Price, after reaching a high on 4 April 2023, went into a correction. The correction was supported by the cloud, keeping the uptrend 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 $4.28.
Market Talk – The U.S. dollar steadied on Wednesday after it seesawed with bond market volatility as investors scrutinized U.S. economic indicators, Federal Reserve commentary and corporate earnings for clues about the path for interest rates.
– The euro rose to $1.0968 after two consecutive daily declines of more than 0.5%. The greenback gained 0.17% to 134.31 yen, recovering from a 0.29% retreat on Tuesday on the back of a rise in US 2-year Treasury yields, which reached an almost one month high of 4.231% overnight.
– Sterling was last trading at $1.2427, up 0.43% on the day. The British pound jumped despite an unexpected rise in the unemployment rate in the three months to February as pay growth stayed higher than forecast, which could prompt the Bank of England to hike its interest rate again in May.
– The Australian dollar rose against the greenback to $0.6730 after Reserve Bank of Australia minutes yesterday, showed the central bank considered an 11th consecutive rate hike in April before deciding to pause. The RBA, however, said it was ready to tighten further if inflation and demand failed to cool.
– Gold prices fell slightly in Asian trade on Wednesday but stayed above US$2000 level as markets awaited more cues on U.S. monetary policy from a string of upcoming Federal Reserve speakers and reports. But further gains were held back by growing uncertainty over the path of U.S. interest rates, with recent hawkish signals from Fed speakers having spooked markets.
Chart Focus Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1999. Stop at $2013 and profit target at $1965.
3. Expectations of a other 25bp Fed hike and easing worries of a global recession are both weighing on Gold.
4. Price is capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Expectations of another interest rate hike by the Fed is weighing on Gold.
2. A good China data overnight is easing worries of a global recession, which is likely to weigh on Gold.
Technical Comments
1. Price is capped by the 20EMA which is hinting at a bearish price trend
2. MACD is hinting at a bearish price trend.
Key Levels
Support
1980.95
1966.00
1949.65
Resistance
1998.85
2011.70
2022.65
Technical Overview
USD/JPY – Price reached a high of 134.70 on Tuesday morning but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. A Spinning top candlestick price pattern is also hinting at a possible price high and a reversal ahead. Stochastic is hinting at a price decline but both MACD and 20EMA are hinting at a bullish price trend. We are expecting a rally to test the 134.70 in the next 24 hours before the decline kicks in.
Support
133.95
133.35
132.85
Resistance
134.70
135.10
135.80
EUR/USD – Price reached a low of 1.0908 on Monday and we have seen a rally to 1.0983. However, the rally is capped by the 20EMA and we could see a decline to 1.0865 in the next 24 hours. MACD is hinting at a price decline. 20EMA is also hinting at a price decline. However, Stochastic is hinting at a price rally. We think price is likely to be capped by the 20EMA and we see a decline to 1.0865.
Support
1.0940
1.0905
1.0865
Resistance
1.0985
1.1020
1.1075
GBP/USD – We had a sell order which was filled at 1.2435 when price reached a high of 1.2449 overnight. Our view remains unchanged from yesterday and we are looking at a price move to 1.2285 in the next 48 hours. Stochastic is rising but both MACD and 20EMA are hinting at a bearish price trend. We recommend keeping stop at 1.2475 and profit target unchanged at 1.2285.
Support
1.2405
1.2355
1.2305
Resistance
1.2450
1.2505
1.2545
USD/CAD – Price had reached a low at 1.3299 last week and we have seen a rally to 1.3419 yesterday. The rally was capped by the previous low turned resistance. If price is unable to move above this resistance, we are likely to see a decline to 1.3299. A move above 1.3420 would hints at a move to 1.3455. All 3 technical indicators, MACD, stochastic and 20EMA are all hinting at a price rally.
Support
1.3360
1.3300
1.3260
Resistance
1.3420
1.3455
1.3490
AUD/USD – The rally off the low at 0.6680 was capped by the Fibonacci 50% of the decline from 0.6805 to 0.6680. If price is unable to move above this resistance, we are likely to see a decline to 0.6615 in the next 48 hours. Stochastic is hinting at a price rally but both MACD and 20EMA are hinting at a price decline. A move above 0.6760 would negate our bearish view and hints at a rally to 0.6805.
Market Talk – The U.S. dollar eased on Tuesday after rallying overnight as strong U.S. economic data reinforced expectations that the Federal Reserve will hike interest rates again in May, while China’s economic recovery gathered pace in the first quarter.
