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

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 – Gold Edged Higher On A Softer Greenback

Market Talk
– The U.S. dollar slipped against the euro on Wednesday, but its losses were capped as traders were hesitant to make any big bets ahead of next week’s central bank meetings, including the Federal Reserve and the European Central Bank.

– With much of Asia observing Lunar New Year holidays and a lack of any big U.S. data releases on Wednesday has contributed to sluggish trading conditions but there could be a big move tonight with the release of US 4Q GDP data.

– The euro edged higher at $1.0913, not far from the nine-month high of $1.0927 touched on Monday. Sterling advanced after data showed British manufacturers unexpectedly lowered their prices in December, which suggested inflation may be easing, ahead of next week’s Bank of England policy meeting.

– The greenback was down at 129.61 yen, having hit a near eight-month low of 127.21 on Jan. 16. The Australian dollar surged to a more than five-month high on Wednesday after inflation data came in hotter than expected, bolstering the case for further rate increases from the RBA. The Australian dollar was last up 0.76% to $0.7099.

– Gold reversed course to edge up on Wednesday as the greenback weakened and investors kept a close eye on a slew of upcoming U.S. economic data that could influence the Federal Reserve monetary policy meeting next week.


Chart Focus EUR/JPY

Key Points

1. Buy EUR/JPY recommendation.

2. Buy EUR/JPY at 141.10. Stop at 140.70 and profit target at 142.70

3. Divergent monetary policy and interest rate differential are both likely to aid the Euro.

4. Price is supported by the Fibonacci 38% correction point as well as the 20EMA line with MACD hinting at a bullish price trend.

Fundamental Comments

1. Divergent monetary policy is likely to aid the Euro.

2. Interest rate differential is in the Euro favour.

Technical Comments

1. Price is supported by the Fibonacci 38% correction point as well as the 20EMA line.

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



Key Levels

Support141.10140.70140.45
Resistance141.75142.25142.85










Technical Overview

USD/JPY – Price broke below the support at 129.60 but only reached a low of 129.10. Stochastic is in the oversold zone and is hinting at limited downside. MACD is also flat and neutral and is near to its zero line. The 20EMA line is also hinting at a weak price trend. Price may continue its sideways movement. There are also two strong supports at 128.00 and 127.15 that could support price and keep price inside a sideway consolidation for the next few days.

Support129.00128.40127.95
Resistance129.60130.10130.60

EUR/USD – Price continues its rally and is now close to the week’s high at 1.0927. We think price can move above this resistance to the next strong resistance at 1.1045 in the next 1-2 days. Stochastic is rising and is hinting at a price rally. The 20EMA is also hinting at a bullish price trend. However, MACD could be forming a divergence, warning of a potential price high. The rally to 1.1045 could be the final rally before a decline.

Support1.08951.08351.0790
Resistance1.09301.09801.1040

GBP/USD – Price reached a high of 1.2447 on Monday but this high was accompanied by a divergence warning from both the MACD and the stochastic indicator. After a decline to 1.2262, price has climbed up higher to 1.2417. The rally may continue higher to 1.2450 as stochastic is moving higher and hinting at a price rally. Both MACD and 20EMA are also bullish and hinting at a bullish price trend.

Support1.23801.23401.2280
Resistance1.24201.24551.2490

XAU/USD – We had a sell recommendation yesterday at $1935, but our call was wrong and we got stopped out overnight. Price rose to a high of $1949.15 and looks like it can continue to move higher. Stochastic may be in the overbought zone but is still rising and hinting at a price rally. MACD and 20EMA are both bullish and hinting at a bullish price trend. The next price resistance lies at $1958.30.

Support1939.601925.401911.30
Resistance1958.301972.501981.30

AUD/USD – Price reached a high of 0.7128 this morning but this high was accompanied by a divergence warning from the MACD indicator, hinting at a potential price high in the making. Stochastic is also in the overbought zone, hinting at a price decline. However, 20EMA remains bullish and is hinting at a bullish price trend.  We think price had reached a high and a move below 0.7055 would confirm the high and hint at a price movement to 0.6990 in the next few days.

Support0.70900.70600.7025
Resistance0.71300.71800.7230

FX Commentary – Euro Up On Eurozone Business Activity Upturn.

