Daily market report
Today is the last trading day of 2022, therefore financial markets are likely to witness a notable decline in liquidity and trading volumes.
With the lack of economic releases ahead of year-end, the Chicago Purchasing manager’s index is the only indicator scheduled for the US trading session.
Market Analysts are expecting a rise in the PMI from 37.2 to 41.2 in December.
Looking now at the latest price action developments in the major currency pairs alongside gold.
Euro bulls remain in control ahead of the year-end despite the lack of liquidity this week.
In the near term, the pair is trading sideways between 1.0575 support and 1.0660 resistance on low volume. Prices made another attempt to reach new highs for the week as EURUSD traded as high as 1.0690 level yesterday, before reversing lower.
As of now, the pair remains in a bullish trend, however, more bullish momentum is needed to confirm a potential trend continuation to the upside.
A breakout confirmation can lead to more gains in the direction of the 1.0700 level initially followed by 1.0740 in extension, while a break to the downside can clear the way for a decline toward the lower band of the range at 1.0575.
This pair is still under pressure in the short term as prices found strong sellers at the hourly resistance zone mentioned in our previous report. This zone is located between 1.2100 and 1.2120 levels.
Moreover, prices continue to form a series of lower highs and lower lows, which keeps the bearish momentum in place.
For the time being, the pair is likely to stabilize in the coming hours, and traders should wait for either a break above 1.2100 resistance or below 1.2000 to confirm the next direction in this pair.
If the decline resumes, we might see new sellers that are likely to send prices lower toward 1.1900 support in the next few days. On the flip side, if the 1.2100 barrier is cleared, buyers can target the 1.2150 level followed by 1.2190 resistance.
USDJPY failed to hold its weekly gains as bearish momentum increased during yesterday’s trading.
Initially, the pair had extended its recovery to reach 134.50 which played the role of strong resistance. This level was previously a broken support that turned into resistance after growing supply levels.
From a technical standpoint, the pair remains in a clear downtrend, and if prices continue to trade below the 133.60-134.50 resistance zone, more decline can be expected.
Sellers are likely to put this pair under pressure again and a move back down towards 131.65 support will be highly anticipated.
The currency pair dipped briefly below 1.3520 support before bouncing strongly and stabilizing above it again.
Therefore, we can see that USDCAD has reintegrated its short-term range located between the 1.3500 and 1.3700 levels. This 200-pip range can see increased volatility in the coming days; therefore, traders should wait until we see a clear break outside of this zone.
In the near term, if prices remain below the 1.3615 resistance, there are higher chances to see the pair heading south in the direction of the lower side of the current range at the 1.3500-1.3485 zone.
Conversely, a confirmed break above 1.3615 resistance can open the way for more advance in the direction of the 1.3700 mark.
Gold traded in line with our expectations as buyers managed to push prices above the 1800 barrier.
In the short term, we might see a price stabilization as new sellers are likely to defend the 1820-1825 resistance zone.
Technically, the yellow metal is following a bullish trend formed with a series of higher highs and higher lows, which reinforces the positive outlook. However, prices should continue to trade above the 1796 support level to confirm the current trend.
Meanwhile, a break above the 1825 resistance, should lead to a continuation higher toward the 1833-1842 resistance zone in the coming days.