FX Commentary – U.S. Dollar Eased On Slower Pace of Fed Tightening

Market Talk
– The U.S. dollar eased on Tuesday as markets bet a Federal Reserve tightening cycle may be nearing an end, while the Japanese yen surged to a six-month high on expectations of tighter Japanese monetary policy in the months ahead.

– The yen jumped 0.7% in Asia, hitting a seven-month high of 129.50 against the dollar. The yen has been on a rally since early-December, when the BOJ unexpectedly struck a more hawkish tone, which ramped up expectations that it could tighten its ultra-loose policy in 2023.

– The euro slipped to $1.0683, but was not far from its highest levels since June. While the euro area economy is heading for a recession, concerns about gas supply over the winter have eased, meaning a downturn may not be as bad as feared a few months ago.

– A batch of surveys showed China business activities shrank at the sharpest pace in nearly three years as COVID-19 infections swept through production lines sending the Aussie lower to $0.6791 and the kiwi dollar to $0.6305.

– Gold prices hit a six-month high on Tuesday, up 0.8% in thin trading, with the market’s attention turning to minutes from the U.S. Federal Reserve’s latest policy meeting due this week. Spot silver rose 1.1% to $24.25.




Chart Focus EUR/USD

Key Points

1. Buy EUR/USD recommendation.

2. Buy EUR/USD at 1.0650. Stop at 1.0620 and profit target at 1.0715.

3. A slower pace of Fed tightening and a less severe downturn in Europe are both likely to aid the Euro.

4. Price is likely to be supported with MACD hinting at a bullish price trend.

Fundamental Comments

1. A slower pace of Fed tightening is weighing on the U.S. dollar.

2. A less severe downturn in Europe is likely to aid the Euro dollar.

Technical Comments

1. Price is likely to be supported by the 20EMA as well as the rising trend line, keeping the uptrend intact.

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



Key Levels

Support1.06501.06051.0575
Resistance1.06801.07151.0740









Technical Overview

USD/JPY – Price reached a low of 129.50 this morning but this low was accompanied by a MACD divergence warning. This is a hint that price could have reached a low. Stochastic is also in the oversold zone and is hinting at a limited downside. However 20EMA is hinting at a strong bearish price trend. We think there could be a corrective rally in the next 24 hours to 131.40 before the downtrend resumes again.

Support129.50128.90128.65
Resistance130.15130.60137.00

AUD/USD – Price slipped from last Friday’s high of 0.6820 to a low of 0.6771 this morning. We think this is a correction of the previous week’s rally. The correction should find support at 0.6740 and we could see a rally back to 0.6835 again after the correction. Stochastic is declining from the overbought zone, hinting at a price decline. However, both MACD and 20EMA are bullish and hinting at a bullish price trend.

Support0.67700.67400.6705
Resistance0.68200.68500.6890

GBP/USD – Price has been trading within a range for the past 2 weeks and we think price is likely to stay within the range of 1.1990 to 1.2120 for the next 48 hours or until there is a price break out of this range. Stochastic is in the middle of its range and is hinting at a sideways movement. MACD is flat and neutral and is hinting at a range as well.  20EMA is also flat and hinting at a range.

Support1.20501.19901.1940
Resistance1.20851.21251.2185

XAU/USD – Price continued its rally from the previous week and reached a high of $1844.15 this morning. There is no divergence warning from the MACD indicator, which means price is likely to continue higher in the next 48 hours. Stochastic is close to the overbought zone but 20EMA is hinting at a strong bullish price trend. We think price can test the resistance at $1878.45 in the next 48 hours.

Support1832.201818.451803.10
Resistance1847.751857.401869.60

NZD/USD – Price reached a low of 0.6295 this morning after declining from last Friday’s high of 0.6371. Stochastic is near to the oversold zone and is hinting at a possible price rally. MACD remains bullish and could be turning up again, hinting at a price rally. 20EMA is neutral and flat at the moment. We think price is likely to find support at 0.6300 which is also the Fibonacci 50% support zone. From this support, we could see a rally to 0.6410 in the next few days.

Support0.62950.62600.6225
Resistance0.63350.63700.6410

FX Commentary – U.S. Dollar Gained On Recession Fears

Market Talk
– The U.S. dollar soared on Thursday, led by strong gains against the yen, sterling, and commodity currencies, as investors fretted about the risk of recession with the Federal Reserve likely to raise interest rates well into next year.

