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 – U.S. Dollar Jumped On Upbeat U.S. Labour Data

Market Talk
– The U.S. dollar jumped on Friday after upbeat economic data from the United States lessened the risk of recession, but also suggested the Federal Reserve would have to hike interest rate further and keep rates up for longer.

– The Labour Department’s closely watched employment report showed that nonfarm payrolls surged by 517,000 in the previous month. The department revised December data higher to show 260,000 jobs added instead of the previously reported 223,000. Average hourly earnings also rose for the second consecutive month, boosting the U.S. dollar.

– The greenback extended its rally on the yen to a three-week top of 132.60 on Monday amid reports the Japanese government had offered the job of central bank governor to the current deputy, Masayoshi Amamiya, who is considered by markets to be more dovish than some other contenders.

– The euro was huddled at $1.0791 after shedding 1.1% on Friday. Sterling fell 1.39% to $1.2055, the lowest since Jan. 6 and its worst day since Dec. 15. The Aussie was struggling at $0.6923, after slumping 2.2% on Friday while the kiwi dollar was hovering at $0.6320.

– Gold prices were muted on Monday, after plummeting 2.5% on Friday. A stronger-than-expected U.S. employment data ramped up fears that the Federal Reserve could keep hiking interest rates sending gold prices lower to $1860.45.


Chart Focus USD/CAD

Key Points

1. Buy USD/CAD recommendation.

2. Buy USD/CAD at 1.3370. Stop at 1.3340 and profit target at 1.3470.

3. A strong US labour data and a decline in crude oil prices are both likely to keep the U.S. dollar strong.

4. Price is likely to be supported by the 20EMA line, with both trend indicators hinting at a bullish price trend.

Fundamental Comments

1. A strong US labour data is hinting that the Fed is likely to hike rates further, keeping the dollar strong.

2. A decline in crude oil price is likely to keep the Canadian dollar weak.

Technical Comments

1. Price is likely to be supported by the 20EMA line, which is also hinting at a bullish price trend.

2. MACD is also hinting at a bullish price trend.



Key Levels

Support1.33901.33351.3295
Resistance1.34301.34751.3520










Technical Overview

USD/JPY – We had a sell recommendation from last Thursday at $128.95 and on Friday, we had shifted stop to cost at 128.95 and kept profit order at 127.80. Price went up above our stop last Friday and we are out of this position without a loss. Price will need to move above 132.86. If price is unable to move above this resistance, we see price going lower to 130.00 in the next 24 hours. We are in favour of the bearish price trend.

Support131.55131.05130.55
Resistance132.00132.40132.90

EUR/USD – Price has declined below last week low of 1.0801, triggering a bearish price trend. We are likely to see a continuation of this bearish price trend to 1.0710 in the next 48 hours. Trend indicators, MACD and 20EMA confirm this bearish price trend but Stochastic is hinting at a limited downside. We favour the bearish price and only a move above 1.0930 would negate our bearish view.

Support1.07651.07051.0650
Resistance1.08051.08551.0890

GBP/USD – Price reached a low of 1.2030 this morning but looks like it may have reached a low. Both stochastic and MACD are hinting that price has reached a low. However, 20EMA is hinting at a strong bearish price trend. We tend to favour the stochastic and MACD. We think price is likely to move up today to 1.2145 or to 1.2185. From this location, we see the start of another decline.

Support1.20301.19851.1935
Resistance1.20751.21251.2185

XAU/USD – Price has declined below last week low of $1900.55, triggering a bearish price trend. We are likely to see a continuation of this bearish price trend to $1843 in the next few days. However, Stochastic is hinting at a price rally to $1900 to go short. Trend indicators are hinting at a bearish price trend. We have the same view as the stochastic indicator and would prefer to get into a short position on a rally towards the 20EMA line at $1900.

Support1872.101860.651843.60
Resistance1882.201900.551918.85

EUR/JPY – Last Friday, we had a sell call on this pair but our call was wrong. Price has moved up higher to the previous high at 142.85. If price cannot move above this resistance, we are likely to see a decline back to 141.20 in the next 48 hours. However, if price moves above the previous high at 142.85, we are likely to see a move to 143.90. We favour the bearish side and see a decline to 141.20 for the next 24 hours.

Support141.85141.25140.75
Resistance142.35142.85143.30

FX Commentary – Euro Rose On Strong Spanish Inflation Data.

