Daily market report

25/11/2022
15:26

Despite the lack of economic releases this week as we kick off the holiday season, the main driver for the markets was the latest FED meeting minutes released on Wednesday which sent the US Dollar lower again.
Investors were expecting the FED to continue its series of interest rates hikes but at a slower pace, and the recent meeting minutes confirmed this idea, as many officials expressed their concerns about the impact the current monetary policy is having on the US economy.
After four consecutive rate hikes by 75bps the FOMC is expected to raise rates by only 50bps in December meeting, and more reductions are expected during next year.
In Asia, the Reserve Bank of New Zealand decided to raise interest rates from 3.5% to 4.25% maintaining its tightening policy.
Today, price movements are likely to be limited as the US market will close earlier.

Now let us have a look at the technical outlook.

EURUSD

The Euro resumed its bullish trend against the US Dollar after starting the week on a weak note.
Prices retraced nearly 50% of the upside move extended from 0.9935 low to 1.0480 high, before to bounce back and trade higher.
The currency pair succeed to break the falling trendline as shown in the hourly chart below, reinforcing the positive trend in the short-term.
As of now, the bullish momentum is likely to slow down, due to lack of liquidity as the US market will close early today, therefore, traders should focus on 1.0440-1.0480 zone for potential resistance in the coming days.
A daily close above this zone, should open the way for a continuation higher towards 1.0535 level, while a failure from the hourly resistance zone, can push prices back lower in the direction of 1.0300 handle.

GBPUSD

The British pound remains strong, and prices managed to extend higher after breaking above 1.2000 psychological barrier, boosted by the recent FED meeting minutes which put the US Dollar under pressure again.
In our last report, we highlighted the importance of 1.1938/50 hourly resistance and the break of that level, was a clear signal that the uptrend was ready to resume.
For the time being, the pair is clearly in an uptrend, however, prices have reached a strong resistance located at 1.2150 which represents the high seen on August17, consequently, new sellers are likely to appear in the next hours.
In the short-term, investors should wait for a correction lower before to look for another continuation to the upside as the currency pair is clearly in an overbought situation.
The nearest support zone is located at 1.2050-1.2020 zone, and if we continue to trade above this area, the bullish is likely to remain unchanged.
In the opposite, a break above 1.2150 should trigger another advance that can reach as high as 1.2280 level.

USDJPY

The currency pair turned lower again after showing a temporary recovery that failed from 142.25/50 resistance zone.
Currently, buyers are fighting to protect a major support represented by the 61.8% Fibonacci retracement of the larger upside advance that started from 130.45 low.
The hourly support zone is located between 138.50 and 137.70 levels, and we should wait to see how the market will react from it in the coming days, before to confirm the next direction in this pair.
To summarize, a daily close below the mentioned above support zone will call for further decline towards 136.30 level followed by 135.85 in extension, in the opposite, a bounce from the mentioned above support zone can send the pair higher in the direction of 139.60 level.

USDCAD

The currency pair remains under pressure as prices continue to preserve the lower highs and lower lows bearish sequence. Currently, the currency pair is likely to test 1.3300 handle followed by 1.3230 hourly support in extension. In addition, it is important to note that in the higher time frames, prices have showed a Head & Shoulders bearish reversal pattern that might be a warning of more decline in the future. In the coming hours, we expect the upside potential in this pair to stay limited, and any recovery is likely to be short lived while prices continue to trade below 1.3435 resistance level.

GOLD

Gold traded in line with our expectations after failing to trade beyond $1784 resistance. The yellow metal extended its decline to reach a major support level located at 1729 level which represents a former resistance. Prices managed to bounce from that technical level which means that demand is still strong in the near-term. For now, gold is likely to trade sideways to higher in the next hours. Finally, the nearest resistance stands at 1767 level while 1745 represent the support level.

Economic Analyst
Amine Hiani