Tag: USD/CNH

FX Commentary – Yen Advance On Taiwan Tensions

Nicholas

Market Talk
– The U.S. dollar continued its decline on Tuesday, falling to its lowest in two months against the recovering Japanese yen and losing ground on other peers, as investors continued to position for a less aggressive pace of Federal Reserve interest rate hikes.

– Jitters about the impact of an impending visit to Taiwan by U.S. House of Representatives Speaker Nancy Pelosi are driving some safe-haven flows to the yen. The greenback fell as low as 130.38 yen in Tuesday morning trade, its lowest since June 6.

– The Reserve Bank of Australia on Tuesday raised interest rates by 50 basis points for a fourth month running to 1.85% but tempered guidance on further hikes ahead as it forecast faster inflation but also a slowdown in the economy. The Aussie dollar weakened to 0.6950 from an morning high above 0.7000.

– The greenback was weaker against the British pound at $1.2256, just off a five-week peak hit overnight at 1.2293, ahead of a BOE monetary policy meeting this coming Thursday. The euro jumped as high as $1.0294, a level not seen since July 5.

– Gold prices notched a 1-month high at $1780.26 on Tuesday and extended their winning streak to a fifth session, as a dip in the U.S. dollar and Treasury yields boosted demand for the safe-haven metal amid heightened worries over a global economic slowdown.


Chart Focus USD/CHF

Key Points

1. Buy USD/CHF recommendation.

2. Buy USD/CHF at 0.9495. Stop at 0.9465 and profit target at 0.9590

3. A likely price correction and interest rate differential are both supportive of the US dollar.

4. A Spinning Top candlestick price pattern and MACD are both hinting at a price low and a reversal.

Fundamental Comments

1. After a 3-week decline, it could be time for a correction.

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

Technical Comments

1. A Spinning Top candlestick price pattern is hinting at a price bottom and a reversal.

2. MACD is also hinting at a price low and a reversal with a divergence warning.



Key Levels

Support0.94950.94500.9405
Resistance0.95350.95650.9595

Technical Overview

USD/JPY – Price continues its decline to a low of 130.38 this morning and may continue to move lower as both MACD and 20EMA are hinting at a strong bearish price trend. Tension in the Taiwan Straits is also contributing to the yen gains as well. MACD has no divergence warning as yet, hinting that price may not have hit a bottom. However, Stochastic is in the oversold zone and is hinting at a limited downside.

Support130.35129.80129.45
Resistance131.05131.60132.05

EUR/USD – Price reached a high of 1.0293 overnight but was unable to sustain at the high. We have seen price decline back into the range. If price can stay above the 20EMA, there is a chance that we might see a test of the high again. However, a move below the 20EMA is likely to send price back to the lower end of the range at 1.0100. Stochastic is hinting at a price decline. Both MACD and 20EMA remain bullish.

Support1.02251.01851.0145
Resistance1.02551.02951.0335

GBP/USD – Price reached a high of 1.2293 overnight but that high was accompanied by a divergence warning from the MACD indicator, hinting at a price high. Stochastic is in the overbought zone and a bearish stochastic crossover is hinting at a price decline. Both MACD and 20EMA remains bullish. A price move below the 20EMA line at 1.2190 would accelerate the decline for 1.2050.

Support1.21901.21501.2100
Resistance1.22451.22951.2330

XAU/USD – We had a buy call at $1753.40 yesterday but price only declined to a low of $1758.60 and our entry order was not filled. Price has advanced higher to $1780.25 overnight and MACD is hinting at a price high with a divergence warning. Stochastic is also in the overbought zone and is hinting at a price decline. However, 20EMA remains bullish. We think price may have reached a high and a correction to $1750 is likely in the next 2-3 days.

Support1768.751758.601740.90
Resistance1780.251798.901812.10

USD/CNH – We had a sell call at 6.7500 last Friday which was filled. Yesterday, we had recommended keeping stop at 6.7715 and profit target at 6.7150. Unfortunately, price moved higher and triggered our stop. We lost 215 pips on this trade. MACD and 20EMA have turned bullish. Stochastic is moving into the overbought zone. We think with the Taiwan tension, price is likely to continue higher to 6.83 in the next few days.

Support6.77006.75856.7370
Resistance6.79606.82006.8375

FX Commentary – US Sank To A Fresh 6-week Low Post FOMC

Nicholas

Market Talk
– The U.S. dollar sank to a fresh six-week low against the yen on Monday as markets continued to bet that the Federal Reserve has less tightening to do with the U.S. economy at risk of recession and after U.S. data showed slipping consumer inflation expectations.

