Tag: EUR/JPY

FX Commentary – Yen Slump After BOJ Maintained Ultra-Loose Monetary Policy

Nicholas

Market Talk
– The U.S. dollar steadied on Wednesday, while the yen slumped after BOJ maintained its ultra-low interest rates, including its 0.5% cap for the 10-year bond yield, defying market expectations it would phase out its massive stimulus programme in the wake of rising inflationary pressure.

– Bank of Japan kept intact its yield curve control (YCC) targets, set at -0.1% for short-term interest rates and around 0% for the 10-year yield, by a unanimous vote. The central bank also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0% target.

– Sterling led gains versus the dollar, hitting a five-week high after data showed the pace of pay growth in Britain, closely watched by the Bank of England as it gauges how much higher to raise interest rates, accelerated again. Sterling was last trading at $1.2274. The euro was down 0.03% to $1.0785.

– The Australian dollar fell 0.04% at $0.6980, while the kiwi rose 0.03% versus the U.S. currency at $0.6430 after data on Tuesday showed China’s economic growth slumped in 2022 to the weakest rate in nearly half a century.

– Spot gold was unchanged at $1,907.59 per ounce, on Wednesday as the dollar held firm, although expectations of slower pace of interest rate hikes by the U.S. Federal Reserve limited losses in zero-yielding yellow metal. Spot silver was steady at $23.91.


Chart Focus EUR/USD

Key Points

1. Sell EUR/USD recommendation.

2. Sell EUR/USD at 1.0790. Stop at 1.0820 and profit target at 1.0705.

3. ECB tighter monetary policy may have been priced in and interest rate differential is still in the US dollar favour.

4. Price has a Triple Top chart pattern, hinting at a price decline with MACD giving divergence warnings of a possible price high.

Fundamental Comments

1. A 4-month rally may have priced in the ECB rate hikes in the next 6 months.

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

Technical Comments

1. Price has a Triple Top chart pattern, hinting at a price decline.

2. MACD had given divergence warnings of a potential high in place.



Key Levels

Support1.07651.07251.0690
Resistance1.08051.08451.0875










Technical Overview
USD/JPY – Price moved to a high of $131.56 this morning after breaking above yesterday’s high of $129.15, confirming a low in place. 20EMA and MACD are both hinting at a bullish price trend. Stochastic is rising and hinting at a price rally as well. We are expecting price to continue its rally to 134.50 in the next few days after BOJ keep its ultra-loose monetary policy in place. Only a move below 129.05 would negate our bullish view.

Support130.50129.95129.45
Resistance131.20131.90132.35

AUD/USD – Price moved to a high of 0.7018 on Monday but this high was accompanied by a divergence warning from the MACD indicator, hinting at a potential price high in the making. Price is likely to break above Monday’s high in the next 24 hours but if there is another divergence, price could be moving lower. Stochastic, MACD and 20EMA are hinting at a bullish price. A move below 0.6940 would hint at a price high and a reversal move for 0.6875.

Support0.69850.69300.6885
Resistance0.70200.70600.7115

GBP/USD – Price moved to a high of 1.2999 overnight but this high was accompanied by a divergence warning from the MACD indicator, hinting at a potential price high in the making. Stochastic is moving into the overbought zone, hinting at a limited upside. 20EMA remains bullish and is hinting at a bullish price trend. The rally could be limited to 1.2355. A move below 1.2225 would confirm a top in place and hints at a bearish price trend.

Support1.22601.22201.2170
Resistance1.23001.23551.2395

XAU/USD – Price had reached a high of $1928.65 on Monday and has been declining. Price is likely to continue its decline to $1883 in the next few days. Stochastic has yet to reach the oversold zone, hinting at a further price decline. 20EMA has turned bearish and is hinting at a bearish price trend. MACD is about to turn bearish as well. Only a move above $1920 would negate our bearish view for the next few days.

Support1895.951884.051897.95
Resistance1908.401919.501928.65

EUR/JPY – We had a sell recommendation at $139.55 yesterday which was filled. Unfortunately, price declined to a low of 139.15 overnight before a rally this morning send price above our stop loss at $139.90. We are out of this position with a 35 pips loss. Stochastic is pointing higher and is hinting at a price rally. 20EMA is hinting at bullish price trend. MACD remains bearish and hints at a bearish price trend

Support140.95140.40139.85
Resistance141.65142.20142.80

FX Commentary – Yen Perched Near 7-month Highs Ahead Of BOJ Policy Meeting

Nicholas

Market Talk
– The US dollar drifted off multi-month lows on Tuesday, while the yen was perched near seven-month highs as investors held their breath for a potential policy shift at the Bank of Japan policy meeting, which is scheduled for 18 Jan 2023.