Market Talk
– The U.S. dollar slid on Tuesday after data showed U.S. business activity contracted for a troubling seventh straight month in January while the Euro hit a nine-month peak against the dollar after euro zone business activity made a surprise return to modest growth in January.

– While U.S. business activity shrank in January, the downturn moderated across both the manufacturing and services sectors for the first time since September and business confidence strengthened since the turn of the year, limiting the greenback’s decline.

– The euro steadied at $1.0888, near Monday’s nine-month high of $1.0927. Data on Tuesday showed that euro zone business activity made a modest growth in January, indicating the downturn in the bloc may not be as deep as feared. Expectations of further rate increases from the ECB also aided sentiment.

– The Aussie rose to $0.7092, its highest since August, after a shock surge in inflation to a 33-year high last quarter added to the case for the Reserve Bank of Australia to continue raising interest rates. The kiwi slid to $0.6469, after New Zealand’s annual inflation of 7.2% in the fourth quarter came in below its central bank’s 7.5% forecast.

– Gold prices steadied near a nine-month high on Wednesday near $1930.55 as fears of a looming U.S. recession kept safe haven demand elevated amid increased expectations that the Federal Reserve will slow its pace of interest rate hikes in the coming months.


Chart Focus XAU/USD – Gold

Key Points

1. Sell Gold recommendation.

2. Sell Gold at $1935. Stop at $1944 and profit target at $1901.

3. Expectation of another interest rate hike by the Fed next week, although at a slower pace, is likely to weigh on the yellow metal.

4. Price may be forming a Double Top chart pattern with MACD confirming a possible price high in the making.

Fundamental Comments

1. Expectation of another interest rate hike by the Fed next week, although at a slower pace is likely to weigh on the yellow metal.

2. A US$40 rally in the past 1 week may have run its course ahead of an expected rate hike by the Fed.

Technical Comments

1. Price may be forming a Double Top chart pattern, which is a sign of a potential price high in the making.

2. A bearish divergence warning from the MACD indicator is hinting at a possible price high.



Key Levels

Support1925.401911.301900.80
Resistance1935.151942.301958.95










Technical Overview

USD/JPY – Price could be forming a consolidation pattern, in the form of a Triangle chart pattern at the moment. For the past 1 week, price has a smaller daily range movement. Stochastic has been declining, hinting at a price decline. However, both MACD and the 20EMA are bullish and are hinting at a price rally. We see the topside at 131.10 capping the rally while price is likely to be support by the support at 129.60 for the next 48 hours.

Support130.10129.70129.35
Resistance130.60131.10131.55

EUR/USD – Price has moved up to a nine-month high of $1.0927 on Monday. The rally was followed by a sharp price decline. However, the decline was halted by the 20EMA line and price is likely to test the high of 1.0927 again within the next 24 hours. Stochastic is supporting this view by hinting at a price rally. MACD remains bullish. The 20EMA is also hinting at a bullish price trend. A move below 1.0830 would negate our bullish view.

Support1.08751.08301.0790
Resistance1.09251.09801.1035

GBP/USD – Price reached a high of 1.2447 on Monday but this high was accompanied by a divergence warning from both the MACD and the stochastic indicator. This is a strong sign that price may have reached a temporary high. However, stochastic is hinting at a short-term price rally while both the 20EMA and MACD are hinting at a bearish price trend in the next 48 hours.

Support1.22951.22601.2210
Resistance1.23451.23901.2445

AUD/USD – The Aussie rose to $0.7092, its highest since August, after inflation data pointed to further rate hikes by the RBA in the coming month. Stochastic is in the overbought zone and is hinting at a price decline. However, 20EMA is pointing up with a steep slope, hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. We think price is likely to move higher to the next resistance level at 0.7280 in the next few days.

Support0.70900.70500.6995
Resistance0.71250.71900.7245

USD/CAD – Price is near to Monday’s low and looks like this low will be tested and broken in the next 24 hours. While stochastic is near to the oversold zone and is hinting at a limited downside, 20EMA is pointing down with a steep slope hinting at a strong bearish price trend. MACD is also bearish and hinting at a bearish price trend. A break of 1.3320 is likely to send price lower to 1.3225 in the next 24 hours.

Support1.33201.32751.3220
Resistance1.33651.34101.3445

FX Commentary – US Dollar Remained Strong On Safe Haven Buying.

