interest rates next month.
– Gold prices rose to key levels on Wednesday, buoyed by safe haven demand as a string of weak U.S. company earnings and economic data fueled fears of a potential recession this year. Resurgent fears of a banking crisis also boosted safe haven demand
Chart Focus GBP/USD
Key Points
1. Sell GBP/USD recommendation.
2. Sell GBP/USD at 1.2435. Stop at 1.2470 and profit target at 1.2350
3. In increase in risk sentiment and interest rate differential are both in the US dollar favour.
4. Price is likely to be capped by the 20EMA and stochastic is hinting at a price decline.
Fundamental Comments
1. As market sentiment turned risk-averse, the US dollar is likely to be in demand.
2. Interest rate differential is in the US dollar favour.
Technical Comments
1. Price is likely to be capped by the 20EMA which is also hinting at a bearish price trend.
2. Stochastic is moving lower and hinting at a continuation of the downtrend.
Key Levels
Support
1.2385
1.2340
1.2275
Resistance
1.2440
1.2505
1.2545
Technical Overview USD/JPY – Price has moved below the previous week low and could be on its way to 133.10 in a bigger correction move. This is also the Fibonacci ABC formation price target as well. Stochastic is hinting at a price decline. Both MACD and 20EMA are also hinting at a price decline. Only a price move above 134.50 would negate this bearish price view over the next couple of days ahead.
Support
133.35
132.80
132.50
Resistance
133.90
134.35
134.95
EUR/USD – We had a buy recommendation yesterday at 1.0995, which was filled when price declined to a low of 1.0963. The low was just above our stop at 1.0960. Our view may be wrong with market turning to safe haven. We would recommend keeping stop at 1.0960 and profit target at 1.1075. Stochastic is still moving lower but MACD is hinting at a possible price rally. 20EMA is hinting at a price decline.
Support
1.0945
1.0910
1.0875
Resistance
1.0995
1.1035
1.1075
AUD/USD – Price reached a low of 0.6601 this morning. There was no divergence warning from the MACD indicator. It means price can continue to move lower to the next support level at 0.6560. Stochastic is hinting at a continuation of this current decline. 20EMA is hinting at a bearish price trend. We think price will move lower. Only a price move above 0.6670 will negate this bearish price move.
Support
0.6580
0.6540
0.6515
Resistance
0.6620
0.6665
0.6715
XAU/USD – A move towards safe haven has help to halt a decline in gold at $1975.95. We are likely to see price moves higher to test the important resistance at $2012.35. If price failed to move above this resistance, there could be another decline to $1969 but a move above will hint at price rally to $2048.45. Stochastic and 20EMA are both hinting at a price rally but MACD is hinting at a price decline.1971.
Support
1992.85
1983.35
1971.40
Resistance
2003.70
2012.35
2022.40
NZD/USD – Price has failed to move higher to test 0.6225 we had envisioned yesterday. Instead, price is near to the low of 0.6125 despite the divergence warning given by the MACD indictor. Stochastic is hinting at a continuation of this price decline. Both MACD and 20EMA are also hinting at a bearish price trend ahead. A break of 0.6125 is likely to send price down to 0.6080 in the next 24 hours.
