Daily market report
The US Dollar managed to bounce from a 7-month low despite weak retail sales data.
The Greenback benefited from Fed officials hawkish comments suggesting that more interest rate increases can be on the way to fight inflation. Meanwhile, US stocks were sharply lower alongside treasuries yield.
Later today, traders will be looking for housing starts which are expected to have declined in December from 1.427M to 1.359M. In the meantime, initial jobless claims are due to rise from 205K to 214K. Moreover, ECB president Lagarde’s speech will be followed closely by Euro traders.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro failed to break above the hourly resistance located at 1.0870 level for the fourth time in a row, which reinforces the possibility of a downside retracement in the coming hours.
In the meantime, if the pair does not break below the 1.0765-1.0780 support zone, the Euro is likely to remain steady.
In the short term, we can see a price stabilization, and a trading range is expected as the current trend is losing momentum.
In extension, if the Euro manages to extend its decline below the support zone mentioned above, then traders should look for 1.0730 as the next station.
On the other side, the the1.0830 level is considered the nearest resistance in this pair.
The British pound jumped to reach the 1.2440 resistance level yesterday before retreating by the end of the US trading session.
The pair closed below the 1.2400 mark which shows that buyers are losing control in the near term. Therefore, a move lower is expected in the coming hours that can extend to the hourly support zone which stands between 1.2300 and 1.2290 levels followed by 1.2250 in extension.
Prices will likely trade sideways to lower in the coming hours and a daily close below the 1.2300 level should put this pair under pressure.
In the short term, if the pair manages to bounce, then we will look for strong sellers to appear from 1.2350-1.2370 for another move lower.
USDJPY traded in a large range as volatility increased significantly during yesterday’s Asian trading session.
The pair rallied to reach a key technical resistance located at 131.40 before sellers took control again and pushed prices sharply lower. It is important to note that this level was playing the role of support earlier this month.
As of now, the pair is likely to continue to face higher volatility, especially following the Bank of Japan rate decision.
From a technical standpoint, the daily trend remains bearish and if prices continue to trade below the 131.60 peak, the bearish sentiment should stay intact.
In the near term, the 128.95 level is seen as an important resistance while 127.60 represent the nearest support level.
After several attempts to extend the recent decline below the 1.3350 support level, the pair managed to bounce strongly, reinforcing the probability of a bullish reversal.
In our reports, we mentioned that the downside pressure was weak, and the pair was vulnerable to a quick rise in the coming hours. The break above 1.3440-1.3460 confirmed the change in the short-term trend, and by now, prices can extend higher toward the next resistance which stands near the 1.3560 level.
On the flip side, any drop is likely to be temporary and buyers should maintain the positive outlook unless we see a daily close below the 1.3440 level in the coming days.
The gold rally stalled yesterday near the 1925 resistance as the US Dollar bounced from a 7-month low.
Despite the recent drop, the bullish trend remains unchanged, and traders should look at the current decline as a short-term correction. Technically, gold is following a bullish trend formed with a series of higher highs and higher lows, reinforcing the bullish outlook.
However, buyers should keep prices above the hourly support zone located between 1893 and 1890 levels to preserve the bullish momentum in the near term. Otherwise, the yellow metal might suffer from a deeper correction that can reach the 1870 level before seeing new buyers again.
Finally, a drop from current levels can expose the 1890 support while a move higher can lead to a retest of 1915 resistance initially, followed by the 1925 level in extension.