AAFX TRADING

Daily Market Lookup

  • The euro rose for a third consecutive day on Wednesday, after hitting a 20-month low last week, as markets awaited euro zone inflation data for clues on the European Central Bank's next move. The euro has been under pressure, slipping 8% in three months, amid expectations that the ECB will become the latest central bank to raise interest rates. Strong inflation figures in Germany this week left investors assessing the chances that the ECB might signal a faster than expected path for policy tightening. Ulrich Leuchtmann, head of foreign exchange at Commerzbank (DE:CBKG), said the money market is now pricing in an ECB rate increase for the last quarter of the year and it is too soon to see that reflected in the euro. In the short term it will depend on what ECB President Christine Lagarde has to say tomorrow, he said. In the meantime, the dollar retreated after climbing to a 19-month high last week, with risk sentiment lifted as U.S. Federal Reserve officials pushed back against potentially aggressive rate increases this year. A chorus of Fed officials said they would raise interest rates in March but spoke cautiously about what might follow and indicated a desire to keep options open given an uncertain inflation outlook.
  • The U.S. dollar edged lower Wednesday as gains in global equity markets boosted risk sentiment while Federal Reserve officials reined in interest rate hike expectations. Also weighing on the dollar have been recent moves by a series of Fed officials to dilute expectations of a hefty 50 basis points hike in March by the U.S. central bank even with inflation at a 40-year high. St. Louis Federal Reserve President James Bullard, often seen as one of the more hawkish of the Fed policymakers, said on Tuesday he favors successive rate increases at the Fed's March, May and June meetings. But he disagreed with the idea of starting with a half-percentage point hike in March, saying markets have already started to push up borrowing costs. Additionally, Federal Reserve Bank of Kansas City President Esther George, another hawk, said the central bank should be cautious and could take less aggressive actions in raising interest rates by shrinking the balance sheet more forcefully. Traders will keep an eye on the release of the ADP private payrolls, at 8:15 AM ET (1315 GMT), ahead of Friday’s monthly official jobs report. Private job growth is likely to have decelerated to 207,000 in January after recording its fastest pace in seven months in December, when it rose 807,000.
  • The dollar fell for a second straight session on Tuesday, after hitting a 19-month peak at the end of last week, on weaker-than-expected U.S. economic data and after Federal Reserve officials pushed back against aggressive rate hikes this year, lifting risk appetite. After falling nearly 5% in January, world equities started February slightly firmer and currency markets have also changed course. A chorus of Fed officials said on Monday they would raise interest rates in March, but spoke cautiously about what might follow and indicated a desire to keep options open given an uncertain inflation outlook. Philadelphia Fed President Patrick Harker was equally cautious on Tuesday as he pushed back on a rate increase of half a percentage point in March, saying he would have to be convinced it was needed. Louis Navellier, chief investment officer at Navellier and Associates said the latest remarks revived "the belief that the 'Fed put' was still alive," referring to the tendency of the Fed to ease monetary policy, or push back the timeline on raising rates, in response to falling stock markets. In addition, as the Fed sought to put brakes on faster rate hike forecasts, central banks around the world have either raised their policy rates already or flagged their own tightening plans. Central banks in Norway, New Zealand, and Britain have already tightened their policy rates and signalled further hikes are coming. U.S. rate futures late on Tuesday have slightly pulled back on faster rates hikes, pricing about less than five hikes this year, starting in March. A 50 basis-point rate increase showed a roughly 16% probability, down from as high as 32% late last week, according to Refinitiv data. U.S. manufacturing data on Tuesday came in below expectations and added to the dollar's losses. A measure of U.S. manufacturing activity fell to a 14-month low in January, dropping to a reading of 57.6 from 58.8 in December amid an outbreak of COVID infections.
  • Oil prices climbed on Wednesday toward last week's seven-year highs as a draw in U.S. crude stocks confirmed strong demand and tight supplies, but investors remained cautious ahead of an OPEC+ meeting later in the day. Tight global supplies and geopolitical tensions in Eastern Europe and the Middle East have boosted oil prices by about 15% so far this year. On Friday, crude benchmarks hit their highest prices since October 2014, with Brent touching $91.70 and U.S. crude hitting $88.84. U.S. crude stocks fell by 1.6 million barrels for the week ended Jan. 28, against analysts' estimate of an increase of 1.5 million barrels, according to market sources citing American Petroleum Institute figures on Tuesday. But gasoline inventories rose by 5.8 million barrels, above analysts' expectations for a 1.6 million barrel build. The Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, will likely stick to existing policies of moderate output increases on Wednesday, five sources from the producers' group said, even as it expects demand to rise to new peaks this year and as oil prices trade near seven-year highs. Sources said an OPEC+ technical panel meeting on Tuesday did not discuss a hike of more than the expected 40,000 barrels per day from March. Tensions between Russia and the West also underpinned crude prices. Russia, the world's second-largest oil producer, and the West have been at loggerheads over Ukraine, fanning fears that energy supplies to Europe could be disrupted. On Tuesday, Russian President Vladimir Putin accused the West of deliberately creating a scenario designed to lure it into war and ignoring Russia's security concerns over Ukraine.