Market Talk
– The U.S. dollar struggled for direction on Friday as fears of an economic slowdown dented risk sentiment, while the yen slipped as speculation continue to swirl that the Bank of Japan will eventually move away from its ultra-easy policy.

– US data on Thursday showed new claims for unemployment benefits unexpectedly fell last week, pointing to another month of solid job growth and continued labour market tightness. However, other U.S. data on Thursday indicated the world’s biggest economy was slowing down after multiple hefty interest rate hikes from the Federal Reserve. 

– The euro was up 0.11% to $1.0839, after European Central Bank president Christine Lagarde pushed up euro zone bond yields slightly by telling the World Economic Forum’s Davos gathering the bank would stay the course with rate hikes.

 – The greenback gained against the yen to 128.85, a day after the Bank of Japan’s decision to stand pat on its ultra-loose monetary policy. Sterling was last trading at $1.239 while the Australian dollar rose 0.14% versus the U.S. currency to $0.692.

– Gold prices rose over 1% to $1924.09, close to its 9-month peak of $1929 on Thursday, supported by a weaker dollar and some safe-haven demand as weak U.S. economic readings and hawkish comments from Federal Reserve officials fuelled recession worries.


Chart Focus AUD/USD

Key Points

1. Sell AUD/USD recommendation.

2. Sell AUD/USD at 0.6935. Stop at 0.6965 and profit target at 0.6870

3. Renewed concerns about a US recession and a decline in Aussie labour data are both likely to aid the safe haven U.S. dollar

4. Price is likely to be capped by the 20EMA line with MACD also hinting at a bearish price trend.

Fundamental Comments

1. A dip in December Aussie Labour data is hinting the economy is slowing down and weighing on the Aussie dollar.

2. Renewed concerns about a US recession is aiding the safe haven U.S. dollar.

Technical Comments

1. Price is likely to be capped by the 20EMA line which is also hinting at a bearish price trend.

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



Key Levels

Support0.69000.68700.6825
Resistance0.69350.69650.7005









Technical Overview
USD/JPY
– Yesterday, we were looking for a decline to 127.21 but we were wrong. Price has been supported above 127.80 and has since moved higher to 129. Stochastic is moving up from the oversold zone and is hinting at a price rally. Both MACD and 20EMA are bullish and hinting at a price rally as well. We think price could be moving higher to 130.80 in the next 48 hours.

Support128.70128.25127.75
Resistance129.35129.90130.30

EUR/USD – Price has moved up slightly overnight but we think price is likely to be capped around the previous highs of 1.0875 and from there; we are likely to see a decline back to 1.0765. Stochastic is moving higher and hinting at a bullish price trend. Both MACD and 20EMA are hinting at a mildly bullish price trend. Above 1.0875 would hint at a rally to 1.0930. Below 1.0765 would hint at a decline to 1.0665.

Support1.08151.07651.0725
Resistance1.08451.08901.0930

GBP/USD – Price moved to a high of 1.2435 on Wednesday and a decline was supported by the 20EMA at 1.2310. As long as price is supported by the 20EMA, we are likely to see another test of the week’s high at 1.2435. A move below 1.2310 would hint at a decline to 1.2165. Stochastic is neutral. MACD is bullish and hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend.

Support1.23551.23101.2245
Resistance1.23951.24351.2490

XAU/USD – Price reached another new high this week at $1934.90 but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. Stochastic is also near to the overbought zone hinting at a limited price upside. 20EMA remains bullish and is hinting at a bullish price trend. A price move below $1905 would confirm the high and hint at a decline to $1882.45 in the next few days.

Support1922.901913.851900.80
Resistance1934.901946.201958.95

USD/CAD – We had a buy recommendation at 1.3445 yesterday. Price declined to a low of 1.3444 and our entry order was filled. Our view remains the same as yesterday. We are looking for a price rally to 1.3550 in the next couple of days. Stochastic is moving lower, hinting at a price decline. MACD and 20EMA are hinting at a bullish price trend. We recommend keeping stop at 1.3415 and profit order at 1.3545.

Support1.34451.33901.3350
Resistance1.34751.35151.3550

FX Commentary – Safe Haven Demand Drove Up U.S. Dollar.

Market Talk
– The U.S. dollar rose broadly on Thursday as growth concerns about the U.S. economy drove demand for the safe-haven greenback, while the yen renewed its ascent as investors doubled down on bets that the Bank of Japan would shift away from its yield curve control policy.

