Daily market report
The US Dollar extended its decline following the latest inflation data from the US.
The US CPI for the month of December fell by -0.1% down from 0.1% previously while the YoY figures dropped from 7.1% to 6.5%. Moreover, the initial jobless claims came out below expectations at 205K.
Later today, the UK GDP is expected to drop from 0.5% down to -0.3%, in the meantime, manufacturing production is likely to have declined from 0.7% down to -0.2% in November.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro managed to break above the hourly resistance zone that was located between 1.0740 and 1.0790 levels.
This breakout cleared the path to a test of the next resistance level which stands at 1.0845 as mentioned in our previous report.
In the short term, we can see a price stabilization due to profit-taking ahead of the weekly close, however, the pair remains in a strong uptrend and the former broker resistance zone is likely to turn into new support in the coming days.
In extension, if the Euro managed to extend its advance above 1.0850 resistance, then traders should aim for 1.0935 as the next price target.
On the other side, a failure from current levels can lead to a move back toward the 1.0790-1.0740 support zone.
The British pound saw increased volatility during the US CPI release, despite that, the pair traded in line with our expectations.
Buyers succeeded to defend the support zone located between 1.2100 and 1.2090 levels as prices started a strong rally in the direction of the 1.2240 resistance level which managed to cap the recent advance.
Currently, the pair is preserving its uptrend, therefore, any drop is likely to remain limited in the short term.
Prices will likely trade sideways to higher in the coming hours and a break above the 1.2240 resistance is needed to open the way for a continuation higher in the direction of the 1.2300 mark.
Finally, the 1.2175 level is considered as the near-term support and a break below it should put the pair back into its wide range located between 1.2090 and 1.2240 levels.
USDJPY saw strong selling pressure after failing to overtake the hourly resistance of 132.85.
The pair fell sharply, and sellers succeeded to push prices below important support at 131.35 which triggered a big drop.
As of now, the daily trend remains in a clear downtrend, and the bearish momentum is very strong. Consequently, a continuation to the downside is highly anticipated and prices can test the next support level at 127.60 in the coming days.
To conclude, if prices succeed to bounce in the near term, then we will be looking for resistance at the 129.55 level before another drop may start.
The currency pair continues to face sellers after breaking below 1.3485 support last week.
However, the bearish momentum is still lacking strength. Prices are trading sideways to lower, and if the pair holds below the 1.3460-1.3485 resistance zone, we can see a continuation lower in the direction of the 1.3315 level.
On the flip side, a daily close above the resistance zone mentioned above is likely to cancel this bearish scenario.
Finally, the nearest support stands at 1.3360 and a successful breakdown below it will confirm the selling pressure.
Gold managed to print a 7-month high yesterday as prices topped the 1900 psychological barrier.
Buyers continue to preserve the hourly support zone located between the 1875 and 1867 levels reinforcing the positive trend.
Technically, gold is following a bullish trend formed with a series of higher highs and higher lows, moreover, prices succeeded to break higher outside of the consolidation pattern shown in the chart below.
Finally, a break above the 1900 resistance, should lead to a continuation higher toward $1910 per ounce in the coming days, while if prices reverse from the current resistance, we can see a move back toward the 1875-1867 support zone.