FX Commentary – U.S. Dollar Rebounded After Fed Official’s Hawkish Comments

Market Talk

– The U.S. dollar rebounded after digesting slightly softer-than-expected U.S. inflation data after Federal Reserve Governor Lael Brainard said that there were some signs of “welcome” cooling in the latest inflation readout, but emphasized that the central bank is still proceeding with a series of interest rate hikes, as well as an effort to trim its balance sheet.

– Although data released on Tuesday showed CPI rose by 8.5% y-o-y, which is the highest since 1981, there was a small glimmer of hope that price pressures may have peaked, sending US benchmark 10-year Treasury yield into its first decline in 8 sessions.

– The Kiwi whipsawed after the Reserve Bank of New Zealand announced its sharpest rate hike in two decades to curb inflation. While the 50 basis point hike by the Reserve Bank of New Zealand was larger than many economists had expected, it was within traders’ expectations, and policymakers tempered the move by not lifting their projected peak for rates.

– The euro was pinned to a five-week low on Wednesday $1.0820 as prospects for peace in Ukraine seemed to darken. Sterling, which has been pegged near $1.30, held at $1.3001.

– Gold was down on Wednesday morning in Asia, after gaining as much as 1% during the previous session aided by the latest U.S. inflation data. While gold is considered an inflation hedge, rising interest rates is likely to push up bond yields and increase the opportunity cost of holding zero-yield bullion.


Chart Focus EUR/USD

Key Points

1. Buy EUR/USD recommendation.

2. Buy EUR/USD at 1.0825. Stop at 1.0795 and profit target at 1.0930

3. ECB meeting later tonight may boost the Euro if ECB hints at a hike later in the year.

4. Price has managed to hold above a previous low while MACD is also hinting at a bottom.

Fundamental Comments

1. ECB meeting later tonight could boost the Euro.

2. Interest rate differential may have peaked if ECB hints at a hike later in the year.

Technical Comments

1. Price has managed to hold above a previous important low, hinting at a Double Bottom possibility.

2. MACD is hinting at a bottom with a divergence warning.



Key Levels

Support1.08051.07651.0725
Resistance1.08451.08851.0930

Technical Overview

USD/JPY – Price broke above the previous high at 125.85 this morning and we are likely to see price heading towards 126.40 in the next 24 hours. While stochastic is in the overbought zone, MACD remains bullish. 20EMA is pointing up with a steep slope, hinting at a strong bullish price trend ahead. A move below 124.70 would negate our bullish view.

Support126.00125.75125.30
Resistance126.40126.85127.20

USD/CAD – We had a sell recommendation at 1.2650 which was filled when price reached a high of 1.2661. Overnight, price declined to a low of 1.2580 before recovering this morning above 1.2600. We remain bearish as MACD is showing a bearish divergence. However, Stochastic is hinting at a price rally while 20EMA is still bullish. We would recommend lowering stop to 1.2665 and keeping profit order at 1.2560.

Support1.25901.25401.2505
Resistance1.26351.26651.2700

GBP/USD – The decline overnight managed to move one pip below last Friday low of 1.2982. The possibility of a break below this support is still strong although price has managed to repel three attempted breaks. Stochastic is still moving lower. 20EMA and MACD are both hinting at a bearish price trend. A break below this low is likely to send price lower to 1.2855 in the next few days.

Support1.29801.29251.2885
Resistance1.30351.30751.3110

XAU/USD – Price has broken above the resistance at $1970 overnight and could be heading towards $1990 to $2000 in the next few days. Stochastic is rising and is not yet in the overbought zone. MACD remains bullish and is hinting at a bullish price trend. 20EMA is pointing up with a steep slope, hinting at a strong bullish price trend. However, a price move below $1940 would negate this bullish price trend.

Support1966.301957.951946.40
Resistance1978.501987.451998.75

CAD/JPY – We had a buy recommendation on this pair at 99.10 from Monday and yesterday. we had recommended placing stop at 98.90 and profit order at 99.80. Price has moved higher to 99.91, filling our profit order. We are out of this position with a profit of 70 pips. Price is likely to test the previous high at 100.15 in the next 24 hours as Stochastic is moving higher and MACD remains bullish. 20EMA is also hinting at a bullish price trend.

