Daily market report
The Bank of Canada raised interest rates by 25bps from 4.25% to 4.50% on Wednesday, the highest level for key rates in 15 years. However, the central bank signaled a pause in its monetary policy tightening. No future rate hikes are planned in the near term as the Bank of Canada will try to assess the impact of its recent tightening measures on inflation.
The Canadian Dollar was little changed against the US Dollar, trading at 1.3390 level at the time of this report.
Later today, traders await the quarterly US GDP which is expected to have declined from 3.2% to 2.6%, moreover, initial jobless claims are likely to rise from 190K to 205K.
Finally, new home sales are due to decline from 640K to 617K in December.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro remains steady against the US Dollar, the single currency managed to end the day above the 1.0900 psychological barrier for the first time this month.
In the near term, the trend turned bullish in alignment with the daily chart which reinforces the positive outlook in this pair. Prices are likely to extend higher in the direction of the 1.0970 level followed by the 1.1000 mark in the coming hours, meanwhile, buyers should clear the hourly resistance level of 1.0930 first.
The current scenario should stay valid unless we see a daily close below the key support of 1.0860.
Despite weak economic data that came out from the UK earlier this week, the British pound continues to hold as buyers pushed the pair above the 1.2400 mark.
As of now, the bullish momentum remains strong, and buyers are likely to aim for a retest of 1.2440 key resistance. A break above this level should clear the way for another wave higher towards 1.2460 followed by the 1.2520 level in extension.
On the other side, potential declines should be considered temporary if the pair continues to trade above the 1.2335 level in the short term.
Finally, the nearest support stands at 1.2385, while the important resistance is located at 1.2440 level.
USDJPY failed to preserve its previous gains as sellers are maintaining control of this pair.
Technically, the short-term trend has switched to negative, and we can see another extension lower in the direction of the 128.70 level in the coming hours. In addition, traders should note that the daily trend remains bearish, which reinforces the negative outlook in this pair.
From an intraday perspective, a bounce toward 129.75 remains possible before selling pressure resumes. Finally, advances are likely to be short-lived if the pair continues to trade below 130.60 peak.
The pair continues to trade sideways despite the latest rate decision from the Bank of Canada. Prices are still balanced and looking at the technical picture, we can see that the pair is trading inside a range that is extended between 1.3340 and 1.3420 levels.
From a wider angle, we can say that the main trend is neutral in this pair, therefore, we can continue to witness sideways trading until a clear break outside of the range mentioned above happens.
A break above the 1.3420 level should expose 1.3500 resistance, in the opposite, a breakdown below the 1.3340 support can trigger heavy selling toward the 1.3225 zone.
Despite the increase in volatility seen throughout this week, the yellow metal succeeded to reach new highs as buyers continue to protect this week’s low 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.
In the near term, we can see that the gold uptrend is extended, and technical indicators are showing overbought conditions, however, the bullish momentum remains strong, and we did not see any signs of trend reversal yet.
Finally, the 1950-1956 zone can be considered as an important resistance from where we might see a pause in the current uptrend when reached. On the other side, we will be looking for support at $1937 followed by the 1929 level.