Daily market report

The US Dollar is trying to recover from a 4-week losing streak fueled by a slowdown in US inflation.
With the lack of important economic releases for the rest of the week, the greenback is set for a bounce on the back of profit taking.
In the European trading session, all eyes will be turned on the Eurozone CPI release which is expected to rise to 1,5% from 1.2% during the previous month, while the yearly rate is likely to remain as it is at 10.7%. 
Later during the day, US traders are waiting for the Building permits and Housing starts.
Building permits are set to decline to 1,512 million permits only, down from 1,564 million earlier, while October Housing starts should see a drop from 1,439 million to 1,410 million.
Finally, initial jobless claims are likely to remain unchanged at 225K.
Now let us have a look at the technical outlook.



The Euro traded in line with our expectations as the pair found strong resistance at the zone located between 1.0445 and 1.0490 levels. Prices reached a high of 1.0480 on Tuesday before to fall sharply towards the hourly support of 1.0270. For the time being, the single currency started to show signs of stabilization and traders should expect the pair to trade sideways in the next hours until prices exit the current range that stands between 1.0480 and 1.0270 levels. In the short-term, the nearest resistance is seen at 1.0435 while the support lies at 1.0355 followed by 1.0280 level in extension.


The British pound continue to hold firmly against the US Dollar after trading briefly at the psychological barrier of 1.2000. Looking at the hourly chart, the currency pair failed to exceed this week high, despite that prices continue to preserve the bullish sequence formed by a series of higher highs and higher lows. Technically, the bounce from 1.1790 got rejected from a key Fibonacci level (61,8% retracement located at 1.1938) which increases the odds of a correction to the downside that may start in the coming hours if the pair stays below 1.1938 hourly resistance. A downside movement towards 1.1790 is likely, while a break below that level should confirm a short-term bearish reversal and clear the path for a deeper correction in the direction of 1.1700 handle. In the opposite, only a daily close above 1.1938 should weaken the current scenario.


The currency pair continue to fight for a clear direction in the short term. As mentioned in our previous technical report, prices have retraced 61.8% of the larger upside advance that started from 130.45 low, and by now, buyers should continue to defend the recent low of 138.45 Consequently, we might see a recovery back to 140.60/80 resistance zone in the coming hours, while a break above this barrier should confirm a short-term bottom and push prices higher in the direction of 141.50/142.20 zone in the coming days. It is important to note that the pair is lacking momentum in the absence of a fundamental catalyst and traders should be aware of fake breakouts in both sides.


After reaching the hourly support of 1.3230, the pair managed to bounce yesterday boosted by the recent inflation figures from Canada. Currently, the currency pair started to show some signs of recovery, which can extend prices higher in the next hours, but the upside potential is likely to remain limited as prices may face strong resistance from 1.3360-1.3410 zone. To summarize, the short-term trend is still bearish, but traders should wait to see the reaction from the resistance zone mentioned above before to act accordingly.


Gold rally stalled at the hourly resistance around $1782 per ounce and showed multiple failure in the lower time frames. For now, the short-term trend has turned neutral in the yellow metal with prices trading sideways between 1785 and 1766. Following the extended move to the upside, trend following traders are required to wait for a temporary correction towards that can reach as low as 1753-1743 support zone before to look for another leg higher in gold. From a wider angle, the current cycle remains bullish and a fresh rally towards 1800 handle cannot be ruled as far as prices keeps trading above 1727 level.

Economic Analyst
Amine Hiani

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