– Confidence among single-family homebuilders improved for a fourth consecutive month in April, while manufacturing activity in New York State increased for the first time in five months. Recent hawkish comments from Fed officials saw markets pricing in a greater chance of a rate hike in May, and brewed uncertainty over whether the central bank will pause in June.
– The euro was at $1.09320, easing away from the one-year high of $1.1075 it touched last week. Sterling was last trading at $1.2381, on the day ahead of employment data that could potentially cause some volatility in the pound if the report shows that the labour market is not cooling.
– The Japanese yen weakened to 134.52 per dollar, hovering around the one-month peak of 134.57 it touched on Monday. The Australian dollar rose to $0.6720 after the minutes of the last Reserve Bank of Australia meeting showed that the central bank considered an 11th-consecutive rate hike in April before deciding to pause.
– Gold prices hovered below key levels in early Asian trade on Tuesday, coming under pressure from a firmer dollar and Treasury yields as markets reconsidered expectations for an imminent pause in the Federal Reserve’s interest rate hikes following recent strong US data and hawkish Fed officials’ comments.
Chart Focus GBP/USD
Key Points
1. Sell GBP/USD recommendation.
2. Sell GBP/USD at 1.2435. Stop at 1.2475 and profit target at 1.2285.
3. Strong US data and interest rate differential are both in the US dollar favour.
4. Price is likely to be capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Strong US data overnight is aiding the US dollar.
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. MACD is hinting at a bearish price trend.
Key Levels
Support
1.2350
1.2305
1.2375
Resistance
1.2410
1.2460
1.2505
Technical Overview
USD/JPY – Price reached a high of 134.70 this morning but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. A Spinning top candlestick price pattern is also hinting at a possible price high and a reversal ahead. Stochastic is in the overbought zone and is hinting at a price decline ahead. However 20EMA and MACD are both hinting at a bullish price trend. We see price moving lower to 133.25 in the next 48 hours.
Support
134.05
133.35
132.85
Resistance
134.70
135.10
135.80
EUR/USD – Price reached a low of 1.0908 overnight and we have seen a rally to 1.0950 this morning. However, the rally is likely to be capped by the 20EMA at 1.0970 and we could see another decline to 1.0865 in the next 48 hours. Stochastic is in the oversold zone and is hinting at a limited downside. Both stochastic and 20EMA are hinting at a bearish price trend. We are in favour of the bearish price move.
Support
1.0905
1.0875
1.0830
Resistance
1.0965
1.1000
1.1060
XAG/USD – Price had reached a high of $26.07 last week and we have seen a corrective decline lower to $24.79 on Monday. We are likely to see a rally to the Fibonacci 62% correction point at $25.58 in the next 24 hours. We think this is the second part of a 3-part correction. There should be another decline in the next few days to $24.45. Stochastic is hinting at a price rally while both MACD and 20EMA are hinting at a price decline.
Support
24.95
24.55
24.15
Resistance
25.30
25.60
25.95
XAU/USD – Price reached a high last week at $2048.45 last night following a divergence with MACD. Price reached a low at $1980.95 overnight. A Hammer candlestick price pattern is also hinting at a possible temporary low. We are likely to see a rally to $2015 in the next 24 hours but this rally is likely the second part of a 3 part corrective decline process following the high at $2048.45.
Support
1991.85
1980.95
1966.00
Resistance
2002.95
2014.95
2031.70
USD/CAD – Price had reached a low at 1.3299 last week and we have seen a rally to 1.3419 yesterday. The rally was capped by the previous low turned resistance. Stochastic is reaching the overbought level and is hinting at a limited upside. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. We see price moving lower to 1.3299 in the next few days.
Price went on a rally after reaching a low on 18 March 2023. However, the rally was unable to move above cloud. In the past 3 trading sessions, candlestick price patterns are suggesting price may have reached a turning point. We are likely to see a reversal soon. Lagging Span is above price of 26 days ago but is below the cloud. We think price is likely to be capped by the lower edge of the cloud and could be moving lower to the previous low at $236.75 in the next 2-3 weeks.
SPDR Select Sector Fund – Industrial Stock Code XLI.NYS
Outlook
Price has been trying to move above the cloud in the previous three trading sessions but was capped by the lower edge of the cloud, keeping the bearish price trend intact. Conversion line and base line remain in a bullish crossover but could be changing trend soon, as both lines are approaching each other. Lagging Span is below price of 26 days ago but is inside the cloud at the moment. MACD remains bearish. If price is unable to move above the cloud, it could be heading towards the previous low support at $95.20 in the next 2-3 weeks.
