AAFX TRADING

Daily Market Lookup

  • The dollar stabilized in early trade on Wednesday after falling on Tuesday as a collapse in new home sales and a slump in social media stocks stoked fears of a U.S. recession. U.S. bond yields had slumped on Tuesday on safe-haven flows, an illustration of the market's focus moving from fears of inflation to fears for growth. Expectations for the path of U.S. interest rates are consequently being trimmed, reducing the support that they have given to the greenback in recent weeks. The sense that relative rate dynamics are shifting to the dollar's detriment was reinforced overnight as the Reserve Bank of New Zealand raised its key rate by 50 basis points to 2.0%. The RBNZ said that large hikes now were more likely to stop inflation staying high for too long. The kiwi rose 0.6% to a three-week high of 1.5350 to the dollar, before paring gains a little later. The same debate - whether larger hikes are needed to keep public faith in central banks' commitments to low inflation - is also driving the euro at present. ECB President Christine Lagarde said on Tuesday that only 'gradual' rate increases are needed as long as inflation expectations don't become de-anchored. Others on the ECB's governing council, including the Austrian and Dutch central bank governors Robert Holzmann and Klaas Knot, have pushed for a 50 basis point hike already in July but Finnish central bank head Olli Rehn, a key swing voter in the governing council, sided with Lagarde on Wednesday, although he noted that inflation risks have definitely increased. Elsewhere, the Central Bank of Russia said it will hold an emergency meeting this week, amid speculation that the ruble's surge will lead it to cut interest rates further and perhaps lift more of its capital controls. The CBR raised its key rate to 20% and stopped nearly all household and corporate purchases of foreign exchange in an effort to protect the ruble when Russia invaded Ukraine in February. However, Russia's massive current account surplus - revenue from energy exports has continued to flow in while purchases of imports have collapsed due to western sanctions - has meant that the currency is now, if anything, too strong. The ruble rose another 1.2% on Wednesday to 56.191 to the dollar, its highest in over four years.
  • The dollar was up on Wednesday morning in Asia as investors awaited minutes from the last U.S. Federal Reserve meeting. The euro was down 0.22% to $1.07105 but remained near Tuesday’s high of $1.0748, a level not seen since April 25. European Central Bank President Christine Lagarde’s comments said eurozone interest rates will likely be in positive territory by the end of the third quarter, which gave the euro a boost. Lagarde’s comments implied an increase of at least 50 basis points to the deposit rate and triggered speculation of bigger hikes this summer. Investors are keeping an eye on the monetary policy outlook with worries of a potential recession caused by the tightening monetary policies. The minutes from the last Fed meeting will be released later today, with investors awaiting more clues on whether the tightening would continue. However, Fed Bank of Atlanta President Raphael Bostic, one of the central bank’s dovish policymakers, warned that headlong rate hikes could create “significant economic dislocation” and urged the Fed to tighten policy with care and avoid “recklessness” in an essay published on Tuesday.
  • Gold prices dropped on Wednesday as the dollar firmed, while investors awaited minutes from the U.S. Federal Reserve's May policy meeting for cues on the magnitude of the central bank's upcoming interest rate hikes. The dollar index strengthened after hitting its lowest level in a month in the previous session, making greenback-priced bullion more expensive for buyers holding other currencies. The FOMC is expected to release the minutes from its May 3–4 policy meeting at 1800 GMT later in the day. However, "investors are struggling with how to assess the landing path of inflation now that peak inflation is behind us. The question for the market is how long it will take to normalize, and that uncertainly is helping gold," Innes said. While gold is seen as an inflation hedge, higher short-term U.S. interest rates raise the opportunity cost of holding non-yielding bullion. As the Federal Reserve amps up its fight against 40-year-high inflation with what is expected to be a string of big interest-rate increases, a U.S. central banker injected a note of caution, warning headlong rate hikes could create "significant economic dislocation."
  • Oil prices rose Wednesday morning in Asia with investors weighing supply tightness of gasoline against the possibility of economic slowdowns and continued lockdowns in China. Oil inventories in the U.S. rose last week but gasoline stocks fell, according to American Petroleum Institute (API) data released Tuesday. Inventories of crude increased by 567,000 barrels for the week to May 10, that was a surprise increase and contrasted with a 2.4 million barrel draw the week earlier. Analysts had been expecting a decrease in inventories of 690,000 barrels. However, gasoline inventories fell by 4.2 million barrels, which continued to stoke fears of rising gas prices and the impact of those prices on inflation. The drop in gasoline stocks and likely increase in prices comes at an inconvenient time, with the busy U.S. driving summer season about to start. Distillate stocks also dropped by 949,000 barrels. Data on stockpiles from the U.S. Energy Information Administration is expected on Wednesday. In China, Shanghai continued a slow move towards opening but Beijing stepped up quarantine efforts as it continues to battle a month-old COVID outbreak. The International Energy Agency (IEA) warned this week that prices are set to continue surging unless demand from China remains weak in the months ahead. According to Platts, demand for oil from China fell 11.5% year on year in April. That could change, however, if lockdowns in various cities begin to ease.