– Data at the end of last week tossed the greenback in both directions, rising initially after the personal consumption expenditures price index showed the fastest inflation since 2005, only to sink after the final University of Michigan report – closely watched by Fed policymakers – showed slipping consumer inflation expectations.

– The euro edged lower to $1.0218, continuing its consolidation near the middle of its range over the past week and a half. The greenback dipped as low as 132.07 yen for the first time since June 16, and was at 132.50.

– Sterling was flat at $1.2186, after hitting the highest since June 28 at $1.2245 on Friday. Markets are laying 67% odds for a half-point rate hike on Thursday when the Bank of England meets for its policy meeting, compared to 33% probability of a quarter-point increase.

– Gold hit a more than three-week high on Friday, supported by a softer dollar and a lower US Treasury yields and bets that the Federal Reserve may cool the pace of rate hikes as economic risks deepen.

Chart Focus XAU/USD – Gold

Key Points

1. Buy Gold recommendation.

2. Buy Gold at $1753.40. Stop at $1748.40 and profit target at $1774.80

3. A lower U.S. Treasury yields and a slower pace of rate hike by the Fed are both likely to aid Gold.

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

Fundamental Comments

1. A lower U.S. Treasury yields is supporting Gold.

2. A slower pace of rate hike by the Fed is also likely to aid Gold.

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 bullish and is hinting at a bullish price trend.



Key Levels

Support1758.101749.501738.70
Resistance1767.901784.401801.70

Technical Overview

USD/JPY – Price declined to a low at $132.05 this morning which is just above the 200% of the decline from 139.35 to 135.55. As there is no divergence from the MACD indicator, we are expecting price to continue lower to 131.70 in the next 24 hours. MACD and 20EMA are both bearish and hinting at a bearish price trend. Stochastic is in the oversold zone and hinting at a limited downside.

Support132.05131.70131.45
Resistance132.75133.15133.55

EUR/USD – Price is likely to trade within the high-low range of the past 2 weeks. The high lies at 1.0278 while the lower end of the range lies at 1.0100. Stochastic is moving towards the overbought zone. Both MACD and 20EMA are bullish and hinting at a bullish price trend. We see a test of the topside at 1.0278 in the next 1-2 days. Price will need to break above 1.0278 to continue the bullish trend but we think price is likely to be capped and declined back into the range.

Support1.02001.01651.0115
Resistance1.02401.02801.0310

GBP/USD – Price rallied to a high of 1.2245 this morning but this could be a price high as MACD is hinting at a possible price high with a divergence warning. However, both 20EMA and Stochastic are hinting that price is likely to move higher. As long as price stays above the 20EMA line. We are inclined to stay bullish and see a test of the high at 1.2245 in the next 24 hours again. A move below 1.0260 would negate our bullish view.

Support1.21501.21151.2060
Resistance1.21951.22451.2275

XAG/USD – Price reached a high of $20.36 last Friday and has been declining this morning. However, the trend remains bullish. Both MACD and 20EMA are hinting at a bullish price trend ahead.  Stochastic is inside the overbought zone and we may see a price decline back to the 20EMA at $19.80 before another rally that could bring price higher to $20.50. Only a decline below $19.30 would negate this bullish price trend.

Support20.0519.7519.40
Resistance20.3520.6020.90

USD/CNH – We had a sell call at 6.7500 last Friday which was filled when price moved to a high of 6.7702. 20EMA has turned bullish but MACD remains bearish. Stochastic is moving higher and is currently hinting at a price rally. Hopefully, we have seen the high at 6.7702 and price declines for the rest of the day. For today, we would recommend keeping stop at 6.7715 and profit target at 6.7150.

Support6.75856.73706.7250
Resistance6.77056.79906.8200

FX Commentary – US Dollar Languished Near A 6-week Low After Treasury Yields Retreat.

Nicholas

Market Talk
– The U.S. dollar languished near a six-week low to the yen amid a sharp retreat in Treasury yields after data showed the U.S. economy contracted again in the second quarter, fuelling speculation that the Federal Reserve will not raise rates as aggressively as previously expected.

– U.S. second-quarter gross domestic product (GDP) contracted at a 0.9% annualized rate, according to the Commerce Department’s advance estimate, released on Thursday. That followed a first-quarter contraction of 1.6%, sending the U.S. economy into a technical recession.

– The greenback traded at 134.39 yen after an overnight plunge of 1.74%, the most since March 2020. It touched a low of 134.2 on Thursday, the weakest since June 17. The euro was flat at $1.0194 after a see-saw session on Thursday that ultimately ended with it little changed.

– Sterling was off 0.09% at $1.2172, easing back from Thursday’s high of $1.2191, the strongest since June 29. The Australian dollar slipped to $0.6998, pulling away from the highest since June 17 at $0.7013, reached on Thursday.