 

 
Intraday RESISTANCE LEVELS
2nd February 2022 R1 R2 R3
GOLD-XAU 1,808-1,818 1,832 1,841-1,850
Silver-XAG 22.50-23.15 23.80 24.40-24.90
Crude Oil 87.90-88.20 89.00 89.50-90.00
EURO/USD 1.1355-1.1400 1.1485 1.1525-1.1590
GBP/USD 1.3590-1.3640 1.3700 1.3750-1.3800
USD/JPY 115.00-115.40 115.70 116.10-116.80

Intraday SUPPORTS LEVELS
2nd February 2022 S1 S2 S3
GOLD-XAU 1,800-1,783 1,777 1,770-1,764
Silver-XAG 22.40-21.90 21.50 21.05-19.50
Crude Oil 87.00-86.20 85.60 84.95-84.50
EURO/USD 1.1270-1.1230 1.1210 1.1180-1.1120
GBP/USD 1.3530-1.3490 1.3410 1.3350-1.3300
USD/JPY 114.50-114.05 113.70 113.20-112.70

Intra-Day Strategy (2nd February 2022)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral to Sell
EUR/USD Neutral to Buy
GBP/USD Neutral to Buy
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Tuesday made its intraday high of US$1808.68/oz and low of US$1795.65/oz. Gold up 0.217% at US$1801.03/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside is expected before it gets stretched. Stochastic Oscillator is in neutral territory and giving negative crossover to bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Buy in between 1790-1769 with risk below 1769, targeting 1800-1808-1818 and 1832-1848-1854-1860. Sell in between 1800-1860 keeping stop loss closing above 1860, targeting 1790-1783-1777 and 1769-1760.

 
Intraday Support Levels
S1     1,800-1,783
S2     1,777
S3     1,770-1,764
Intraday Resistance Levels
R1     1,808-1,818
R2     1,832
R3     1,841-1,850

Technical Indicators

Name   Value Action
14DRSI  

41.005

Buy
20-DMA   1814.38 Sell
50-DMA  

1808.53

Sell
100-DMA   1803.45 Sell
200-DMA   1801.18 Sell
STOCH(5,3)   13.940 Sell
MACD(12,26,9)   0.746 Buy

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$23.03/oz and low of US$22.39/oz settled up by 0.707% at US$22.62/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. MACD is below zero line and histograms are decreasing trend and it will bring bearish stance in the upcoming sessions. RSI is approaching neutral region, indicating buy signal for now. The Stochastic Oscillator is in oversold region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 22.50-20.50, targeting 23.15-23.70-24.10 and 24.55-24.90- 25.40 with stop loss should be place on the breakage below 20.50. Sell in between 23.15-25.40 with stop loss above 25.40; targeting 22.50-22.10-21.90 and 21.40-21.00.

 
Intraday  Support Levels
S1     22.40-21.90
S2     21.50
S3     21.05-19.50

Intraday  Resistance Levels
R1     22.50-23.15
R2     23.80
R3     24.40-24.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   41.607 Buy
20-DMA   23.16 Sell
50-DMA   23.15 Sell
100-DMA   23.43 Sell
200-DMA   23.88 Sell
STOCH(5,3)   15.891 Buy
MACD(12,26,9)   0.034 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US88.19/bbl, intraday low of US$85.84/bbl and settled down by 0.239% to close at US$86.66/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 68.50 which is a support level and breakage below will call for 65.40. MACD is above zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in neutral region and giving positive crossover for confirmation of bullish stance; while the RSI is in neutral region and more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 87.90-89.50 with stop loss at 89.50; targeting 86.20-85.60-84.95 and 84.50-83.00-82.30. Buy above 87.20-83.90 with risk daily closing below 83.90 and targeting 87.90-88.20 and 89.00-89.50.

