By Lukman Otunuga, Research Analyst, FXTM
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The lingering effect of Thursday’s dovish FOMC meeting minutes continued to punish the value of the USD in Friday’s European session. A general lack of clarity on when the US central bank will raise rates has translated to investor anxiety which has resulted in the USD being exposed to further pressures.
With one of the prerequisites for a hike being the further progress in the labour force, the latest soft NFP announcement offers a compelling reason as to why the Fed may not act till 2016. With the prospects of a 2015 rate hike slowly diminishing, sentiment remains bearish on the USD and this can be observed in the Dollar Index. The Index has declined to new daily lows of 94.86 and any additional USD weakness may invite a further decline to the relevant support at 94.00.
Dollar vulnerability continues to support any upside momentum on Gold which has surged to new daily highs. The weak NFP release last week combined with the dovish tone from the FOMC meeting minutes has provided a foundation for Gold to extend further. Investor anxiety, in addition to renewed concerns about the global markets, may act as factors that guide the precious metal to regain some of its safe-haven shine. The price of this precious metal has hit a high of 1157.0 and any additional Dollar weakness may see Gold appreciate to the next relevant resistance at 1170.0.
Upbeat comments from the Head of OPEC combined with USD weakness has resulted in the WTI appreciating to a three-month high of $50.88. This commodity has become technically bullish on the daily timeframe with the next relevant resistance at $52.00. Fundamentally, however, the theme has not changed with elevated concerns over the global economy leading to fears that there will be less demand for oil, which could act as a major catalyst to extinguish this upside momentum.
EURJPY: The EURJPY has become technically bullish. Prices are trading above the daily 20 SMA and the MACD is about to cross to the upside. The next relevant resistance is at 137.50.
CADJPY: The CADJPY is technically bullish. Prices have breached above 92.50 with the next relevant resistance at 94.00. A move back below 91.50 suggests bullish weakness.
USDZAR: The USDZAR currently tests support at 13.250. A break below this level may open a path to the next relevant support at 13.000. Whilst prices are below the 20 daily SMA, the MACD is in the process of crossing to the downside.
GBPNZD: The GBPNZD is heavily bearish. A solid breach below the 2.2750 support may open a path to the next relevant support at 2.2100.
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