– Recession fears intensified that the Federal Reserve’s battle against inflation using aggressive interest rate hikes could lead to a recession. Adding to global recession worries, the Bank of England and the European Central Bank further indicated an extended hiking cycle on Thursday.

– The euro hit $1.0737, the highest since June 9, after the ECB hike interest rate by 50 basis points, before falling back to $1.0629. Sterling fell sharply and was down nearly 2% to 1.2183, as investors believe the BOE is nearing the end of its rate hikes.

– The Aussie was at $0.6700 after diving 2.4% overnight, its biggest fall since March 2020, to as low as $0.6677 heightened fears of an impending recession next year. The kiwi dollar was hovering at $0.6336, having also plunged 1.8% overnight to as low as $0.6321.

– Gold prices were flat at $1776.85 per ounce on Friday, having retreated 1.5% on Thursday, pressured by expectations of higher interest rates for a longer period by the U.S. Federal Reserve. Recession fears helped to cushion gold price decline.

– We will be taking a 2-week break. Update will resume on 3 Jan 2023.


Chart Focus GBP/USD

Key Points

1. Sell GBP/USD recommendation.

2. Sell GBP/USD at 1.2260. Stop at 1.2295 and profit target at 1.2110.

3. Expectation of more US interest rate hikes next year and interest rate differential are both likely to aid the U.S. dollar.

4. Price is likely to face a strong resistance at the 20EMA line and MACD is hinting at a bearish price trend.

Fundamental Comments

1. Expectation of more US interest rate hikes next year is likely to aid the U.S. dollar.

2. Interest rate differential is in the U.S. dollar favour.

Technical Comments

1. Price is likely to face resistance at the 20EMA as well as a previous support turned resistance line.

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



Key Levels

Support1.21751.21301.2085
Resistance1.22251.22701.2315







Technical Overview

USD/JPY – Price reached a high of 138.17 overnight and has declined lower. We think the price correction should be support at the 20EMA line support at 136.60. From here, we see another price rally to test the previous high of 138.17 again in the next 48 hours. Stochastic is rising and has not yet reached the overbought zone, hinting there could be more upside. Both 20EMA and MACD are bullish and hinting at a bullish price trend.

Support136.95136.55135.95
Resistance137.65138.15138.75

EUR/USD – Price reached a high of 1.0737 and has pulled back to 1.0592 this morning.  If price is supported at this location, there is chance of another test of the overnight high at 1.0737. Stochastic is declining and hinting at a price decline. MACD and 20EMA remain bullish and both are hinting at a bullish price trend. We think price is likely to move lower to 1.0545 in the next 24 hours.

Support1.06201.05901.0560
Resistance1.06701.07351.0775

AUD/USD – Price declined to a low of 0.6675 overnight, which was just above the previous week low of 0.6667. 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. We think price may correct higher but is likely to be capped by the 20EMA line at 0.6760. We are expecting another test of the previous week’s low at 0.6667 in the next 24 hours.

Support0.66750.66400.6610
Resistance0.67100.67600.6810

XAU/USD – We had a sell call at $1797 yesterday but price only reached a high of $1795.28 and our order was not filled. Price has decline to a low of $1773.00 but we think there is likely to be another decline to 1765.75 in the next 24 hours. Stochastic is hinting at a limited downside. MACD is bearish and hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend.

Support1773.001765.751752.75
Resistance1786.151796.351812.95

NZD/USD – We had a buy call on Wednesday at 0.6425 which was filled. Yesterday we had recommended placing stop at 0.6395 and profit target at 0.6510. Our stop was triggered when price declined to a low of 0.6318. Stochastic is in the oversold zone and is hinting at a limited downside. However, both MACD and 20EMA are hinting at a bearish price trend. We think price is likely to be resisted at the 20EMA line at 0.6395 and from there we could see another decline to 0.6295.

Support0.63400.63050.6270
Resistance0.63750.64000.6430

FX Commentary – US Dollar Slipped As Fed Hiked By 50 Basis Points

Market Talk
– The U.S. dollar was on the back foot on Thursday, even as the Federal Reserve kept to its hawkish rhetoric after raising rates by half a percentage point, as investors were doubtful over how much the central bank would commit to putting the brakes on growth to curb inflation.

