Daily Market Report

06/04/2023
10:33

In the FX market, the US Dollar managed to bounce against the major currencies on Wednesday. Meanwhile, gold failed to hold yesterday’s gains after reaching a high of $2032 per ounce.

Looking at the latest developments in the US stock market, the Dow was up 0.24% backed by a strong performance of healthcare stocks, however, both the S&P500 and the Nasdaq composite lost 1.07% and 0.25% respectively.

Later today, traders will be waiting for the employment figures from Canada. Employment change is expected to have declined in March from 21.8K to 12.0K, on the opposite, the unemployment rate is due to rise from 5.0% to 5.1%.

In the US, initial jobless claims are expected to rise from 198K to 200K.

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

EURUSD

The Euro traded lower on Wednesday after failing to break the resistance of 1.0975.
Looking at the recent price action, we can see that the positive momentum has decreased which can lead to a short-term retracement. Meanwhile, the downside risk is likely to remain limited while prices continue to trade above the 1.0790 low.

The next support area is located between 1.0840 and 1.0820 levels and a potential recovery can be expected from that zone if tested.

On the other hand, a daily close below 1.0790 should clear the path for a deeper retracement toward the 1.0710 level.

To conclude, the short-term trend is still bullish, however, traders should expect a temporary pause in the uptrend before a continuation higher begin.

GBPUSD

The British pound retreated from the 1.2520 resistance, however, earlier this week, the pair managed to break above a key resistance located at 1.2440 which keeps the uptrend intact.

In the near term, a downside retracement can start in the coming hours, however, if the pair continues to trade above the 1.2275 low, the technical picture will remain unchanged.

For the time being, the momentum remains positive, and any potential decline is expected to face new buyers from the 1.2395-1.2360 support zone. On the opposite, a potential recovery can lead to another advance in the direction of the 1.2480 resistance before we see price stabilization.

Finally, the pair is expected to remain well supported and a break above 1.2520 is needed in the coming days to confirm the current positive outlook.

USDJPY

After breaking below the hourly support of 132.20, the pair extended its decline to reach a low of 130.65.

As of now, we might see a retracement higher toward the 131.60-131.80 levels which represents the short-term resistance zone before seeing a continuation to the downside that can target the daily support of 130.50. Looking at the biggest picture, the downside pressure should remain intact while prices continue to trade below the 133.80 high. Therefore, any recovery attempt is likely to be limited.

In extension, a break past the resistance zone mentioned above can open the way for a retest of 132.20 formerly broken support which is likely to become a new resistance in this pair.

USDCAD

The pair managed to bounce on Wednesday following a six-day losing streak.

Previously, sellers succeeded to push prices below the 1.3630 support. This level is expected to act as resistance if tested again in the coming days. Therefore, the current advance should be considered as temporary as the trend is still bearish, traders should wait for prices to reach the initial resistance zone in the near term, located between 1.3520 and 1.3560 before looking for a continuation lower.

Finally, when looking at the higher timeframes, we can see that sellers remain in control. Meanwhile, a potential upside retracement is likely as the pair has reached oversold conditions which can lead to profit-taking ahead of Canada’s employment figures.

GOLD

The gold rally has stalled at the 2030 resistance level; therefore, we might see a correction of the previous advance in the coming hours.
For the time being, the trend is still on the upside, in the meantime, we have seen the formation of a doji candle in the daily chart which signals a pause in the current uptrend.

On the other side, it is important to note that 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 1949 low in the coming days. From an intraday perspective, the current correction can target the first support at the 2009 level followed by the 2000 and 1990 levels before seeing a bounce in the direction of the hourly resistance at $2024 per ounce.

Economic Analyst
Amine Hiani