– The BOJ will hold its monetary policy meeting tomorrow. Market sees three possibilities: no policy change, a tweak similar to a move in December to widen the 10-year yield target band, and the total abandonment of yield curve control, with the latter likely to drive the most extreme market response.

– The euro reached a nine-month high on Monday at $1.0874, but was last loitering around $1.0830. The yen hit a top of 127.22 per dollar during Asia hours on Monday, before easing a little during a holiday-thinned U.S. session to sit around 128.40.

– The Australian dollar hit a five-month high just above $0.70 on Monday and was last firm at $0.6972, despite Beijing releasing a weak fourth quarter economic data. The New Zealand dollar held at $0.6394.

– Spot gold was unchanged at $1,917.24 per ounce, holding steady above the key $1,900 per ounce level during early Asian hours on Tuesday, buoyed by hopes of slower interest rate hikes by the Federal Reserve.


Chart Focus EUR/JPY

Key Points

1. Sell EUR/JPY recommendation.

2. Sell EUR/JPY at 139.55. Stop at 139.90 and profit target at 138.05.

3. Speculation the Bank of Japan (BOJ) will revise its ultra-loose monetary policy is aiding the yen.

4. Price is likely to face stiff resistance at the Fibonacci 38% correction point and the 20EMA with MACD hinting at a bearish price trend.

Fundamental Comments

1. Speculation the Bank of Japan (BOJ) will revise its ultra-loose monetary policy is aiding the yen.

2. A slower pace of interest rate hikes by the European Central Bank on signs of easing inflation is likely to weigh on the Euro.

Technical Comments

1. Price is likely to face stiff resistance at the Fibonacci 38% correction point and the 20EMA.

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



Key Levels

Support139.05138.50137.95
Resistance139.60139.95140.40









Technical Overview

USD/JPY – Price reached a high of $129.15 this morning but the rally was capped by 20EMA. Price was unable to move above the 20EMA hinting that the price trend is still bearish. MACD remains below the zero line which is hinting a bearish trend. Stochastic is rising and hinting at a price rally. If the price is capped by the 20EMA at $129.05, we may see a decline to the previous low support at $127.20 in the next 48 hours.

Support128.45128.10127.55
Resistance129.15130.00130.75

EUR/USD – Price declined to $1.0800 yesterday but was supported by 20EMA. Price has bounced up after testing the 20EMA which is hinting at a bullish price trend. MACD remains bullish but looks weak at the moment. Stochastic is declining and hinting at a price decline. As long as the price stays above 20EMA around $1.0800, we are likely to see a rally back to yesterday’s high at $1.0873 again in the 24 hours.

Support1.08001.07601.0725
Resistance1.08451.08751.0930

GBP/USD – Price reached a high at $1.2288 on Monday morning but declined to $1.2170 in early Tuesday morning. Both MACD and 20EMA are neutral at the moment. Stochastic is moving lower and is hinting at a price decline. Price is likely to be supported by the 20EMA. As long as the price stays above this point, we could see a rally back to yesterday’s high at $1.2288. A break below $1.2140 is likely to negate our bullish view.

Support1.21701.21301.2085
Resistance1.22251.22851.2355

XAU/USD – Price reached a low of $1907.97 as at the time of this writing and this could be a corrective decline. 20EMA is likely to halt the decline at $1904.85. MACD remains above the zero line and is hinting at a bullish price trend. However, stochastic is moving lower and is hinting at a price decline. We are likely to see some correction to the 20EMA at $1904.85 before the price resumes the rally to $1928.65 in the 24 hours.