– The Fed moved to a slower pace of rate hikes of 50 basis points after 4 consecutive hikes of 75 basis points. Fed Chair Jerome Powell said overnight that the Fed will deliver more interest rate increases next year despite a possible recession in the U.S., with rates expected to peak above 5% and poured cold water somewhat on Wall Street expectations for a rate cut in the second half of next year.

– The euro hovered near their six-month highs in early Asia trade on Thursday at 1.0647, after touching a 6-month high at 1.0695 in the previous session. Sterling was last 0.1% lower at $1.2415, following a 0.5% overnight gain. Both BOE and ECB are due to deliver a 50 basis points hike later in the day.

– The dollar slipped 0.06% against the Japanese yen to 135.40. The Aussie was last 0.05% lower at $0.6860, The kiwi fell 0.05% to $0.6456, though it was similarly not far off the six-month peak of $0.6513 it hit this week.

– Gold prices slipped 0.7% to $1,794.22 per ounce, retreating further from a more than five-month high at $1824.37 scaled on Tuesday; after U.S. Federal Reserve Chair Jerome Powell said more interest rate hikes would come next year after the Fed delivered a half a percentage point hike in U.S. interest rate.



Chart Focus XAU/USD – Gold

Key Points

1. Sell Gold recommendation.

2. Sell Gold at $1797. Stop at $1808 and profit target at $1767.

3 Powell’s comments of more interest rate hikes to come next year and a higher termination point for interest rate are both likely to hurt gold.

4. Price’s movement below the 20EMA together with stochastic and MACD are hinting at a bearish price trend.

Fundamental Comments

1. Powell’s comments of more interest rate hikes to come next year is likely to weigh on gold.

2. Expectation of a higher termination point for interest rate is likely to weigh on gold.

Technical Comments

1. Price has moved below the 20EMA and could be about to break the trend, hinting at a bearish price trend.

2. Stochastic and MACD are turning down, hinting at a bearish price trend.



Key Levels

Support1785.401777.451765.75
Resistance1795.801812.951824.25








Technical Overview

USD/JPY – Price reached a low of 134.50 overnight and stochastic is in the oversold zone and is hinting at a price rally ahead. MACD has a bullish crossover and is also hinting at a price rally. However 20EMA is still bearish and hinting at a price decline. If price can move above 136.00, we are likely to see a price movement to test the previous high at 138.00 in the next few days.

Support135.45134.95134.65
Resistance135.95136.30136.90

EUR/USD – Price continued its rally to a high at 1.0695 but stochastic is already in the overbought zone and is hinting at a price decline ahead. However, both MACD and 20EMA are bullish and hinting at a bullish price trend. We think the next direction could be decided by the ECB press conference later today. If price can remain above 1.0595, we remain bullish but a move below is likely to hint at a decline to 1.0445.

Support1.06401.06051.0560
Resistance1.06951.07301.0775

GBP/USD – Price may be forming a small Double Top chart pattern and a decline below the support line at 1.2340 would confirm the chart pattern and call for a decline to 1.2230 in the next few days. Stochastic is in the overbought zone and is hinting at a price decline. MACD is hinting with divergence of a possible price high in the making. However, 20EMA remains bullish and is hinting at a bullish price trend. We are bearish on this pair.

Support1.23751.23401.2295
Resistance1.24051.24451.2480

NZD/USD – We had a buy call on Wednesday at 0.6425 which was filled when price decline to a low of 0.6400. Our view remains unchanged from the previous day. Stochastic is in the middle of its range and is neutral. However, both MACD and 20EMA are bullish and hinting at a bullish price trend. We see price going up to 0.6510 in the next 24 hours. We would recommend keeping stop at 0.6395 and profit target at 0.6510.

Support0.64250.63900.6355
Resistance0.64550.64850.6515

AUD/JPY – We had a buy call on Tuesday at 92.70 which was filled. Yesterday, we had recommended keeping stop at 92.35 and profit order at 93.80. Price declined to a low of 92.05, triggered our stop at 92.30. Stochastic is moving lower, hinting at a price decline. MACD remains bullish but is weak. 20EMA is neutral at the moment. The decline has also managed to stay above the Fibonacci 62% correction point, hinting at a price rally ahead.

