Author: Nicholas

FX Commentary – Jitters in Bank Arouse Talk Of A Fed Pause

Nicholas

Market Talk
– The U.S. dollar was on the back foot while the euro climbed on Tuesday, as regional bank jitters in the U.S. had traders expecting U.S. interest rate cuts before long. However, in Europe a 50 basis point hike remains a live option at next week’s central bank meeting.

– News overnight of plunging deposits at First Republic Bank in the U.S. served as a reminder that stability risks have not entirely died down and prompted traders to renew expectations that the Fed shifts quickly from hiking to cutting. Interest rate futures market has also factored in roughly 50 bps of rate cuts by the end of the year

– The euro rose above $1.10 overnight and was still going at $1.1062 early in the Asia session. European Central Bank board member Isabel Schnabel told Politico that a 50 bp rate hike was not off the table and would depend on data – notably inflation figures due two days before May’s meeting.

– The Japanese currency struggled amid remarks from new Bank of Japan governor Kazuo Ueda, that  he was not in a hurry to shift policy. The greenback rose versus the Japanese currency, and was last 134.27 yen. This week’s BOJ meeting, which concludes on Friday, is his first in charge.

– Gold prices rose 0.3% to $1,995.57 an ounce, on Tuesday, extending a recovery into a third straight session as the greenback fell amid bets that the Federal Reserve could pause its rate hike cycle by as soon as June. Worsening economic conditions, which increase the safe haven appeal of the yellow metal, also aided the yellow metal.

Chart Focus EUR/USD

Key Points

1. Buy EUR/USD recommendation.

2. Buy EUR/USD at 1.0995. Stop at 1.0960 and profit target at 1.1075

3. A potential 50 basis point hike and divergent monetary policy is aiding the Euro dollar.

4. Price is likely to be supported by the 20EMA with MACD hinting at a bullish price trend.

Fundamental Comments

1. A potential 50 basis point hike in Euro interest rate is aiding the Euro dollar.

2. Divergent monetary policy between the Euro and US is aiding the Euro dollar.

Technical Comments

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

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



Key Levels

Support1.10401.10001.0965
Resistance1.10751.11001.1135










Technical Overview

USD/JPY – Price has been moving in a 100 pips range for the past 48 hours and looks like it would stay range bound for the next 24 hours. Stochastic is in the middle of its range and both MACD and 20EMA are hinting at a sideways range trading scenario. We think price may have reached a top at 135.13 last week. We see price going down to 133.10 in a correction over the next few days.

Support134.10133.55133.15
Resistance134.70135.15135.55

USD/CAD – Price has reached a high of 1.3566 which was also a previous high from 2 weeks ago. Price will need to move above this high to test another important high at 1.3700. Stochastic remains near to the overbought zone and is hinting at a limited upside. However, 20EMA is hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. We see price moving higher unless price moves below 1.3445.

Support1.35101.34701.3445
Resistance1.35651.36201.3650

GBP/USD – Price reached a high of 1.2506 this morning and we may see a correction lower to 1.2450 in the next 24 hours. Stochastic has reached the overbought zone and is hinting at a possible price decline. MACD is hinting at a mild bullish trend. Only 20EMA is hinting at a strong bullish price trend. We see price going lower to 1.2350 in the next couple of days.

Support1.24601.24101.2375
Resistance1.25051.25551.2600

XAU/USD – We think price has reached a low of $1969.13 last week and we are likely to see a bounce back up to $2012.35 in the next couple of days. If price failed to move above $2018, there could be another decline to $1969 but a move above will hint at $2048.45. Stochastic is rising and is hinting at a price rally. MACD has turned bullish and is hinting at a price rally as well. 20EMA is neutral at the moment.

Support1988.651969.151959.95
Resistance2000.802018.152031.70

NZD/USD – Price has reached a low of 0.6125 on Monday but this low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low in place. Stochastic is moving higher and is hinting at a price rally. 20EMA has turned bullish and is hinting at a bullish price trend. We see price testing its previous high of 0.6225 in the next 48 hours. A price move below 0.6125 would negate our bullish view.

Support0.61250.60800.6050
Resistance0.61850.62250.6265

CFD Trading –Buy Bristol-Myers SQ (BMY.NYS) @ $70.10. Stop @ $67.80 and Target @ $74.60.

Nicholas

Bristol-Myers SQ Stock Code BMY.NYS

Outlook

Price stayed above the cloud in a price correction, keeping the uptrend intact.  In the previous trading session, we saw a gap up in price, which is a hint that the price correction could have ended. Conversion and Base lines had a bullish crossover earlier, hinting at a bullish price trend. Lagging Span is above price of 26 days ago but is below the cloud. MACD is bullish with both lines above the zero line. We think price is likely to move higher to the previous price high at $74.59 in the next 2-3 weeks.

Strategy                  

$70.10                Buy

$74.60                Price Target

$67.80                Risk Management Stop

3 weeks              Trade Duration

CFD Trading –Sell Teradyne Inc. (TER.NAS) @ $98.00. Stop @ $102.90 and Target @ $91.20.