Support1901.251892.101879.85
Resistance1919.501928.651939.30

AUD/JPY – We had a sell call on this pair yesterday at 89.90. However, price only reached a high of 89.86 and our entry price was not filled. We remain bearish on this pair. MACD and 20EMA remain bearish and are hinting at a bearish price trend. Stochastic, is rising and hinting at a price rally. We see price being capped by the Fibonacci 50% correction point and the 20EMA line around 90.10. We see price going lower to 88.60 in the next few days

Support89.5589.0588.55
Resistance90.1090.5091.05

FX Commentary – US Dollar Buoyed By Powell’s Hawkish Comment

Nicholas

Market Talk
– The dollar looked set to post its best week in over a month on Friday on expectations that U.S. rates could peak higher, while sterling was on the ropes as investors revised their rate projections after a shift in tone from the Bank of England.

– The number of Americans filing new claims for unemployment benefits unexpectedly fell to a seasonally adjusted 217,000 for the week ended Oct. 29, while nonfarm productivity, which measures hourly output per worker, rose at a 0.3% annualized rate last quarter after slumping at a 4.1% pace in the April-June quarter.

– The pound dropped to a two-week low against the dollar at $1.1165 after the Bank of England raised rates but warned of a “very challenging outlook”. BoE raised rate to 3% from 2.25% in its largest single increase since 1989, as it battles the twin forces of a slowing economy and red-hot inflation.

– The dollar rose 0.2% against the yen to 148.205 yen, as traders continue to watch for any further official intervention to shore up the battered Japanese currency. The euro fell 0.6% against the dollar to $0.9758.

– Spot Gold rose 0.1% on Friday to $1,631.88 an ounce recovering slightly from a sharp falls, after the Fed hike interest rate leading to steep losses in gold, as the opportunity cost of holding the yellow metal increased.

Chart Focus AUD/JPY

Key Points

1. Sell AUD/JPY recommendation.

2. Sell AUD/JPY at 93.95. Stop at 94.30 and profit target at 93.00.

3. Concerns over zero-COVID policy and decline in equity market is shifting focus to the safe haven yen.

4. Price is capped by the 20EMA with MACD hinting at a bearish price trend.

Fundamental Comments

1. Decline in the equity market has decreased risk appetite and shifted focus to the safe haven yen.

2. Concerns over slowing demand in China due to zero-COVID policy is likely to weigh on the Aussie dollar.

Technical Comments

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

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



Key Levels

Support93.4592.9592.45
Resistance94.0094.6595.00









Technical Overview

USD/JPY – The range over the past few days has decreased and this could be a sign of consolidation. Stochastic is in the overbought zone and both MACD and 20EMA are flat and neutral at the moment. We think price is likely to move within a range of 146.80 to 148.85 in the next couple of days ahead. NFP later in the global day could move price out of this range. We would recommend following the direction of the breakout.

Support147.80147.25146.80
Resistance148.20148.85149.45

EUR/USD – Price reached a low of 0.9729 overnight and currently price is moving higher from the overnight low. However, we think price is likely to be capped by the 20EMA resistance at 0.9825 and another decline to the previous low at 0.9729 is likely in the next 1-2 days. Stochastic is in the oversold zone but both MACD and 20EMA are both bearish and hinting at a bearish price trend.

Support0.97600.97050.9675
Resistance0.97900.98400.9895

GBP/USD – Price reached a low of 1.1148 overnight on recession forecast by the BoE despite a 75 bps rate hike. The trend is bearish and we think price is likely to be capped by the 20EMA line at 1.1335 and another test of the previous low at 1.1060 is likely in the next few days. Stochastic is in the oversold zone but 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. MACD is also hinting at a bearish price trend.

Support1.11901.11301.1095
Resistance1.12401.12951.1335

XAU/USD – Price tested the previous low of $1616.98 overnight and reached a fresh low of $1616.55. However, a strong bounce of the overnight low is hinting at a potential price bottom. The rally is likely to continue towards $1668 in the next 24 hours. Stochastic is rising from the oversold zone and hinting at a price rally. 20EMA has turned bullish but MACD remains bearish. If price failed to move above $1668, it could turn back towards $1616.55 again.

Support1640.651630.701616.55
Resistance1653.351668.551682.50

EUR/JPY – We had a sell recommendation at 145.65 on Wednesday which was filled. Yesterday, we had left stop at 145.55 and profit target at 144.60. Our profit order was filled when price declined to a low of 144.02. We are out with a 105 pips profit. Stochastic is in the oversold zone but both MACD and 20EMA are bearish.  We think price is unlikely to move above the 20EMA resistance line at 145.25 and price is likely to test the low of 144.02 again and lower in the next few days.

