Daily Market Report

11/04/2023
11:41

The U.S Dollar extended its advance earlier this week, meanwhile, traders await the latest change in inflation scheduled for tomorrow. Those figures are very important as the FED continues to monitor actively inflation levels to determine its next monetary policy move.

The CPI is expected to have declined in March from 0.4% to 0.2%, if the figures match expectations, investors might think that the FED will have to pause its rate hike program sooner and we will likely see another selling pressure in the US Dollar. On the other side, higher-than-expected numbers can push the US central bank to wait for longer before reviewing its current monetary policy which can benefit the US Dollar in the near term.

Below, we will be analyzing the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro retreated on Monday extending the decline that started at the end of last week.

Technically, The Euro failed to overtake the hourly resistance of 1.0975 and we have seen the formation of two consecutive lower highs, which warns about bearish momentum in the short term. The pair began to show signs of weakness as sellers managed to push prices below the 1.0890 hourly support.

As of today, a move back higher toward the broken support mentioned earlier can lead to more selling as this level is expected to turn into resistance in the coming hours.
The new resistance zone for the Euro is located between 1.0890 and 1.0920 levels, on the opposite, traders should look for support at the 1.0830 level.

To conclude, the single currency is in a corrective phase, and we might see a stabilization if prices continue trading above the 1.0788 low which represents a key level for future price action.

GBPUSD

The British pound dropped after we have seen a breakdown below the 1.2400 psychological support.

For the time being, the downside retracement can face new buyers in the coming hours from the hourly support zone located between the 1.2345 and 1.2310 levels. Looking at the biggest picture, the pair is expected to recover if prices remain above the key support of 1.2275.

From a technical standpoint, the recent advance took the form of a series of higher highs and higher lows reinforcing the positive outlook. However, buyers must keep prices above the 1.2275 support as shown in the chart below, otherwise, this pair can be at risk of reversal to the downside.

Finally, the new resistance zone is located between the 1.2400 and 1.2440 levels, while an important demand zone lies between 1.2345 and 1.2310. The next direction will be determined once prices break outside of this area.

USDJPY

The pair rallied yesterday after successfully breaking above Friday’s high located at 132.38 level.

As of now, prices have reached the daily resistance of 133.80, from where we expect the pair to give up some gains due to potential profit-taking that is likely to take place.
Meanwhile, any decline is likely to be temporary as the momentum has switched from bearish to bullish with the nearest support located at the 133.15 level which represents the 38.2% Fibonacci retracement of the upside move that started from the 132.00 low.

Looking at the biggest picture, a clear breakout above the 133.80 resistance is needed to confirm the bullish reversal scenario. Otherwise, the pair will enter a consolidation phase.

USDCAD

The pair managed to extend its correction higher as mentioned in our previous reports.

However, the current advance should be considered as corrective, and the focus will be on the 1.3540-1.3580 zone as it represents an important area for sellers. This zone is expected to act as a strong barrier and the pair is likely to reverse lower as the main trend is still bearish.

In addition, traders should wait for price action to show signs of bearish reversal, before looking for a continuation to the downside.

Looking at important technical levels in the near term, the 1.3540 level represents a key resistance while 1.3470 followed by 1.3425 are the support levels.

GOLD

Gold showed a downside gap following the doji candle seen last week.

As of now, we are seeing a pause in the existing uptrend on the back of USD strength.
Technically, the trend remains bullish in the higher time frames, however, the short-term momentum is losing steam.
The next levels of interest for buyers stand at the 1982 level which represents yesterday’s low, followed by important support at $1977 per ounce.

On the flip side, the 1995 level is expected to act as a short-term resistance, with the $2001-2003 zone as the key area to watch for sellers.

Economic Analyst
Amine Hiani