Market Talk
– Currency trading was subdued in the lead up to Wednesday’s Fed rate decision with the U.S. dollar facing a fourth monthly loss on Tuesday. Investors’ view of a peak in U.S. interest rates could swing into view as soon as this week’s Federal Reserve meeting.

– Interest-rate futures indicate market expectations for a 25 basis point hike from the Federal Reserve to take the Fed funds rate window to 4.5%-4.75%. Pricing suggests two more 25 basis point hikes are expected, before cuts arrive later in the year.

– The euro rose as far as 1.0913 after data showed Spanish inflation running surprisingly hot in January, before the broader mood reeled it back to 1.0851. The common currency is up 1.3% this month and is loitering near a nine-month peak ahead of European Central Bank rate decisions on Thursday.

– The Aussie slipped to $0.7050 after data showed retail spending took a shock 3.9% tumble in December, far exceeding forecast of a 0.3% dip, which is a likely dragged on economic growth and trimming expectations for how much further interest rates might have to rise.

– Gold prices retreated to $1922.10 on Tuesday, coming under pressure from a stronger dollar as caution kicked in ahead of a Federal Reserve meeting this week, where the Fed is widely expected to raise interest rate by 25 basis points.


Chart Focus EUR/AUD

Key Points

1. Buy EUR/AUD recommendation.

2. Buy EUR/AUD at 1.5360. Stop at 1.5325 and profit target at 1.5480

3. A sharp drop in Aussie retail spending and a likely hike in Euro interest rate are both weighing on the Aussie dollar.

4. A Cup and Handle chart pattern and MACD are both hinting at a price reversal.

Fundamental Comments

1. Expectation of a 50 basis points hike by the European Central Bank is likely to aid the Euro.

2. A sharp drop in Aussie retail spending is weighing on the Aussie dollar.

Technical Comments

1. A Cup and Handle chart pattern is hinting at a price low and a price reversal.

2. MACD is hinting at a possible price low with divergence warning.



Key Levels

Support1.53851.53451.5305
Resistance1.54251.54851.5520










Technical Overview

USD/JPY – Price is consolidating in the range of 129.10 and 131.10 and looks likely to continue till FOMC announcement. Stochastic is moving higher and hinting at a price rally but both MACD and 20EMA are flat and neutral. Both trend indicators are hinting at a sideways trend. Unless price can move above 131.10 or go below 129.10, we are expecting price to stay within this range in the next 24 hours.

Support130.00129.60129.10
Resistance130.55130.90131.55

EUR/USD – We had a buy recommendation at 1.0840 which was filled when price declined to a low of 1.0838.  Stochastic is still declining and hinting at a further decline in price. MACD and 20EMA are also bearish and hinting at a bearish price trend. If price were to move below 1.0820, it could be heading lower to 1.0765. However, if it can hold above 1.0830, we have a chance to see 1.0930 again in the next couple of days.

Support1.08251.07801.0735
Resistance1.08751.09301.0960

GBP/USD – Price reached a high of 1.2416 on Monday and has been on a decline since that high. We think the decline is likely to continue lower to 1.2280 in the next 48 hours. Stochastic is declining and has yet to reach the oversold zone, hinting at more declines ahead. Both MACD and 20EMA are hinting at a bearish price trend. Only a price move above 1.2380 would negate our bearish view for the next 48 hours.

Support1.23301.22801.2245
Resistance1.23701.24151.2450

XAU/USD – Price reached a high of $1934.10 on Monday and has been on a decline. We think the decline can continue and we see price decline to $1900 in the next 24 hours. Stochastic is declining and is hinting at a price decline. Both MACD and 20EMA are also hinting at a price decline. A MACD divergence is also hinting at a possible price high. A move below $1900 would confirm a high and a move to $1886 in the next few days.

Support1911.301896.551886.55
Resistance1925.301934.701949.15

USD/CAD – We had a buy recommendation at 1.3330 last Friday and yesterday, we had left stop at 1.3295 and profit order at 1.3410. Price reached a high of 1.3414 this morning and our profit order was filled. We are out of this position with a profit of 80 pips. Stochastic is rising and 20EMA is also pointing to a bullish price trend. If price can go above 1.3425, it could move up to 1.3515 in the next few days.