Support144.05143.60143.05
Resistance144.75145.25145.95

FX Commentary – U.S. Dollar Gained On Hawkish Stance From Powell.

Nicholas

Market Talk
– The U.S. dollar was on the front foot on Thursday after Federal Reserve Chair Jerome Powell signalled U.S. rates would likely rise further than expected, disappointing traders’ hopes for a change in tone, and shifting the focus to Friday’s jobs data.

– The Fed raised its benchmark funds rate by 75 basis points to 3.75-4% as widely expected. The dollar initially fell on hints in the Fed’s statement of smaller hikes ahead, but Powell’s hawkish stance during his press conference sent the US dollar higher against its peers.

– Sterling fell 0.8% on the dollar overnight to sit at $1.1378 in early deals on Thursday. Markets have priced for the BoE to deliver its biggest hike since 1989 and raise interest rates by 75 basis points later in the global day.

– The greenback’s gains knocked its New Zealand peer from a six-week high and back below its 50-day moving average to $0.5890. The Australian dollar fell 0.7% overnight and slipped further to a week-low of $0.6332 on Thursday

– Gold prices fell on Thursday, reversing recent gains as hawkish comments from Federal Reserve Chairman Jerome Powell’s comment that U.S. rates will likely end the cycle higher than previously expected has dashed hopes that interest rate hikes will end soon.


Chart Focus NZD/USD

Key Points

1. Sell NZD/USD recommendation.

2. Sell NZD/USD at 0.5830. Stop at 0.5865 and profit target at 0.5675

3. Expectation of further U.S. rate hikes and interest rate differential are both in the U.S. dollar’s favour.

4. Price has moved below the 20EMA and could be developing a Double Top chart pattern with MACD hinting at a bearish price trend.

Fundamental Comments

1. Overnight rate hike has widened the interest rate differential in the US dollar favour.

2. Powell’s comment that U.S. rates will likely end the cycle higher than previously expected is aiding the U.S. dollar.

Technical Comments

1. Price has moved below the 20EMA and could be developing a Double Top chart pattern, hinting at a price decline.

2. MACD has a divergence warning of a potential price high and is currently bearish.



Key Levels

Support0.57950.57450.5700
Resistance0.58350.58800.5940









Technical Overview
USD/JPY – Price declined to a low of 145.67 overnight but has bounced back up to 147.55 again. The 20EMA line at this point is currently capping the rally and if price can move above this resistance, we are likely to see price moving up to 148.85 again in the next few days. Stochastic is rising and is supporting this bullish view. Both 20EMA and MACD are also turning bullish and hinting at a price rally ahead.

Support147.10146.65146.20
Resistance147.65148.00148.40

EUR/USD – Price broke below the Fibonacci 62% support at 0.9850 and declined to a low of 0.9809 this morning. We are likely to see the decline continue to 0.9705 in the next couple of days. Stochastic is moving into the oversold zone but could still support further price decline. Both MACD and 20EMA are hinting at a bearish price trend. Price would need to move above 0.9895 to negate our bearish price view for the next couple of days.

Support0.98000.97650.9705
Resistance0.98400.98950.9940

GBP/USD – Price has moved below a support at 1.1430 and we are likely to see a continuation of this decline to 1.1255 in the next few days ahead. Stochastic is moving into the oversold zone but could still support further price decline. Both MACD and 20EMA are bearish and hinting at a bearish price trend ahead. Price will need to move above 1.1430 to negate the bearish price trend for the next few days.

Support1.13751.13201.1255
Resistance1.14351.14751.1520

XAU/USD – Price reached a low of $1634.53 after Powell’s comment of further rate hikes ahead. Stochastic is still declining and has yet to reach the oversold zone. Stochastic is hinting there could be more downside ahead. Both MACD and 20EMA are bearish and hinting at a bearish price trend. We see price moving down to the previous low at $1616.98 in the next couple of days.

Support1630.701616.951600.00
Resistance1640.651658.701668.55

EUR/JPY – We had a sell recommendation at 145.65 yesterday which was filled as price rose to a high of 145.81. Price has since declined to a low of 144.66. Stochastic is in the oversold zone and is hinting at a limited downside. However, both 20EMA and MACD are hinting at a bearish price trend head. We would recommend shifting stop lower to 145.55 while keeping profit target unchanged at 144.60.

