Daily Market Report

04/04/2023
10:55

To kick off the new quarter, we saw a surge in Oil prices after large producers within the OPEC+ group agreed to cut oil production by more than one million barrels per day starting next month. WTI rallied by more than 6% to settle above $80 per barrel on Monday.

In the FX market, the US Dollar bounced strongly before retreating by the end of the day. On the other side, both the Dow and the S&P500 were up 0.98% and 0.37% respectively while the Nasdaq lost 0.27%.

During the Asian trading session, the Reserve Bank of Australia kept the main interest rates unchanged at 3.60% matching expectations. Later today, there will be a few economic releases to follow as the focus remains on the upcoming US Non-Farm Payrolls scheduled for the end of the week.

Meanwhile, factory orders are expected to rise from -1.6% to -0.5%.

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

EURUSD

The Euro is trading near a key resistance located at the 1.0930 level which represents last month’s high; therefore, we might see some profit-taking during the beginning of this week.

Looking at the key levels for future price action, the positive momentum is expected to decrease in the coming hours, however, when looking at the higher time frames we can see that the trend remains on the upside.

The downside risk is likely to remain limited while prices continue to trade above the 1.0790 low. On the other hand, a breakout above 1.0930 should strengthen the bullish momentum and send prices toward the psychological barrier of 1.1000.

To conclude, the Euro is expected to trade sideways to lower in the near term before the uptrend resume and traders should wait for a breakout above the 1.0930 resistance to confirm a continuation higher.

GBPUSD

The British pound has reached an important resistance zone located between 1.2405 and 1.2445 levels. Consequently, a downside retracement can start in the coming hours.

For the time being, the momentum remains positive, and any potential decline is expected to face new buyers from the 1.2375-1.2340 support zone. From a wider angle, buyers will try to aim for higher prices in the next few days with 1.2445 as the next level of interest.

Moreover, a successful breakout above this resistance can lead to a strong rally in the direction of the 1.2515 resistance. On the other hand, the pair is likely to stay strong if prices continue to hold above the 1.2280 support.

Finally, only a daily close below 1.2280 can weaken the current positive outlook.

USDJPY

After failing to overtake the daily resistance of 133.80, the pair traded lower to reach key support located at the 132.20 level.

As of now, we might see an upside movement toward the 133.20 level which represents the short-term resistance before seeing price stabilization. Looking at the biggest picture, the downside pressure remains intact as sellers are expected to challenge future recovery attempts. As long as the pair is holding below the 133.80 peak, the upside risks should be limited.

From an intraday perspective, the pair is expected to trade sideways until we see a clear break above 133.20 resistance or below 132.20 support.

USDCAD

The pair extended its decline reaching the daily support of 1.3440, from where we might see a potential price recovery.

Previously, sellers succeeded to push prices below the 1.3520 support. This level is expected to act as resistance if tested again. Therefore, despite the current downtrend, traders should wait for a bounce before looking for a continuation lower as the pair is trading in the oversold territory.

When looking at the higher timeframes, we can see that sellers remain in control. In addition, if the bearish momentum resume, the next level of interest stands at 1.3360, while the key resistance zone in this pair is located between the 1.3520 and 1.3565 levels.

GOLD

Gold managed to reach the upper limit of the consolidation triangle shown in the chart below before retreating.

For the time being, the trend is still on the upside while the yellow metal is trading sideways in the short term and a daily close above the 1990 resistance is needed to reinforce the bullish outlook.

In the meantime, the positive momentum is supported by a series of higher highs and higher lows, therefore, the gold trend is expected to remain positive if prices hold above the 1949 low in the coming days. From an intraday perspective, the 1972 level is seen as the hourly support while the 1990 resistance is the key level to break to target new highs.

To summarize, the positive outlook will stay valid unless we see a daily close below the 1949-1935 zone.

Economic Analyst
Amine Hiani