Support99.8099.4098.95
Resistance100.15100.70101.15

FX Commentary – U.S. Dollar Rose To Its Highest In 3 Years

Market Talk
– The U.S. dollar rose to its highest level in more than three years on Tuesday, as Treasury yields spiked to a three year high ahead of U.S. inflation data which could foreshadow even more aggressive interest rate hikes from the Federal Reserve.

– The yield on benchmark 10 year notes rose to 2.836%, its highest since December 2018, supporting the dollar. The Japanese currency bore the brunt of the losses against the greenback, which rose to 125.77 yen overnight, its highest since June 2015.

– The euro was steady at $1.0870, buffeted by politics, but unable to hold onto gains from its mini-relief rally on Monday after French leader Emmanuel Macron beat far-right challenger Marine Le Pen in the first round of presidential voting.

– Investors now await the U.S CPI data due later in the day for clues as to how far and fast the Federal Reserve will tighten its monetary policy. A high reading is likely to reinforce expectations of aggressive Federal Reserve tightening.

– Gold was up on Tuesday morning in Asia as U.S. Treasury yields and the greenback gained ahead of the latest inflation figures. The data could provide clues as to how far the U.S. Federal Reserve will continue tightening monetary policy.


Chart Focus USD/CAD

Key Points

1. Sell USD/CAD recommendation.

2. Sell USD/CAD at 1.2650. Stop at 1.2680 and profit target at 1.2560.

3. A recovery in crude oil price and interest rate differential are both aiding the Canadian dollar.

4. Price may have hit a top and a correction is due with MACD warning of a possible price high.

Fundamental Comments

1. A recovery in crude oil price is aiding the Canadian dollar.

2. Interest rate differential is in the Canadian dollar favour.

Technical Comments

1. Price may have hit a top and a correction could be ahead.

2. MACD has a divergence warning of a possible price high



Key Levels

Support1.26201.25901.2540
Resistance1.26551.27001.2730

Technical Overview

USD/JPY – Price broke above the previous high at 125.10 yesterday and reached a high of 125.77, which was just short of our resistance at 125.85. Stochastic is in the overbought zone but both MACD and 20EMA are hinting at a strong bullish price trend. We are likely to see another attempt to test the high of 125.85 in the next 24 hours. A break of this resistance will sent price higher to 126.40 while failure will send price back to 124.00.

Support125.30124.90124.40
Resistance125.75126.00126.40

EUR/USD – Price was capped again below 1.0945 and we saw a decline to 1.0865 at the point of this writing. We are likely to see a test of last Friday’s low at 1.0835 again. However, with MACD warning with a divergence, we think the low could be either at 1.0835 or 1.0805. Stochastic is in the middle of its range.  20EMA is also starting to flatten, hinting at a trend exhaustion.

Support1.08351.08051.0770
Resistance1.08901.09351.0975

GBP/USD – The decline overnight managed to stay above last Friday low of 1.2982 and MACD could be developing a divergence. However, there is still no confirmation of a possible low in place at the moment. The decline could continue as 20EMA is still pointing lower and hinting at a bearish price trend. Stochastic is in the middle of its range. We think a medium term low could be near after a 3-week decline and we are waiting for confirmation.

Support1.29801.29251.2885
Resistance1.30351.30751.3110

XAU/USD – Our view remains the same as yesterday. Price moved above the high of $1949.40 to test $1970. However the inability to break above $1970 has sent price lower to $1940.65. We are likely to see another test of $1970 again in the next 24 hours. Watch the breakout at $1970. A break of this resistance is likely to send price higher to $2000 while failure will keep price within the range of the past few day.

Support1949.551937.551929.20
Resistance1960.151969.501980.90

CAD/JPY – We had a buy recommendation on this pair yesterday at 99.10 which was filled when price declined to a low of 98.97. The 20EMA is currently supporting the price and as long as price stays above the 20EMA, are likely to see another test of the high at 99.83 again. We remain bullish and would recommend shifting stop higher to 98.90 and profit order lower to 99.80.