Support1.33801.34351.3295
Resistance1.34251.34751.3520

FX Commentary – US Dollar Stayed Near Eight-Month Low Ahead of FOMC.

Market Talk
– The U.S. dollar distanced itself from an eight-month low on Monday ahead of a slew of central bank meetings later in the week, though gains were capped by dovish re-pricing of the U.S. Federal Reserve’s rate-hike expectations as compared to more hawkish counterparts.

– The euro rose to $1.0874, drawing support from continued hawkish rhetoric by ECB policymakers and ebbing fears of a deep recession, ahead of policy meetings from the Fed and the European Central Bank (ECB). Sterling was at $1.2405 ahead of a Bank of England (BoE) later this week.

– The Australian dollar fell 0.3% to $0.7088 but was on track for a monthly gain of nearly 4%, after the shock that Australia’s inflation rate shot up to a 33-year high in the previous quarter, caused traders to ramp up bets that the RBA will have to tighten interest rates further.

– The Japanese yen jumped close to 0.2% to 129.62 per dollar. Core consumer prices in Japan’s capital for the month of January marked the fastest annual gain in nearly 42 years, data on Friday showed, keeping the Bank of Japan under pressure to phase out its economic stimulus.

– Spot gold was steady at $1931.25 per ounce on Monday ahead of the U.S. Federal Reserve’s rate decision later in the week, where Fed policymakers are expected to hike US interest rate by 25 basis points.


Chart Focus EUR/USD

Key Points

1. Buy EUR/USD recommendation.

2. Buy EUR/USD at 1.0840. Stop at 1.0810 and profit target at 1.0925

3. A divergent monetary policy between the ECB and the Fed is likely to aid the Euro dollar.

4. Price is likely to be supported by the previous week’s low with stochastic hinting at a price rally.

Fundamental Comments

1. The ECB is expected to hike rate by 50 basis points while the Fed is expected to hike rate by 25 basis points

2. This narrowing of interest rate differential is likely to aid the Euro.

Technical Comments

1. Price is likely to be supported by the previous week’s low.

2. Stochastic is near to the oversold zone and is hinting at a price rally ahead.



Key Levels

Support1.08351.07901.0760
Resistance1.08751.09301.0960










Technical Overview

USD/JPY – Price is consolidating in the range between 129.10 and 131.10. Stochastic is in the middle of its range and is neutral at the moment. MACD is also neutral but looks weak at the moment. Price has moved below the 20EMA, hinting at a possible bearish price trend. Unless price can move above 131.10 or go below 129.10, we are expecting price to stay within this range in the next 24 hours.

Support129.10128.70128.35
Resistance129.60129.95130.30

USD/CAD – We had a buy recommendation at 1.3330 last Friday was filled when the price reached a low of 1.3298. Stochastic is in the oversold zone and is hinting at a limited downside. 20EMA is bearish and is hinting at a bearish price trend. However, MACD showing a divergence warning of a possible price low. We would recommend keeping stop at 1.3295 and profit order at 1.3410.

Support1.32951.32601.3220
Resistance1.33501.34001.3430

GBP/USD – Price moved to a low at $1.2339 last Friday but was supported by 20EMA. Stochastic is moving lower and hinting at a price decline. Price has moved up above the 20EMA and MACD has remained above the zero line. Both trend indicators are hinting at a possible bullish price trend. Currently, the price is in a sideway trend, ranging from 1.2260 to 1.2446. Unless price can move above this range, we are expecting price to trade sideways within the range in the next 24 hours.

Support1.23601.23151.2260
Resistance1.24251.24551.2490

XAU/USD – Price reached a low of $1916.59 last Friday and moved to a high at $1934.09 this morning. Stochastic is rising and hinting at a price rally. MACD is pointing up and hinting at a bullish price trend. Price has moved above the 20EMA, hinting at a change in trend. As long as the price stays above the 20EMA at $1930, we are likely to see a rally back to $1949.15 again in the next couple of days. A break below $1909.65 is likely to negate our bullish view.

Support1923.551911.301896.55
Resistance1934.701949.151958.30

EUR/JPY – We had a buy recommendation at 141.10 last Thursday which was filled. Last Friday, we had recommended lifting stop higher to 140.85 while keeping our profit order at 142.70. Price moved to a low of 140.54 this morning and triggered our stop. Stochastic is moving lower and hinting at a price decline. Price has moved below the 20EMA and MACD has remained below the zero line which both hinting at a possible bearish price trend.