– Weak U.S. data released on Wednesday showed that U.S. retail sales fell by the most in a year in December and manufacturing output recorded its biggest drop in nearly two years, stoking fears that the world’s largest economy is headed for a recession.

– The euro shed 0.02% to stand at $1.0792, some distance from Wednesday’s nine-month high of $1.0887. Sterling fell 0.17% to $1.2327, away from the previous session’s one-month high of $1.2435.

– Aussie skidded 0.49% to $0.6907, after Australia employment unexpectedly dipped in December in a sign the red-hot labour market might be cooling, though the jobless rate stayed near five-decade lows. The kiwi fell 0.31% to $0.6425 after New Zealand Prime Minister Jacinda Ardern announced plans to step down no later than early February.

– Spot gold was up 0.2% at $1,907.18 per ounce; in early Asian trade on Thursday as investors weighed chances of the U.S. Federal Reserve slowing its pace of interest rate hikes after overnight U.S. data stoke fears of a U.S. recession.


Chart Focus USD/CAD

Key Points

1. Buy USD/CAD recommendation.

2. Buy USD/CAD at 1.3445. Stop at 1.3415 and profit target at 1.3545

3. Renewed concerns about a US recession and a decline in crude prices are both likely to aid the safe haven U.S. dollar.

4. Price is likely to be supported by the 20EMA line as well as a previous resistance turned support line with MACD hinting at a bullish price trend.

Fundamental Comments

1. Renewed concerns about a US recession is aiding the safe haven U.S. dollar.

2. A decline in crude oil price on worry of a recession is likely to weigh on the Canadian dollar.

Technical Comments

1. Price is likely to be supported by the 20EMA line as well as a previous resistance turned support line.

2. MACD is hinting at a bullish price trend while stochastic is hinting there is room for upside movement.



Key Levels

Support1.34751.34351.3390
Resistance1.35151.35501.3595










Technical Overview
USD/JPY – Price moved to a high of $131.56 on Wednesday after BOJ announcement but has declined to a low of 127.84 at the point of this writing. We are likely to see a continuation of this decline to 127.21 initially and later to 126.15 in the next few days. Stochastic is in the oversold zone and hinting at a limited downside but both trend indicators, 20EMA and MACD are hinting at a strong bearish price trend.

Support127.55127.20126.85
Resistance128.25128.95129.40

EUR/USD – We had a sell recommendation yesterday at 1.0790 but we were wrong on this call. Price rallied to a high of 1.0887 overnight but has declined to a low of 1.0781 this morning. Stochastic is still declining and hinting at a price decline. MACD remains bearish and is hinting at a bearish price trend. 20EMA is flat and neutral at the moment. We remain bearish for 1.0725 in the next 48 hours.

Support1.07651.07251.0690
Resistance1.08051.08451.0890

GBP/USD – Price moved to a high of 1.2435 overnight. A previous MACD divergence warning was also negated by the overnight rally. However, price has drifted lower to 1.2315 and could be heading lower to 1.2285 where the 20EMA is likely to provide support. Stochastic is also hinting at a price decline. 20EMA and MACD are both bullish and hinting at a bullish price trend in the next 48 hours.

Support1.23101.22451.2190
Resistance1.23501.23951.2435

XAU/USD – Price has declined to a low of $1900.80 which is also near to the 20EMA line. Stochastic is near to the oversold zone and is hinting at a limited downside. MACD is also about to turn up and is hinting at a bullish price trend ahead. 20EMA is flat and neutral at the moment. If price is able to hold above $1900, we could see a rally to $1925.60 in the next couple of days ahead. A decline below $1900 would see price test the support at $1882.45.

Support1900.801884.051874.30
Resistance1913.851928.651939.95

AUD/USD – Price reached a high of 0.7061 yesterday but a softer Aussie labour data this morning has sent price down to 0.6885. Stochastic is declining and hinting at a bearish price trend. MACD and 20EMA are both bearish and are also hinting at a bearish price trend. We think the decline is likely to continue to 0.6820 in the next 48 hours. Only a price move above 0.6960 would confirm a low in price and a test of the previous high at 0.7061.

Support0.68550.68000.6765
Resistance0.69050.69600.7000