Support98.9598.6098.15
Resistance99.4599.85100.20

FX Commentary – US Dollar Gained As Treasury Yields Rise

Market Talk
– The U.S. dollar was up on Monday morning in Asia, helped by rising U.S. Treasury yields, while the Euro was helped by Emmanuel Macron winning the first round of the French Presidential election as investors await central bank policy decisions in Europe, Canada and New Zealand later in the week.

– The 10-year benchmark U.S. Treasury yield hit 2.73% on Friday; its highest since March 2019. The benchmark 10-year yield added another seven basis points to top 2.77% on Monday as the Federal Reserve readies to cut its asset holdings and move interest rates sharply higher.

– The Japanese yen suffered the most selling, briefly touching as low as 125 per dollar and last sitting 0.5% weaker at 124.86. Investors saw little reason to exit bets against the yen with the Bank of Japan holding yields near zero while the US Treasury yield keeps rising.

– The euro flickered as high as $1.0913 amid thin trading at the Asian session open on Monday, before settling about 0.15% higher than Friday’s close at $1.0890 aided by Macron victory in the French election. Sterling slipped 0.15% to $1.3015, falling fallen to a low of 1.2982 last Friday.

– Gold was down on Monday morning in Asia, with the greenback and U.S. Treasury yields rising as the U.S. Federal Reserve maintains its hawkish stance. However, concerns that Russia could launch fresh attacks in eastern Ukraine limited the safe-haven yellow metal’s losses.

Chart Focus CAD/JPY

Key Points

1. Buy CAD/JPY recommendation.

2. Buy CAD/JPY at 99.10. Stop at 98.80 and profit target at 100.10

3. Higher crude oil price and interest rate differential are both aiding the Canadian dollar.

4. Price is supported by both the 20EMA and Fibonacci 50% correction point with Stochastic hinting at a price rally.

Fundamental Comments

1. Higher crude oil price is aiding the Canadian dollar but is weighing on the yen.

2. Interest rate differential is in the Canadian dollar.

Technical Comments

1. Price was supported by the 20EMA as well as the Fibonacci 50% correction point.

2. Stochastic is hinting at a bullish price trend.



Key Levels

Support99.1098.6598.15
Resistance99.80100.15100.65

Technical Overview

USD/JPY – Price broke above the previous high at 125.10 to reach a high at 125.45. The rally is likely to continue towards the next resistance at 125.85 in the next 24 hours. Stochastic is in the overbought zone. 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. A price move below the 20EMA line at 123.80 would negate our bullish view.

Support125.10124.60124.10
Resistance125.50125.85126.40

EUR/USD – We were looking for test to the low at 1.0805 last Friday but price only reached a low of 1.0835. The low was also accompanied by a divergence warning from the MACD as well as the stochastic indicator. This morning, price has moved as high as 1.0913 but is currently lower at 1.0880. We are likely to see a test of 1.0945 and the reaction at this level is likely to determine the next price direction.

Support1.08701.08351.0800
Resistance1.09151.09451.0990

GBP/USD – Price reached a low of 1.2982 last Friday, breaking below the previous low at 1.2999. While there was a divergence warning from the stochastic indicator, there was no divergence warning from the MACD indicator. We prefer to follow the MACD indicator. 20EMA is also hinting at a strong bearish price trend.  The next support level lies at 1.2900, while a move above 1.3050 would confirm 1.2982 as the low and rally in progress.

Support1.29751.29251.2885
Resistance1.30151.30501.3090

XAU/USD – Our view remains the same as last Friday. We see price moving within a range of $1915 to $1970 in the next 48 hours or until there is a breakout of this range. Price moved to a high of $1949.40 this morning and a move above this level is likely to send price towards $1970. Watch the breakout at $1970 for clues to the next direction. Inability to break above $1970 is likely to keep price within the range.

