AAFX TRADING

Daily Market Lookup

  • The U.S. dollar edged higher Thursday, gaining some support from the generally hawkish tone of the minutes of the Federal Reserve’s December meeting. The minutes of the Fed's latest policy meeting, released late Wednesday, indicated agreement that the central bank should slow the pace of aggressive interest rate increases, but the policymakers were still keen to emphasize their focus on combating inflation. The Fed members said they favored a "restrictive policy stance for a sustained period," until inflation was on a sustained downward path to 2%, and that was likely to take "some time." While the Fed is determined to tame inflation, it is keen to do so while avoiding a major recession that would result in steep job losses. The December jobs report is due on Friday, and is expected to show the economy added 200,000 jobs, which is lower than the prior month. However, ahead of this, the weekly initial jobless claims are due later Thursday, and they will be studied for clues of the current strength of the labor market. EUR/USD rose 0.1% to 1.0612, despite German exports unexpectedly falling in November as high inflation and market uncertainty continue to weigh on Europe's largest economy despite fading supply chain problems. USD/JPY rose 0.2% to 132.82, with the yen giving back some of the gains seen since early December after the BOJ unexpectedly widened the target range for its benchmark yields, creating speculation that the central bank will reverse its ultra-loose monetary policy later this year. GBP/USD fell 0.4% to 1.2006, with sterling struggling the day after U.K. Prime Minister Rishi Sunak promised to bring inflation down by half and make the British economy grow this year While these objectives are certainly deliverable, according to the latest forecasts from the Office of Budget Responsibility, the country is currently suffering a wave of strikes and confidence is at a low ebb.
  • The dollar swung higher Thursday, just a day ahead of Friday’s labor market report that some believe could force investors to rethink their game of chicken against the Federal Reserve and potentially thrust the greenback to glory. The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.85% to 104.91. Investors have largely been ignoring the Fed’s pledge to keep rates higher to cool inflation, but the December jobs report “might well be a possible candidate, which might convince the market to question its divergence with the Fed expectations once again,” Commerzbank said in a note. The December jobs report due Friday is expected to show that the economy created about 200,000 jobs last month and the unemployment rate remained steady at 3.7%. Wage growth will likely dominate attention and is expected to slow to 0.4% for the month and 5% on an annualized basis from 0.6% and 5.1%, respectively. The Fed has said that it does not expect to cut rates this year. But the market does not trust this view, according to commerzbank, and this remains "the central aspect dominating the dollar outlook" This divergence, however, isn’t likely to end in a victory for those engaged in a game of chicken against the Fed, potentially paving the way for the greenback to rack up gains. As long as this divergence persists, the “higher the risk that the sentiment on the currency market will tilt in the direction of Fed expectations after all and that the dollar will appreciate significantly once again,” Commerzbank added. The slew of reports on the labor market this week - showing demand remains strong and fewer initial jobless claims - have already delivered the first blow and shown a chink in the armor of those harboring ‘Fed pivot’ hopes Others, however, believe the greenback’s road ahead will likely be choppy as the world's reserve currency is fast approaching technical headwinds.
  • Oil prices rose as much as $1 on Friday, extending gains from the previous session, supported by hopes of a China demand boost and after data showed lower U.S. fuel inventories following a winter storm that hit at the end of the year. China announced more state support measures on Thursday, including establishing a dynamic adjustment mechanism on mortgage rates for first-time home buyers, in a bid to boost its highly indebted property sector, which accounts for a quarter of the country's economy. The total number of passenger trips via road, rail, water and air during the upcoming Lunar New Year is expected to reach 2.1 billion this year, transport officials said on Friday, double the 1.05 billion during the same period last year Daily passenger flights scheduled during the holiday season beginning on Saturday are averaging 73% of pre-pandemic levels in 2019. China, the world's largest crude oil importer, has ended its stringent zero-COVID policy, leading to a surge in COVID infections across the country. In the U.S., data from the Energy Information Administration (EIA) showed on Thursday that distillate inventories, which include diesel and heating oil, dropped more than expected in the week to Dec. 30. They fell by 1.4 million barrels, compared with expectations of a 396,000-barrel drop. Meanwhile, U.S. gasoline stocks fell 346,000 barrels last week, according to the EIA data, compared with analysts' expectations for a 486,000-barrel drop. On a weekly basis, however, oil prices were on track to end lower, with both the Brent and WTI contracts down around 7% on a week earlier. Concern about the possibility of a global recession have weighed on trading sentiment. The world's top crude exporter Saudi Arabia lowered prices for the flagship Arab light crude it sells to Asia to its lowest since November 2021 amid global pressures hitting oil.

