Daily market report
Later today, market participants await the release of the US inflation data alongside jobless claims.
The US CPI for the month of December is expected to have declined, however, traders are seeking confirmation to see if the forecasted drop in inflation is enough to weigh on FED future monetary policy. In the meantime, initial jobless claims are due to rise from 204K to 215K.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro traded in a tight range yesterday as prices continue to hover around the hourly resistance zone located between 1.0740 and 1.0790 levels.
From a technical standpoint, the pair remains in an uptrend and if prices manage to break above the 1.0790 resistance level, a continuation higher in the direction of the 1.0845 level will be highly anticipated.
In the short term, we can see a price stabilization, however, prices should remain well supported above the 1.0710 low to maintain the bullish momentum.
In extension, if the Euro reverses lower in the coming hours and breaks below the 1.0710 level, the next support zone will be between 1.0660 and 1.0630 levels, and only a daily close below this zone can weaken the current positive outlook.
The British pound traded lower during yesterday’s European trading session after reaching the 1.2200 psychological barrier.
The pair extended its decline to reach the hourly support mentioned in our previous report located around the 1.2100 mark. We witnessed strong buyers from that level and the British pound succeeded to bounce during the US trading session and recover a big part of its previous losses.
Currently, prices will likely trade sideways between the 1.2200-1.2240 resistance zone and 1.2100-1.2085 support levels, consequently, we will wait for a clear break outside of this zone before confirming the next direction in this pair.
Finally, a break higher should lead to another advance in the direction of the 1.2300 level, while a break below the support zone can trigger a strong decline that can reach as low as the 1.2000 level in the coming days.
USDJPY continues to suffer from heavy selling pressure, the pair managed to bounce to reach as high as 132.85 level before reversing lower as the resistance zone remains intact.
As of now, the daily trend remains in a clear downtrend, however, the hourly trend remains neutral and a close below 131.35 support is needed to confirm another move lower in this pair.
If prices succeed to break below the support mentioned above, the next level of interest will be
at 130.30 and the bearish momentum is likely to grow.
On the flip side, a daily close above the 133.00 psychological barrier should clear the path for a larger correction that can reach the 134.00 zone.
The currency pair found some buyers at an important support located at the 1.3385 level which represents the December 5th low.
From a wider angle, prices are trading sideways, despite the recent drop we have seen in the previous days. If the current retracement extends to the upside, we can see a move back in the direction of the 1.3485-1.3500 resistance zone before seeing new sellers again.
On the flip side, if we see a failure in the coming hours, a move back in the direction of 1.3385 support will be likely.
Finally, the nearest resistance is seen at the 1.3450 level while the closest support stands at the 1.3400 level.
Gold remains steady and the current bullish outlook is still unchanged,
Yesterday, the yellow metal tested important support at $1867 per ounce, from where we saw a strong bounce reinforcing the positive trend.
Technically, gold is following a bullish trend formed with a series of higher highs and higher lows, in addition, prices are trading inside a rising channel and holding well near this week’s high.