Support1937.551929.201915.40
Resistance1949.501965.551980.90

NZD/USD – We had a sell call at 0.6885 on Friday but price only reached a high of 0.6880 and our entry order was not filled. Price has declined to a low of 0.6812 this morning and this low was accompanied by a divergence warning from the MACD indicator as well as the stochastic indicator. If price can move above 0.6855, it could be a sign of a reversal and a confirmation of a low in place.

Support0.68100.67700.6725
Resistance0.68550.68950.6935

FX Commentary 24 May 2019

Market Talk

– Safe haven Gold, JPY, and CHF remain strong on Thursday, data out of Japan, Europe and the US was admittedly not that great. Crude oil plunges 5% on weak economic data and moderating Iran tension sending USD/CAD to 1.3501 high.

– Gold looked to the minutes of the U.S. Federal Reserve meeting which indicated that there was no hurry in cutting rates. With interest rate staying put, Gold was a big gainer on Thursday while Treasury yields declined to the lowest level since Oct 2017.

– Sterling weakened again on Thursday as pressure mounted on Prime Minister Theresa May to name a date for her departure after a backlash over her last-ditch plans for Britain’s exit from the EU. Pressure is on Sterling, with investors increasing bets that the pound will suffer further losses as the threat of a disorderly Brexit is seen as increasing.

– ECB minutes showed confidence in an economic recovery in 2H 2019 has dropped. Germany May Ifo business climate index was lower than expectation coming in at 97.9 vs 99.1 expectation. Euro dollar made a new2019 lowbut managed to bounce higher on a weak US PMI data.

– The U.S. dollar retreated after hitting its highest level in two years as US manufacturing activity was lowest in almost in decade in May, suggesting a sharp slowdown in economic growth. The threat of economic fallout from the trade war with China is also weighing on the dollar.

Chart Focus USD/JPY

Key Points

1. Sell USD/JPY recommendation

2. Sell USD/JPY at 109.90. Stop at 110.35 and target at 108.80

3. Widening US-China trade conflict is likely to lead to a falling US equity and move capital into safe haven JPY

4. Price capped at Fibonacci 50% correction point and MACD are both hinting of a price decline

Fundamental Comments

1. Widening trade conflict between the 2 largest economies is likely to move capital into safe haven JPY

2. A falling US equity market is likely to lead to less demand for US$

Technical Comments

1. A price movement was capped at Fibonacci 50% correction point, hinting of a price decline.

2. MACD is bearish and turning lower, hinting of a price decline

Key Levels

Support 109.45 109.05 108.75
Resistance 109.95 110.20 110.65

Technical Overview

AUD/JPY – Price went to a high of 75.80 yesterday and our sell call was not filled. Price has moved lower to 75.40 and should be on its way to 75.10. MACD is still bearish and Stochastic is still moving lower and has not moved into oversold extreme as yet. A move above 75.75 would negate our bearish view.

Support 75.40 75.10 74.80
Resistance 75.75 75.95 76.20

EUR/USD – Price reached a low of 1.1105 last night and has since bounced up above 1.1200. MACD has given a bullish divergence warning on the low made last night. We may have seen the low at 1.1105 and price could be heading higher to 1.1265. MACD is turning bearish and Stochastic is moving towards the overbought extreme.

Support 1.1180 1.1135 1.1105
Resistance 1.1225 1.1265 1.1295

GBP/USD – The trend is bearish but MACD has given a bullish divergence warning last night. Stochastic is moving higher but has yet to reach the overbought zone. Price is currently capped by 20EMA. There is another strong resistance at 1.2710. Above 1.2710 will negate the bearish view. We prefer to be bearish at the moment.

Support 1.2650 1.2620 1.2595
Resistance 1.2685 1.2710 1.2760

XAU/USD – Price has moved above 1280 and yesterday, it went to a high of 1287.15. 20EMA has turned bullish and pointing higher but its gradient is not steep. MACD has turned bullish. Stochastic has turned up and is close to the overbought zone. The first support is at 1278.80 and the resistance is at 1291.40. We think price is likely to move within this range.

Support 1278.80 1270.75 1266.20
Resistance 1287.80 1291.40 1298.20

CAD/JPY – Price dropped lower to 81.15 last night filling our profit order at 81.70. We are out with a 65 pips profit. Stochastic is into oversold extreme but MACD is bearish and its trend is strong. 20EMA is also bearish and its gradient steep. Price may move lower to the previous low at 80.92.