Nicholas

Outlook

Price closed below the cloud in the previous trading session, changing the chart outlook to bearish. Conversion line and Base line remain in a bearish crossover and is hinting at a bearish price trend ahead. Lagging Span is below price of 26 days ago but is inside the cloud at the moment.  MACD is bearish and is hinting at a bearish price trend. If price is unable to move above the cloud, it could be heading towards the support at $91.20 in the next 2-3 weeks.

Strategy                  

$98.00                Sell

$91.20                Price Target

$102.90              Risk Management Stop

3 weeks              Trade Duration

FX Commentary – US Dollar Held Gains On Expectation Of Tight Monetary Policy.

Nicholas

Market Talk
– The U.S. dollar held gains on Thursday after strong U.S. banking results firmed up expectations that the Federal Reserve will keep monetary policy tight for a while longer while the New Zealand’s dollar slumped after cooler than expected inflation data.

– The Japanese yen weakened for a second day, losing 0.1% to at 134.85, after the yield on two-year Treasury notes rose 7 basis points to 4.269%, after hitting a one-month high of 4.286%. The greenback had briefly poked above 135 for the first time in a month in Wednesday’s trading.

– Sterling was last trading at $1.2440, up 0.13% on the day after hotter-than-expected UK inflation cemented expectations for more rate hikes by the Bank of England.

– New Zealand’s consumer price index for the first quarter came in below expectations on Thursday, but remained near historic highs. The kiwi slid 0.7% to $0.6154 after touching the weakest level since March 16.

– Gold prices traded below key levels on Thursday, coming under pressure from resurgence in the dollar and mounting expectations that major central banks across the globe will keep raising interest rates in the near-term.


Chart Focus USD/CHF

Key Points

1. Buy USD/CHF recommendation.

2. Buy USD/CHF at 0.8925. Stop at 0.8895 and profit target at 0.9050

3. Expectations of another 25bp Fed hike and an increase in US Treasury yields are both likely to aid the U.S. dollar.

4. Price is likely to be supported by the Fibonacci 50% correction point with MACD hinting at a bullish price trend.

Fundamental Comments

1. An increase in US Treasury yields is likely to aid the U.S. dollar.

2. Expectations of another interest rate hike by the Fed is likely to aid the U.S. dollar.

Technical Comments

1. Price is likely to be supported by the Fibonacci 50% correction point.

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



Key Levels

Support0.89350.88950.8855
Resistance0.89750.90050.9045










Technical Overview

USD/JPY – Price reached a high of 135.13 on Wednesday but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. Stochastic is also hinting at a price decline ahead but 20EMA is hinting at a strong bullish price trend. We think price may have reached a high at 135.13 and we see a decline back to 133.80 in the next few days.

Support134.30133.95133.35
Resistance134.75135.15135.80

EUR/USD – Price has tested the support at 1.0905 on 2 occasions and both times, this support has managed to hold. We are likely to test a test of the top side at 1.1075. Stochastic is hinting at a price rally ahead. MACD and 20EMA are neutral at the moment. We think price is likely to move higher to 1.1020 in the next 48 hours as long as price can hold above 1.0945.

Support1.09401.09051.0865
Resistance1.09851.10201.1075

GBP/USD – Price has managed to hold around the 20EMA support level and if this support holds, price is likely to test the topside of 1.25 again in the next 48 hours. Stochastic is rising and is hinting at a bullish price trend. MACD is about to turn bullish while 20EMA is neutral at the moment. We favour the topside test but a move below 1.2390 would negate our bullish price view for the next 48 hours.

Support1.24051.23551.2305
Resistance1.24551.25051.2545

XAU/USD – Price only reached a high of $1998.50 overnight, missing our sell entry price at $1999. If price is capped by the 20EMA at $2000, we are likely to see another decline to $1965. If price can move above the $2000 level, we are likely to see a test back to $2022 in the next few days. MACD has a divergence and is hinting at a price rally. Stochastic is also hinting at a price rally but 20EMA is hinting at a price decline. We favour the upside test.

Support1980.951966.001949.65
Resistance1998.852011.702022.65

NZD/USD – Price reached a low this morning at 0.6148 but this low was accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. Stochastic is hinting at continuation of this price decline. 20EMA is also hinting at a bearish price trend. We think price may have reached a low and we see a rally back to the previous high at 0.6225 in the next few days.

Support0.61450.60950.6060
Resistance0.61850.62250.6260

CFD Trading – Buy AEM SGD (AWX.SGX) @ $3.15. Stop @ $3.04 and Target @ $3.57.

Nicholas

AEM SGD Stock Code AWX.SGX

Outlook

Price has been moving in a horizontal movement since moving above the cloud.  Price is likely to be supported by the cloud and the base line, keeping the uptrend intact. Conversion and base lines remain in a bullish crossover, hinting at a bullish price trend. Lagging Span is above price of 26 days ago but is below the cloud. MACD is bullish, with both lines above the zero line and is hinting at a bullish price trend. We think price is likely to move higher to the previous price resistance at $3.58 in the next 2-3 weeks.

Strategy                  

$3.15                 Buy

$3.04                 Price Target

$3.57                 Risk Management Stop

3 weeks              Trade Duration