Daily market report
The US Dollar traded sideways last week following better-than-expected GDP figures which came out at 2.9% compared to the 2.6% forecasted. Meanwhile, US stocks ended the week higher boosted by strong corporate earnings. All three major US indexes were up by end of last week.
As of today, the eurozone Gross domestic product is expected to have declined in the last quarter from 0.3% to -0.1% while Canada’s GDP is likely to remain unchanged at 0.1% monthly.
Moreover, Chicago’s PMI is seen at 45.1 this month, like December figures.
Later this week, traders await the FED, BoE, and ECB interest rate decisions which we will cover in more detail in our upcoming market reports.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro failed to overtake the 1.0930 resistance last week before retreating below the 1.0900 mark which reinforces the possibility of a downside retracement in the coming hours.
In the near term, the trend has turned sideways, and the pair continues to trade inside a 100-pip range located between 1.0930 and 1.0835 levels. Therefore, prices are likely to head south toward the 1.0835 support.
Moreover, a breakdown below this support can lead to more losses that can extend to the next support level located at 1.0780.
From a wider angle, despite the potential weakness expected in the near term due to profit-taking ahead of the major central bank’s announcement later this week, the Euro is likely to remain well supported if prices continue to trade above the 1.0710 low.
The British pound faced strong sellers from the 1.2440 resistance level, which can lead to sideways trading in the near term.
The bullish trend is lacking momentum, and traders should keep an eye on the 1.2340 level which is considered an important support. A break below this level should lead to another wave lower in the direction of the 1.2285 zone.
On the other side, if the pair manages to bounce in the coming hours, we can see more sellers around the 1.2380-1.2395 area before the downside resume.
USDJPY traded higher on Monday, after finding strong demand from the 129.40-129.20 support zone.
However, when looking at the higher time frames we can see that the daily trend remains bearish, which keeps the negative outlook in this pair intact. Meanwhile, the short-term bullish momentum is increasing which can lead to another wave of advance before we see a downside reversal.
As of now, the focus should be on the 130.60 resistance level as a break above it can lead to a re-test of the 131.10 peak. On the other hand, a failure from the mentioned above resistance should clear the path for a retracement toward the 129.80 hourly support.
Finally, the upside potential in this pair is likely to remain limited and the current advance
should be considered as a temporary corrective move.
The pair managed to bounce back from the 1.3200 psychological support which keeps the current outlook neutral.
From a swing trading perspective, we can say that the main trend is sideways in this pair, therefore, we can witness a price stabilization until we see an increase in trading volume.
Key technical levels in the higher time frames are 1.3500 barrier and 1.3200 support. The next direction is likely to remain unclear until an exit outside of this wide range happens.
Looking at the intraday technical, the nearest support stands at 1.3320 level while the closest resistance is found at 1.3415 level.
Gold is losing some bullish momentum in the near term after reaching a strong resistance that stands at the 1950 level as mentioned in our previous report.
Technically, the positive trend remains unchanged in the daily chart, however, the hourly chart has turned neutral, and sellers can expose the 1916-1911 support zone.
In the meantime, any retracement lower is likely to find buyers around and a potential bounce is due in the coming hours.
Despite the slowdown in the bullish momentum, we can see that the uptrend should remain strong if the yellow metal continues to trade above $1895 per ounce which is considered as key technical support for this week.
On the other side, an important resistance is located at the 1935 level and a daily close above it is needed to confirm the end of the current corrective move.