Support140.50139.95139.55
Resistance140.95141.30141.75

FX Commentary – Greenback Edged Higher On Stronger U.S. GDP Data

Market Talk
– The U.S. dollar edged higher against the euro on Thursday after data showed the U.S. economy maintained a strong pace of growth in the fourth quarter, backing the case for the U.S. Federal Reserve to maintain its hawkish stance for longer.

– US Q4 GDP data came in better than expected, expanding by an annualized 2.9%, down from the year-on-year expansion of 3.2% in the third quarter, but still higher than Wall Street economists’ forecasts for a 2.6% growth. This is a double-edged sword for investors, as it could embolden the Fed to keep key interest rates at restrictive levels for longer.

– The Australian dollar held hefty weekly gains on Friday as markets priced in higher interest rates by the RBA. The Aussie stood at $0.7125, having gained 2.2% on the week so far to reach highs not seen since June at $0.7142. The next bull target is $0.7282, with support at $0.7063.

– The euro was 0.23% lower at $1.08895, but not far from the nine-month high of $1.09295 touched on Monday. Sterling was about flat on Friday morning against the U.S. dollar at 1.2378. Against the yen, the dollar was up 0.54% at 130.275 yen.

– Gold prices came within a hair’s breadth of $1,950 an ounce, reaching an overnight high of $1949.15, before retreating on Thursday, as bulls in the game appeared to be conserving energy for another crack at the key resistance if U.S. inflation data due in the next 24 hours turns out to be tamer than thought.

Chart Focus USD/CAD

Key Points

1. Buy USD/CAD recommendation.

2. Buy USD/CAD at 1.3330. Stop at 1.3295 and profit target at 1.3410

3. A strong set of US data and interest rate differential are both in the US dollar favour.

4. A reversal candlestick pattern and MACD are both showing signs of a potential price reversal in the making.

Fundamental Comments

1. A strong set of US data could embolden the Fed to keep key interest rates at restrictive levels for longer, aiding the US dollar.

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

Technical Comments

1. Price made a low on the 4-hourly chart with a Long Legged Doji, hinting at a possible price bottom.

2. MACD is showing divergence and hinting that price may have made a potential low.



Key Levels

Support1.33201.32751.3225
Resistance1.33551.34001.3430










Technical Overview

USD/JPY – Price reached a low of 129.10 and has bounced back up to 130.60. Stochastic is also moving higher and is hinting at a price rally. However, both MACD and 20EMA are hinting at a neutral price trend. This is supporting our view that price is likely to continue in a sideways consolidation in the next 48 hours. Unless price can move above 131.10 or go below 129.10, we are expecting price to stay within this range.

Support129.70129.10128.70
Resistance130.25130.60131.10

EUR/USD – Price continues its rally and made a new overnight high at 1.0929. However, this high was accompanied by a divergence warning from the MACD indicator, warning about a potential high in the making. Price has since declined below the 20EMA. Stochastic is declining and is hinting at a price decline ahead. MACD is neutral. We think price may have reached a high and a corrective decline to 1.0780 is likely in the next few days.

Support1.08551.08101.0765
Resistance1.08951.09301.0980

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 1.2430. Stochastic is near to the overbought zone and is hinting at a limited upside. Both MACD and 20EMA are neutral. We think price could be moving lower to 1.2260 again in the next few days.

Support1.23601.23151.2280
Resistance1.24051.24551.2490

XAU/USD – After reaching a high of $1949.15 overnight, price has been declining. The price decline has also broken below a rising trend channel starting from 29 Dec. Price has also moved below the 20EMA. If price fails to move above the trend channel and the 20EMA at $1932, price could be heading lower to $1900 in the next few days. A move above $1932 would negate our bearish view and hints at a price rally to $1950.

Support1919.401911.301896.55
Resistance1931.101942.101958.30

EUR/JPY – We had a buy recommendation yesterday at 141.10, which was filled when price declined to a low of 141.07 this morning. Stochastic has reached a low and has turned up, hinting that price may have reached a low and is moving higher. However, both MACD and 20EMA are weak. Price can go in either direction. We would recommend lifting stop higher to 140.85 while keeping profit target at 142.70.

Support141.05140.70140.45
Resistance141.50141.90142.30