 

 
Intraday RESISTANCE LEVELS
25th May 2022 R1 R2 R3
GOLD-XAU 1,859-1,870 1,879 1,890-1,900
Silver-XAG 22.05-22.50 22.90 23.20-23.75
Crude Oil 110.30-111.60 -112.50 113.25-114.50
EURO/USD 1.0690 1.0741 1.0805-1.0945
GBP/USD 1.2575-1.2620 1.2745 1.2800-1.2975
USD/JPY 128.90-129.60 130.60 131.20-132.00

Intraday SUPPORTS LEVELS
25th May 2022 S1 S2 S3
GOLD-XAU 1,851-1,840 1,831 1,820-1,805
Silver-XAG 21.50-20.90 20.60 20.00-19.60
Crude Oil 109.00--107.50 106.60-105.50 104.00-102.60
EURO/USD 1.0630-1.0550 1.0490 1.0450-1.0390
GBP/USD 1.2490 1.2420 1.2310-1.2200
USD/JPY 127.50-126.90 125.70 125.00-124.30

Intra-Day Strategy (25th May 2022)
GOLD-XAU Sell on Strength
Silver-XAG Buy on Dips
Crude Oil Neutral to Sell
EUR/USD Neutral to Sell
GBP/USD Neutral to Buy
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Tuesday made its intraday high of US$1869.60/oz and low of US$1849.19/oz. Gold up 0.6835% at US$1866.23/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: Sell on Strength

Sell below 1859-1890 keeping stop loss closing above 1890, targeting 1851-1831-1820 and 1801-1789-1780. Buy in between 1851-1769 with risk below 1769, targeting 1858-1868-1879 and 1890-1900.

 
Intraday Support Levels
S1     1,851-1,840
S2     1,831
S3     1,820-1,805
Intraday Resistance Levels
R1     1,859-1,870
R2     1,879
R3     1,890-1,900

Technical Indicators

Name   Value Action
14DRSI  

41.861

Buy
20-DMA   1859.01 Buy
50-DMA  

1885.39

Buy
100-DMA   1878.98 Buy
200-DMA   1855.93 Buy
STOCH(5,3)   72.831 Sell
MACD(12,26,9)   -25.400 Buy

Silver - XAG

AAFX TRADING

Silver on Monday made its intraday high of US$22.20/oz and low of US$21.66/oz settled up by 1.473% at US$22.10/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 21.60-19.60, targeting 22.05-22.50 and 23.05--23.95-24.55-25.10 with stop loss should be place on the breakage below 19.50. Sell in between 22.05-23.75 with stop loss above 23.75; targeting 21.50-21.05-20.60 and 20.00-19.60.