– Gold prices were flat on Friday and is poised for a fourth consecutive monthly drop, as an elevated U.S. dollar and aggressive monetary policies from top central banks continued to erode demand for the yellow metal.

Chart Focus USD/CNH

Key Points

1. Sell USD/CNH recommendation.

2. Sell USD/CNH at 6.7500. Stop at 6.7715 and profit target at 6.7150.

3. A sharp retreat in Treasury yields and expectations of a less aggressive pace of rate hike by the Fed are both likely to weigh on the U.S. dollar.

4. Price is likely to be capped by the 20EMA line and MACD is hinting at a bearish price trend.

Fundamental Comments

1. A sharp retreat in Treasury yields after data showed the U.S. economy contracted is weighing on the greenback.

2. Expectations of a less aggressive pace of rate hike by the Fed are likely to weigh on the greenback.

Technical Comments

1. Price is likely to be capped by the 20EMA line.

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



Key Levels

Support6.73406.72506.7150
Resistance6.75256.77156.7880

Technical Overview

USD/JPY – Price declined to a low at $132.75 this morning which is just below the 161.8% of the decline from 139.35 to 135.55. Stochastic is in the oversold zone and is turning up but MACD does not have a divergence warning as yet. 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. The next strong support comes in at 131.70, which is also the Fibonacci 200% of the previous decline.

Support132.70132.30131.70
Resistance133.40134.00134.50

EUR/USD – We had a buy call yesterday but we got it wrong. We lost 30 pips on this trade. Price declined to a low of 1.0113 overnight but has rallied back above 1.0200 again this morning. We think price is likely to test the previous high at 1.0278 again in the next 1-2 days. Stochastic is rising and MACD is turning bullish. 20EMA is bullish and is hinting at a bullish price trend.  Only a move below 1.0100 would negate our bullish view.

Support1.01851.01451.0100
Resistance1.02351.02801.0310

GBP/USD – Price rallied to a high of 1.2204 this morning and looks like it will continue higher to 1.2325 in the next few days. Stochastic is rising and is hinting at a price rally. However, stochastic is near to the overbought zone. MACD is bullish and is hinting at a bullish price trend. 20EMA is bullish and is also hinting at a bullish price trend. The next resistance lies at 1.2220 which is also the Fibonacci 161.8% of the previous rally.

Support1.21601.21251.2090
Resistance1.22151.22701.2325

XAU/USD – Price broke above the resistance at $1752 overnight and could be moving higher to the Fibonacci 161.8% price projection target at $1774.85 in the next couple of days. Stochastic is rising but is in the overbought zone. Stochastic is hinting at a limited upside. However both MACD and 20EMA are bullish and are hinting at a strong bullish price trend ahead. Only a price move below $1738 would negate this bullish view.

Support1762.851749.851733.20
Resistance1774.851785.901800.00

NZD/USD – Price broke above the previous high at 0.6303 this morning and we could be on the way 0.6450 in the next couple of days. Stochastic is in the overbought zone but MACD is hinting at a strong bullish price trend. 20EMA is also pointing up with a steep slope and hinting at a bullish price trend.  Only a price move below 0.6180 would negate our bullish view for the next couple of days.

Support0.63000.62650.6215
Resistance0.63550.63950.6435

Forex Trading Idea USD/CNH

Nicholas

Strategy

Buy 6.3750 for 6.5875 with a stop below 6.3035.

Technical View

On the weekly chart, the price decline is seen to be slowing down. Price had declined from the high at 7.1961 in May 2020 to the low at 6.3035 in 20 February 2022. The candlestick size in recent days is also getting smaller. Both Stochastic and MACD are hinting with divergence of a possible price low. These are signs of a potential bottom in the process of forming. Price has also moved above the 20EMA. This could be a confirmation of the low.

If price has formed a low at 6.3057, we are likely to see a price movement to the previous price resistance at 6.5875 in the next few months ahead.

Fundamental View

Since the beginning of March 2022, COVID-19 cases have been on a rise, reaching 4,569 cases on 22 March 2022. China has implemented lockdown as the government has a zero case policy. This zero policy has a cost on the economy. Production will be lower. Annual GDP and economic growth will be lower for the year. Markets now widely expect policymakers to resume monetary easing soon to revive an economy hit by a domestic COVID-19 resurgence. The Chinese economy is also weighed down by weaker credit growth and a faltering property sector as well. This is likely to lead to a weaker China yuan against the US dollar.

