Daily market report
During the European trading session, traders await the release of the Purchasing Managers’ Index (PMI) from the UK and the Eurozone.
In Europe, the manufacturing PMI is due to rise from 47.8 to 48.5, in the meantime, the services PMI is estimated at 50.2 compared to 49.8 previously.
Moreover, both the UK composite and manufacturing PMIs are expected to rise from 49.0 to 49.3 and 45.3 to 45.4 respectively, on the other side, the forecasts are pointing to a decline in the UK services PMI from 49.9 to 49.6.
In the US, manufacturing PMI is likely to drop from 46.2 down to 46.0, while services PMI is seen at 45.0 up from 44.7 a month ago.
Later today, ECB president Lagarde’s speech will be widely monitored and can bring additional volatility to the Euro.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro remains well supported against the US Dollar and this situation is likely to stay unchanged if prices continue to hold above the 1.0800-1.0780 support zone in the coming days.
In the near term, the trend is neutral, however, the daily trend is still bullish, and the Euro is likely to remain steady unless we see a daily close below the 1.0800 mark.
Meanwhile, traders can expect another retest of the 1.0930 resistance level if the current upside trend extends higher.
On the other side, if buyers lose control of this pair, a move back lower in the direction of the 1.0780 level will be highly anticipated.
The British pound continues to hold as prices managed to stabilize above the 1.2300 psychological level.
As of now, prices are likely to stabilize in the coming hours after reaching the short-term resistance zone located between 1.2385 and 1.2400 levels.
The bullish outlook should remain intact until we see a break below the 1.2300 mark.
In extension, a break above the 1.2400 level should open the way for another wave higher toward a key technical resistance at the 1.2440 level.
To summarize, if prices continue trading above the 1.2315-1.2300 zone, the upside trend is likely to stay unchanged, while a daily close below this zone, can clear the path for a test of 1.2250 level followed by 1.2230 in extension.
USDJPY managed to bounce strongly from the hourly support zone which stands between 127.60 and 127.80 levels.
In addition, buyers succeeded to push prices above the 128.90 level which confirmed the trend change in the near term.
Consequently, the short-term trend has switched to positive, and we can see another extension higher in the direction of the 131.40 resistance in the coming hours. However, traders should note that the daily trend remains bearish, and the pair is likely to face strong sellers if prices reach the resistance level mentioned above.
From an intraday perspective, 130.90 represents the nearest resistance while the 130.10 level is considered an important support.
The pair is trading sideways to lower after we witnessed a strong downside reaction from the 1.3520 resistance level last week. Moreover, prices stabilized below the 1.3400 mark reinforcing the bearish outlook in the near term.
Looking at the bigger picture, we can say that the main trend is neutral in this pair, therefore, we can continue to witness sideways trading until tomorrow as the Bank of Canada is expected to rise interest rates which can help this pair find a clear trend.
Technically, the current bearish trend lacks momentum, despite that, another re-test of 1.3315 support cannot be ruled out in the next hours, especially if prices remain below the 1.3420 hourly resistance.
The gold decline was temporary as the yellow metal managed to find strong buyers from the 61.8% Fibonacci retracement located at $1911 per ounce.
As mentioned in our previous report, the positive trend remains unchanged, and traders should look at declines as short-term corrections only which can offer entries at lower prices like we have seen yesterday. The bullish technical structure formed with a series of higher highs and higher lows is still in place which reinforces the bullish outlook. This positive view is likely to remain in place for the coming days if prices continue to trade above the 1911 support level.
Finally, the next price targets can be found at $1938 followed by $1945 per ounce, in the opposite, the nearest support stands in 1924 followed by the 1919 level.