 
Intraday  Support Levels
S1     21.50-20.90
S2     20.60
S3     20.00-19.60

Intraday  Resistance Levels
R1     22.05-22.50
R2     22.90
R3     23.20-23.75

TECHNICAL INDICATORS
Name   Value Action
14DRSI   27.633 Buy
20-DMA   23.80 Sell
50-DMA   24.20 Sell
100-DMA   24.13 Sell
200-DMA   24.13 Sell
STOCH(5,3)   50.135 Buy
MACD(12,26,9)   0.108 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US110.73/bbl, intraday low of US$107.89/bbl and settled down by 0.0237% to close at US$109.57/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 0will 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 110.30-116.50 with stop loss at 116.50; targeting 109.00 and 106.90-105.90-104.50. Buy above 109.00-100.20 with risk daily closing below 100.20 and targeting 110.30-111.60 and 112.50-113.25-114.00

 
Intraday Support Levels
S1     109.00--107.50
S2     106.60-105.50
S3     104.00-102.60

Intraday Resistance Levels
R1     110.30-111.60
R2     -112.50
R3     113.25-114.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   54.140 Sell
20-DMA   105.51 Buy
50-DMA   102.62 Buy
100-DMA   97.04 Buy
200-DMA   88.06 Buy
STOCH(5,3)   60.206 Sell
MACD(12,26,9)   1.807 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$1.0660/EUR, high of US$1.0748/EUR and settled the day up by 0.397% to close at US$1.0729/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.1191), which become immediate support, break below will target 1.1270. 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 Sell

Sell below 1.0690-1.0945, targeting 1.0550-1.0490-1.0450 and 1.0390-1.3050-1.0305 with stop-loss at daily closing above 1.1150. Buy above 1.0610-1.0210 with risk below 1.0210, targeting 1.0610-1.0690-1.0741 and 1.0805-1.0945.

 
Intraday Support Levels
S1     1.0630-1.0550
S2     1.0490
S3     1.0450-1.0390

Intraday  Resistance Levels
R1     1.0690
R2     1.0741
R3     1.0805-1.0945

TECHNICAL INDICATORS
Name   Value Action
14DRSI   47.903 Buy
20-DMA   1.0568 Sell
50-DMA   1.0741 Sell
100-DMA   1.0946 Sell
200-DMA   1.1197 Sell
STOCH(5,3)   77.688 Buy
MACD(12,26,9)   -0.011 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.2471/GBP, high of US$1.2597/GBP and settled the day up by 0.459% to close at US$1.2528/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2834) is become immediate resistance level. 14-D RSI is currently in oversold 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 1.2490-1.2010 with target 1.2575-1.2620-1.2745 and 1.2800-1.2975 with stop loss closing below 1.2010. Sell in between 1.2575-1.2975 with targets at 1.2490-1.2420-1.2310 and 1.2200-1.2150-1.2070 with stop loss should be 1.2975.

 
Intraday Support Levels
S1     1.2490
S2     1.2420
S3     1.2310-1.2200

Intraday Resistance Levels
R1     1.2575-1.2620
R2     1.2745
R3     1.2800-1.2975

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

39.251

Buy
20-DMA   1.2498 Sell
50-DMA   1.2792 Sell
100-DMA   1.3042 Sell
200-DMA   1.3265 Sell
STOCH(5,3)   67.970 Buy
MACD(12,26,9)   -0.018 Sell

USD/JPY

AAFX TRADING

USD/JPY on Tuesday made intra‐day low of JPY126.35/USD and made an intraday high of JPY128.08/USD and settled the day down 0.856% at JPY126.78/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 128.50-132.50 with risk above 132.50 targeting 127.50-126.90-126.10 and 125.00-124.30. Long positions above 127.50-124.30 with targets of 128.90-129.60-130.60 and 131.20-132.00-132.90 with stop below 124.30.

 
Intraday Support Levels
S1     127.50-126.90
S2     125.70
S3     125.00-124.30

INTRADAY RESISTANCE LEVELS
R1     128.90-129.60
R2     130.60
R3     131.20-132.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   65.875 Buy
20-DMA   127.65 Buy
50-DMA   123.87 Buy
100-DMA   120.34 Buy
200-DMA   116.74 Buy
STOCH(9,6)   52.683 Buy
MACD(12,26,9)   0.0102 Sell

AAFX TRADING
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