To help the economy, the Chinese central bank is likely to lower its interest rate. Reserve ratio requirement was lowed for the third time in January 2022 and is expected to be lowered another time in the 2nd quarter of 2022. Many analysts are forecasting a 50 basis point cut. This is likely to lead to a narrowing of interest rate differential between the U.S. and the Chinese currency, reducing the advantage of the yuan. With the U.S. Fed expected to hike rates, a widening monetary policy divergence between the world’s two largest economies could shrink China’s current yield advantage over the United States, triggering investors to put their money in U.S. dollar.

War in Ukraine is also likely to aid the safe haven U.S. dollar against the Chinese currency. Fundamental reasons are currently in favour of the US dollar and against the yuan.

FX Commentary – Safe Havens Slipped As Sentiment Improved On Peace Talk

Nicholas

Market Talk


– The U.S. dollar is headed for its first down week in six versus major peers on Friday, as investors continued to assess the impact of the start of the Federal Reserve’s rate tightening cycle. Sentiment also improved after Russia avoided default on dollar-denominated debt.

– The continuation of peace talks even as fighting still rages in Ukraine has stalled demand for safe haven US dollar, while the euro has rebounded from last week’s nearly two-year trough. The single currency was slightly weaker at $1.1079 on Friday after reaching a high of 1.1137 overnight.

– The yen weakened to 118.77 per dollar, after the Bank of Japan left its ultra-accommodative policy settings unchanged on Friday morning, as widely expected, leaving it an outlier among developed-world central banks which are exiting pandemic emergency measures.

– Sterling ticked higher to $1.3152, overcoming the hiccup from the Bank of England’s dovish comments after raising interest rates for a third consecutive meeting on Thursday. The Bank of England hiked its interest rates to 0.75%.

– Gold was down on Friday morning in Asia, on hopes that progress in ceasefire talks between Ukraine and Russia could end the war in Ukraine, which dented the yellow metal’s safe-haven appeal.

Chart Focus USD/CNH

Key Points

1. Buy USD/CNH recommendation.

2. Buy USD/CNH at 6.3585. Stop at 6.3455 and profit target at 6.4070

3. COVID in China and the Fed’s tightening cycle are both likely to aid the U.S. dollar.

4. Price is supported by a strong support with Stochastic hinting at a bullish price trend.

Fundamental Comments

1. COVID and lockdown in China is likely to weigh on the yuan.

2. The Federal Reserve’s rate tightening cycle is likely to aid the U.S. dollar.

Technical Comments

1. Price is supported by the Fibonacci 50% correction point and the 20EMA.

2. Stochastic is turning up and hinting at a bullish price trend.



Key Levels

Support6.35456.34356.3315
Resistance6.37156.39006.4110

Technical Overview

USD/JPY – Price reached a high of 119.13 on Wednesday and has been declining since that high. That high was also accompanied by a bearish divergence warning from the MACD indicator, which is a hint of a possible price high. The 20EMA is currently supporting price at 118.35 but a break of this support is likely to send price lower to 116.90. Stochastic is declining from the overbought zone and is hinting at a bearish price trend ahead.

Support118.35117.95117.50
Resistance118.80119.15119.60

EUR/USD – Price reached a high of 1.1137 overnight but this high was accompanied by a divergence warning from the MACD indicator. Stochastic is also declining from the overbought zone. However, 20EMA remains bullish. We think price may have reached a high after a 5-day rally. We are looking for bearish trend to resume, if price is capped at 1.1137. Above 1.1137, the next price resistance lies at 1.1270.

Support1.10501.10051.0960
Resistance1.10951.11401.1180

GBP/USD – The rally was capped by a previous resistance high at 1.3210 but the decline was supported by the 20EMA at 1.3090. MACD remains bullish and 20EMA is also hinting at a bullish price trend. Stochastic is also hinting at a bullish price trend. We remain bullish and we think price is likely to move above 1.3210 to the next resistance at 1.3270. A decline below 1.3090 would negate our bullish view and call for a decline to 1.2991.

Support1.31501.30901.3040
Resistance1.32101.32501.3300

XAU/USD – The price rally reached a high of $1949.65 overnight but MACD remains bearish. Stochastic has a bearish crossover in the overbought zone and is hinting at a price decline. 20EMA has also turned bearish. We think price may have reached a high and we are likely to see a decline back to test the previous low of $1895.10 in the next 48 hours. A move above $1950 would negate our bullish view.

Support1922.401906.851895.10
Resistance1936.201949.651962.25

USD/CHF – Yesterday, we had a buy call on this pair but we call was wrong. We lost 30 pips on this trade. Stochastic continues to decline but is reaching the oversold zone. MACD remains bullish but is close to the zero line and could turn bearish. 20EMA has already turned bearish. We see this decline continuing lower to the next support level at 0.9290 in the next 24 hours.

Support0.93350.92900.9250
Resistance0.93750.94050.9460