Support92.3092.0091.65
Resistance92.7593.0593.45

FX Commentary – A Loosening of China’s COVID Restriction Weighed On Safe-Haven Greenback

Market Talk
– The U.S. dollar weakened against major currencies on Wednesday amid concerns that rising interest rates could push the U.S. economy into recession, while a loosening of China’s COVID restrictions boosted the yuan.

– Data on Wednesday showed U.S. worker productivity data beat forecasts but extended a weak trend, further muddying a debate on how far and how fast U.S. interest rates will rise. Market has been anticipating the Fed will soon slow its rate tightening pace, but recent upbeat U.S. employment, services and factory data has added uncertainty over the Fed policy outlook.

– The U.S. dollar was unchanged against the Canadian dollar after the Bank of Canada hiked its benchmark overnight interest rate by 50 basis points to 4.25%, the highest level in almost 15 years, and signaled the tightening campaign was near an end.

– The euro was up 0.3% at $1.0507. The euro has risen recently on signs that Europe’s economic downturn may be less bad than previously feared. The dollar was down 0.5% against the Japanese yen. The British pound was last trading at 1.2188.

– Spot gold held its ground at $1,784 per ounce in early Asian trade on Thursday, after a pullback in the dollar and U.S. bond yields as investors anticipate slower rate hikes from the U.S. Federal Reserve at its policy meeting next week.


Chart Focus AUD/USD

Key Points

1. Buy AUD/USD recommendation.

2. Buy AUD/USD at 0.6715. Stop at 0.6685 and profit target at 0.6790.

3. A loosening of China’s COVID restrictions and anticipation of a slower pace of rate hike are both likely to weigh on the U.S. dollar.

4. Price ability to stay above the Fibonacci 62% correction point is a sign of a correction with Stochastic and MACD also hinting at a bullish price trend.

Fundamental Comments

1. A loosening of China’s COVID restrictions is boosting risk sentiment and weighing on the safe haven U.S. dollar.

2. Anticipation of a slower pace of rate hikes from the U.S. Federal Reserve is likely to weigh on the U.S. dollar.

Technical Comments

1. The price decline has managed to stay above the Fibonacci 62% correction point, hinting that the decline is just a correction.

2. Stochastic is rising while MACD is turning bullish. Both momentum indicators are hinting at a bullish price trend ahead.



Key Levels

Support0.67100.66650.6635
Resistance0.67400.67850.6835









Technical Overview

USD/JPY – Price reached a high of 137.85 on Wednesday and went into a decline. The decline was supported by the 20EMA and if price can stay above the 20EMA, we are likely to test the high of 137.85 again but a movement below the 20EMA is likely to send price lower to 134.20 in the next few days. Stochastic is declining and is hinting at a price decline. However, both MACD and 20EMA are hinting at a price rally.

Support136.70136.15135.70
Resistance137.25137.70138.45

EUR/USD – In our last update on Tuesday, we had a sell call at 1.0495 but our call was wrong. Price moved to a high of 1.0549 on Thursday before declining to 1.0505.  Price is currently in the middle of a range and is also sitting just above the 20EMA, which is hinting at a sideways movement. MACD is also flat and neutral. Stochastic is hinting at a price rally. We think price is likely to trade from 1.0600 to 1.0440 until there is a breakout. Follow in the direction of the breakout.

Support1.04901.04451.0390
Resistance1.05501.05951.0640

GBP/USD – Price was supported by the 20EMA overnight and 20EMA is also hinting at a bullish price trend. Stochastic is also rising and hinting at a price rally. MACD is turning bullish and is also hinting at a price rally ahead. We think price is likely to move higher to 1.2345 in the next few days. However a move below the 20EMA at 1.2175 is likely to send price lower to the previous low at 1.2105.

Support1.21751.21451.2105
Resistance1.22351.22701.2345

XAU/USD – Price rallied to a high of $1790.40 yesterday and the correction was able to stay above the 20EMA line at $1780.70. Stochastic is rising and is hinting at a rising price trend. MACD is also hinting at a price rally. 20EMA is bullish as well. We think price is likely to test the previous Monday’s high of $1809.80 again in the next few days. However a price move below $1773 would negate our bullish price view.

Support1780.701765.751752.90
Resistance1790.401801.751809.80

NZD/USD – Price has managed to bounce off the support at 0.6300 for most part of this week. Stochastic is currently rising and is hinting at a bullish price trend. 20EMA is rising and is hinting at a bullish price trend. MACD is turning bullish. We think price is likely to test the Monday’s high of 0.6440 in the next few days. A price move below 0.6300 would negate our bullish view and calls for a decline to 0.6150.