 

 
Intraday RESISTANCE LEVELS
6th January 2023 R1 R2 R3
GOLD-XAU 1,849-1,860 1,869 1,879-1,887
Silver-XAG 23.60-24.10 24.90-25.50 25.90-26.20
Crude Oil 75.20 76.10-77.00 78.10-79.90
EURO/USD 1.0520-1.0590 1.0650-1.0720 1.0790-1.0830
GBP/USD 1.1950-1.1990 1.2040-1.2120 1.2170-1.2290
USD/JPY 134.90-135.70 136.90 137.50-137.90

Intraday SUPPORTS LEVELS
6th January 2023 S1 S2 S3
GOLD-XAU 1,834-1,826 1,814-1,800 1,790
Silver-XAG 23.00-22.50 22.20 21.90-21.10
Crude Oil 74.10-72.90 72.10-71.40 70.10-69.00
EURO/USD 1.0490-1.0450 1.0390 1.0325-1.0290
GBP/USD 1.1890-1.0850 1.0800 1.0730-1.1640
USD/JPY 134.10-132.90 131.90 131.10-130.40

Intra-Day Strategy (6th January 2023)
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 Thursday made it’s intraday high of US$1858.92/oz and low of $1824.96/oz. Gold is up by 1.172% at US$1832.74/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above the zero line and histograms are a2lso increasing trend and it will bring an upward stance in the upcoming sessions. RSI is in the overbought region and more upside is expected before it gets stretched. The Stochastic Oscillator is in neutral territory and giving a negative crossover to a bearish stance for intraday trade.

Trading Strategy: Sell on Strength

Sell below 1849-1900 keeping stop loss closing above 1900, targeting 1849-1834-1826 and 1808-1790. Buy in between 1834-1800 with risk below 1800, targeting 1849-1860-1,870 and 1,879-1887-1900

 
Intraday Support Levels
S1     1,834-1,826
S2     1,814-1,800
S3     1,790
Intraday Resistance Levels
R1     1,849-1,860
R2     1,869
R3     1,879-1,887

Technical Indicators

Name   Value Action
14DRSI  

59.473

Buy
20-DMA   1787.74 Buy
50-DMA  

1756.61

Buy
100-DMA   1747.67 Buy
200-DMA   1764.79 Buy
STOCH(5,3)   44.601 Buy
MACD(12,26,9)   17.589 Buy

Silver - XAG

AAFX TRADING

Silver on Thursday made its intraday high of US$23.90/oz and low of US23.10/oz settled down by 2.20% at US$23.23/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (21.00), breakage above will lead to 21.60. MACD is below the zero line and histograms are decreasing trend and it will bring a bearish stance in the upcoming sessions. RSI is approaching the neutral region, indicating a buy signal for now. The Stochastic Oscillator is in the oversold region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 23.00-20.30, targeting 23.30-23.60 and 24.00-24.40-25.00 with stop loss should be placed on the breakage below 20.00. Sell in between 23.60-25.00 with stop loss above 25.00; targeting 22.10-21.70 and 21.30-20.70-20.10.

 
Intraday  Support Levels
S1     23.00-22.50
S2     22.20
S3     21.90-21.10

Intraday  Resistance Levels
R1     23.60-24.10
R2     24.90-25.50
R3     25.90-26.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   53.069 Buy
20-DMA   23.37 Buy
50-DMA   22.35 Buy
100-DMA   21.54 Buy
200-DMA   21.51 Buy
STOCH(5,3)   17.840 Sell
MACD(12,26,9)   0.422 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Thursday made an intra‐day high of US$75.05/bbl, an intraday low of US$72.61/bbl, and settled up by 1.025% to close at US$74.06/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 the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the neutral region, giving a positive crossover for confirmation of a bullish stance; while the RSI is in the 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 74.90-81.40 with stop loss at 81.40; targeting 73.50-72.90-72.10 and 71.40-70.10-69.00. Buy above 74.10-69.00 with risk daily closing below 69.00; targeting 74.10-75.20-76.10 and 77.00-78.10-80.70.