 
Intraday Support Levels
S1     87.00-86.20
S2     85.60
S3     84.95-84.50

Intraday Resistance Levels
R1     87.90-88.20
R2     89.00
R3     89.50-90.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   71.312 Sell
20-DMA   82.96 Buy
50-DMA   79.32 Buy
100-DMA   76.57 Buy
200-DMA   72.14 Buy
STOCH(5,3)   78.873 Buy
MACD(12,26,9)   2.930 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$1.1220/EUR, high of US$1.1278/EUR and settled the day up by 0.344% to close at US$1.1269/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.1700), which become immediate resistance level, break above will target 1.1825. MACD is above zero line and histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving positive crossovers to signal for bullish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.1270-1.1120 with risk below 1.1120, targeting 1.1485-1.1525-1.1590 and 1.1620-1.1650. Sell below 1.1355-1.1650, targeting 1.1420-1.1385-1.1310 and 1.1250-1.1200-1.1170 with stop-loss at daily closing above 1.1650.

 
Intraday Support Levels
S1     1.1270-1.1230
S2     1.1210
S3     1.1180-1.1120

Intraday  Resistance Levels
R1     1.1355-1.1400
R2     1.1485
R3     1.1525-1.1590

TECHNICAL INDICATORS
Name   Value Action
14DRSI   33.485 Buy
20-DMA   1.1312 Sell
50-DMA   1.1352 Sell
100-DMA   1.1451 Sell
200-DMA   1.1587 Sell
STOCH(5,3)   11.685 Sell
MACD(12,26,9)   -0.004 Buy

GBP/USD

AAFX TRADING

GBP/USD on Monday made an intra‐day low of US$1.3433/GBP, high of US$1.3527/GBP and settled the day up by 0.557% to close at US$1.3519/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3760) is become immediate support level. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in overbought territory and giving positive crossover to confirm bullish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.3530-1.3350 with target 1.351.3640-1.3700-1.3750 and 1.3800-1.3840-1.3890 with stop loss closing below 1.3950. Sell in between 1.3640-1.3840 with targets at 1.3590-1.3550-1.3490 and 1.3440-1.3390-1.3300 with stop loss should be 1.3790.

 
Intraday Support Levels
S1     1.3530-1.3490
S2     1.3410
S3     1.3350-1.3300

Intraday Resistance Levels
R1     1.3590-1.3640
R2     1.3700
R3     1.3750-1.3800

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

63.834

Buy
20-DMA   1.3466 Buy
50-DMA   1.3453 Buy
100-DMA   1.3530 Buy
200-DMA   1.3588 Buy
STOCH(5,3)   85.766 Buy
MACD(12,26,9)   -0.003 Sell

USD/JPY

AAFX TRADING

USD/JPY on Tuesday made intra‐day low of JPY115.11/USD and made an intraday high of JPY115.68/USD and settled the day up % at JPY115.32/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.30), which is initial support on the daily chart. 14-D RSI is currently in overbought region and chances of downward are expected based on RSI. MACD is above zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in neutral territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 114.90-116.50 with risk above 116.50 targeting 14.50-113.90 and 113.20-112.70-112.50. Long positions above 114.50-112.50 with targets of 114.65-115.00-115.50 and 116.00-116.50-116.90 with stop below 112.50.

 
Intraday Support Levels
S1     114.50-114.05
S2     113.70
S3     113.20-112.70

INTRADAY RESISTANCE LEVELS
R1     115.00-115.40
R2     115.70
R3     116.10-116.80

TECHNICAL INDICATORS
Name   Value Action
14DRSI   46.1338 Buy
20-DMA   114.84 Sell
50-DMA   114.19 Buy
100-DMA   113.17 Buy
200-DMA   111.59 Buy
STOCH(9,6)   11.683 Sell
MACD(12,26,9)   0.0102 Sell

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