Support144.55143.95143.60
Resistance145.35145.95146.40

FX Commentary – U.S. Dollar Held Gains Ahead of FOMC

Nicholas

Market Talk
– The U.S. dollar slipped from near a one-week peak versus major peers on Wednesday, with traders on tenterhooks before a looming Federal Reserve rate decision that should also give clues on the future policy path.

– Data on Tuesday showed U.S. job openings unexpectedly rose in September, highlighting a resilient labour market and that rapid interest rate hikes have yet to bite hard in the real economy, dimming hopes that the Fed would ease on its aggressive rate hike policy to tame inflation.

– The Japanese currency jumped suddenly by about half a yen to 147.4 per dollar, and then extended those gains as far as 147.165 before pulling back with traders on alert for possible intervention around the Fed meeting.

– The Euro and the British pound were both little changed at 0.9883 and 1.1506 respectively. The risk-sensitive Australian and New Zealand dollars also rose strongly, buoyed by a rally in Chinese equity markets.

– Gold prices rose on Wednesday to $1650.65 an ounce  on a softer dollar, while cautious investors awaited a key U.S. Federal Reserve policy statement that could provide cues on its pace of interest rate hike.


Chart Focus EUR/JPY

Key Points

1. Sell EUR/JPY recommendation.

2. Sell EUR/JPY at 145.65. Stop at 145.90 and profit target at 144.60

3. War in Ukraine and a possible recession in Europe are both likely to weigh on the Euro.

4. A potential Double Top chart pattern and bearish MACD are both hinting at a bearish price trend.

Fundamental Comments

1. A possible recession in Europe is likely weighed on the Euro.

2. War in Ukraine is likely to weigh on the Euro zone economy.

Technical Comments

1. A potential Double Top chart pattern is hinting at a bearish price trend.

2. A bearish MACD is also hinting at a bearish price trend.



Key Levels

Support145.45145.00144.55
Resistance145.95146.40146.95









Technical Overview

USD/JPY – Price was unable to hold above the 20EMA line and decline to a low of 147.98 overnight. Today price has moved in a tight range in view of FOMC later in the global day. Stochastic is still declining, hinting at a price decline. MACD remains bullish and is hinting at a bullish price trend. 20EMA is bearish. Price is likely to stay in a tight range for today ahead of the FOMC while trend is likely to be determined by the FOMC decision.

Support147.25146.95146.60
Resistance148.40148.85149.45

EUR/USD – Price declined to a low of 0.9852 which was also the Fibonacci 62% correction point of the rally from 0.9704 to the high at 1.0093. As long as price stays above this Fibonacci support, price is likely to move up to 1.0090 again in the next few days. However, a decline below the Fibonacci support is likely to send price lower to 0.9705. Stochastic is near to the oversold zone and both MACD and 20EMA are bearish.

Support0.98500.98050.9765
Resistance0.98950.99400.9995

GBP/USD – The price correction off the high of 1.1645 halted at the previous support level at 1.1430. Stochastic is near to the oversold zone while MACD is above to have a bullish crossover near to the zero line. 20EMA is neutral at the moment. If price can stay above 1.1430, we are likely to see another rally to 1.1645. If below the support at 1.1430, we are likely to see a pullback to 1.1255 in the next few days.

Support1.14751.14301.1380
Resistance1.15251.15801.1625

XAU/USD – We had a sell recommendation yesterday at $1644.85 but we were wrong on this call. Price reached a high of $1656.50 and our stop at $1652.95 was triggered. Stochastic continues to rise towards the overbought zone, hinting at a bullish price trend. 20EMA remains bullish and is hinting at a bullish price trend but MACD is neutral at the moment, with each of its two lines in different zone of the zero line.

Support1645.351630.701616.95
Resistance1656.501666.501674.80

NZD/USD – The decline off the 0.5901 peak managed to hold above the 20EMA line and has been slowly but surely moving higher. If price stays above the 20EMA line, we are likely to see another test of the previous peak at 0.5901. However a decline below the 20EMA line is likely to send price lower to 0.5720. MACD and 20EMA remain bullish and are hinting at a bullish price trend but stochastic is neutral.

Support0.58350.57750.5745
Resistance0.58750.59050.5955