– 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
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.
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.
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.
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.
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.
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.
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.
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.