 
Intraday Support Levels
S1     74.10-72.90
S2     72.10-71.40
S3     70.10-69.00

Intraday Resistance Levels
R1     75.20
R2     76.10-77.00
R3     78.10-79.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   40.318 Sell
20-DMA   77.22 Sell
50-DMA   79.64 Sell
100-DMA   83.55 Sell
200-DMA   86.71 Sell
STOCH(5,3)   8.443 Sell
MACD(12,26,9)   -0.0084 Buy

EUR/USD

AAFX TRADING

EUR/USD on Thursday made an intraday low of US$1.0514/EUR, a high of US$1.0630/EUR, and settled the day down by 0.749% to close at US$1.0520/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.0736), which becomes immediate support, a break below will target 1.0647. MACD is above the zero line and histograms are increasing mode which will bring a bullish view. Stochastic is in overbought territory and giving positive crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0520-1.0930, targeting 1.0490-1.0450-1.0390 and 1.0325-1.0290 with stop-loss at daily closing above 1.0940. Buy above 1.0490-1.0290 with risk below 1.0390 targeting 1.0520-1.0590-1.0650 and 1.0720-1.0790-1.0830.

 
Intraday Support Levels
S1     1.0490-1.0450
S2     1.0390
S3     1.0325-1.0290

Intraday  Resistance Levels
R1     1.0520-1.0590
R2     1.0650-1.0720
R3     1.0790-1.0830

TECHNICAL INDICATORS
Name   Value Action
14DRSI   55.510 Buy
20-DMA   1.0585 Sell
50-DMA   1.0429 Buy
100-DMA   1.0325 Buy
200-DMA   1.0431 Buy
STOCH(5,3)   34.159 Buy
MACD(12,26,9)   0.0058 Buy

GBP/USD

AAFX TRADING

GBP/USD on Thursday made an intra‐day low of US$1.1872/GBP, a high of US$1.2077/GBP, and settled the day up 1.237% to close at US$1.1901/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2113) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in overbought territory and gives a positive crossover to confirm bullish a stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.1890-1.0640 with a target of 1.1950-1.1990-1.2090 and 1.2120-1.2170-1.2280 with a stop loss closing below 1.0640. Sell in between 1.1950-1.2290 with targets at 1.1890-1.0850-1.0800 and 1.0730-1.1640 with stop loss should be 1.2290.

 
Intraday Support Levels
S1     1.1890-1.0850
S2     1.0800
S3     1.0730-1.1640

Intraday Resistance Levels
R1     1.1950-1.1990
R2     1.2040-1.2120
R3     1.2170-1.2290

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

42.319

Buy
20-DMA   1.2038 Buy
50-DMA   1.1947 Buy
100-DMA   1.1895 Buy
200-DMA   1.2103 Buy
STOCH(5,3)   32.661 Buy
MACD(12,26,9)   0.0013 Sell

USD/JPY

AAFX TRADING

USD/JPY on Thursday made an intra‐day low of JPY131.67/USD and made an intraday high of JPY134.05/USD and settled the day up by 0.601% at JPY133.39/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 the overbought region and chances of downward are expected based on RSI. MACD is above the 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 a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 134.90-138.00 with risk above 138.00 targeting 134.10-132.90-131.90 and 131.10-130.40-129.50. Long positions above 134.10-130.00 with targets of 134.90-135.70-136.90 and 137.70-139.50 with stops below 130.00.

 
Intraday Support Levels
S1     134.10-132.90
S2     131.90
S3     131.10-130.40

INTRADAY RESISTANCE LEVELS
R1     134.90-135.70
R2     136.90
R3     137.50-137.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   48.943 Buy
20-DMA   133.90 Buy
50-DMA   136.85 Buy
100-DMA   137.89 Buy
200-DMA   134.81 Buy
STOCH(9,6)   81.067 Buy
MACD(12,26,9)   -1.485 Sell

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