Support 81.15 80.90 80.60
Resistance 81.45 81.70 82.15

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FX Commentary 23 May 2019

Market Talk

– US Treasury Secretary Steven Mnuchin told CNBC that a trip to Beijing to restart trade negotiations has not been scheduled as yet lowering hope of a speedy resolution to the U.S.-China trade war. There are growing worries the Sino-U.S. trade war was fast morphing into a technology cold war between the world’s two largest economies

– Restrictions on Chinese telecom giant Huawei have led China to rethink its entire economic relationship with the U.S., according to a report from The South China Morning Post. China is considering dropping purchases of natural gas from the U.S.

– Minutes of the U.S. Federal Reserve’s last meeting out on Wednesday underlined its readiness to be patient on policy “for some time” given the uncertain global outlook. There was no surprise from what was previously disclosed by Fed’s Chairman Powell.

– Sterling fell within a whisker of a new low for 2019 after PM May’s last gamble on getting her Brexit withdrawal bill through parliament backfired. May’s proposal have reportedly angered her own party’s lawmakers to an extent that they want her immediate resignation.

– There is German Flash PMI at 3.30pm today and Ifo business climate at 4pm. US PMI is at 9.45pm and New Home Sales is at 10pm.

Chart Focus AUD/JPY

Key Points

1. Trading sell AUD/JPY recommendation

2. Sell AUD/JPY at 75.90. Stop at 76.30 and target at 75.15

3. Sino-US trade conflict will weigh on Aussie dollar and favour safe haven JPY

4. Bearish momentum and a Descending Triangle are hint of another price decline.

Fundamental Comments

1. Sino-US trade conflict will weigh on Aussie dollar, which is a proxy for the Chinese currency Yuan

2. Sino-US trade conflict will increase risk aversion and favour safe haven JPY.

Technical Comments

1. A possible Descending Triangle is in the process of forming, hinting of another price decline.

2. MACD is bearish and is turning lower. Stochastic is turning lower as well.

Key Levels

Support 75.60 75.30 74.80
Resistance 75.90 76.20 76.60

Technical Overview

USD/JPY – Price is currently sitting on the 20EMA support at 110.20. Stochastic is moving lower but has not yet reached the oversold extreme zone. However MACD is still bullish and showing a bullish MACD hook. Price can go in either direction at this current location. We would recommend a wait and see approach on the next price reaction at 20EMA point.

Support 110.20 109.95 109.50
Resistance 110.65 110.95 111.25

EUR/USD – Price is breaking below a 2-day low support at 1.1135. MACD is bearish and is turning lower. Stochastic has turned lower and is heading back into oversold extreme again. This is a hint of a strong bearish trend. Our view remains the same as yesterday and we are looking for a price test of 1.1100.

Support 1.1135 1.1105 1.1090
Resistance 1.1170 1.1195 1.1225

GBP/USD – Sterling continued its decline overnight into this morning. Stochastic is into the oversold extreme but MACD is strongly bearish and its decline and has yet to show a divergence warning. 20EMA is bearish and its gradient is steep. This is a hint of a strong bearish trend.

Support 1.2595 1.2560 1.2525
Resistance 1.2620 1.2685 1.2730

XAU/USD – Our view remains unchanged from yesterday. We believe the rally had ended at 1303 and price is likely to test the previous low at 1266. 20EMA has capped price advance overnight at 1277.30 and as long as this resistance holds, we could see 1266 within the next 48 hours. MACD is bearish and Stochastic is turning lower.

Support 1269.40 1266.20 1259.50
Resistance 1275.30 1280.60 1288.60

CAD/JPY – Yesterday our sell call was filled and price came within a whisker of stop loss order at 82.65. Price has declined lower to current rate of 81.95. We would recommend bring stop lower to 82.20 and keeping profit target at 81.70. Stochastic is moving lower but MACD is still bullish.

Support 81.70 81.45 81.10
Resistance 82.15 82.55 82.95

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