Support0.63350.63000.6250
Resistance0.63850.64400.6470

FX Commentary – US Dollar Declined On The Fed Perceived Dovish Tilt

Market Talks

– The U.S. dollar stood close to a three-month low on Friday morning as the prospect of the Federal Reserve slowing monetary policy tightening as soon as December, following the release of November’s FOMC meeting minutes, dominated investors’ minds.

– Minutes from the Fed’s November meeting released on Wednesday showed that a “substantial majority” of policymakers agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes.

– Sterling rose more than 0.5% overnight and last stood at $1.2112, close to its over three-month high of $1.2153 hit in the previous session and on track for a nearly 2% weekly gain. The euro slipped to $1.0404, but remained close to $1.0481, its highest level in over four months hit last week.

– The Japanese yen jumped roughly 0.7% overnight and last bought 138.60 per dollar. The Aussie slipped to $0.6753, after rising more than 0.4% overnight. The kiwi eased 0.19% to $0.6252, but that was not far off its three-month peak hit in the previous session.

– Gold prices firmed on Friday, gaining 0.3% to $1760.15 en route to a weekly gain, buoyed by the dollar’s retreat on a perceived dovish tilt in the U.S. Federal Reserve’s interest rate hike strategy. Silver eased to $21.46 but was still up about 2.7% for the week.


Chart Focus XAG/USD

Key Points

1. Buy silver recommendation.

2. Buy silver at $21.15. Stop at $20.80 and profit target at $22.10.

3. A perceived dovish tilt in the U.S. Federal Reserve’s interest rate hike strategy and a decline in U.S. Treasury yields are both weighing on the U.S. dollar.

4. Price is likely to be supported by the 20EMA with MACD hinting at a bullish price trend.

Fundamental Comments

1. A perceived dovish tilt in the U.S. Federal Reserve’s interest rate hike strategy is weighing on the U.S. dollar.

2. A decline in the US Treasury yields is weighing on the U.S. dollar.

Technical Comments

1. Price is likely to be supported by the 20EMA.

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



Key Levels

Support21.1020.9020.55
Resistance21.4021.7022.05









Technical Overview

USD/JPY – In our last update on Wednesday, we had a buy call at 141.45 but our call was wrong and we got stop out at 140.85. Price has since declined to 138.01 overnight. There could be more downside ahead as MACD has not given a divergence warning as yet. Stochastic is in the oversold zone but 20EMA is hinting at a bearish price trend. The next support lies at 137.70 and price could be heading to this support in the next 24 hours.

Support138.35137.70137.15
Resistance138.80139.20139.60

EUR/USD – Price has reached a high of 1.0448 overnight and the rally looks like it can continue higher to the previous high at 1.0480 in the next 24 hours. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. Only a price move below 1.0345 would negate our bullish view for the next 24 hours.

Support1.03951.03401.0295
Resistance1.04451.04801.0535

GBP/USD – Price reached a high of 1.2153 overnight and the rally looks like it can continue higher in the next 24 hours as MACD remains bullish and is hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. Stochastic is in the overbought zone and hinting at a limited upside. As long as price stays above the 20EMA at 1.2020, we are likely to see a rally to the next high at 1.2295 in the next few days.

Support1.20901.20501.1990
Resistance1.21301.21551.2195

XAU/USD – Price managed to rally after it had reached a low of $1731.45 on Wednesday. MACD remains bullish and is hinting at a price rally. 20EMA is also hinting at a bullish price trend. However, stochastic is in the overbought zone and is hinting at a limited upside. Price is currently just below the Fibonacci 62%. At this moment price could move in either direction but we prefer the upside.

Support1751.201743.101731.45
Resistance1760.801770.801785.60

NZD/USD – Price broke above its previous high at 0.6205 to a high of $0.6288 overnight. MACD remains bullish and is hinting at a price rally. 20EMA is also hinting at a bullish price trend ahead. However, stochastic is in the overbought zone and is hinting at a limited upside. We are looking at a small pullback to the 20EMA line at 0.6205 and if price can stay above this support, we are looking at a rally to 0.6380 in the next few days.

Support0.62400.62000.6160
Resistance0.62900.63400.6380