Daily Market Report

The U.S. Dollar started the new month on a positive note, meanwhile, U.S. stocks had a mixed close on Tuesday. The 30-stock index posted modest gains after rising 0.20%, conversely, the S&P500 dropped 0.27% and the Nasdaq composite fell 0.43% after the ISM manufacturing PMI came out below expectations. July was a good month for the U.S. market, investors’ confidence has grown following strong economic data and softer inflation which increased the odds for a potential soft landing scenario. Moreover, better-than-expected corporate earnings are likely to continue supporting the U.S. stock market’s bullish momentum in the coming days.
The main event last month was the FOMC monetary policy meeting in which the FED decided to raise interest rates by 25bps pushing rates to the highest level in 22 years. On a monthly basis, the Dow was up 3.4%, the S&P500 gained 3.1% posting its fifth consecutive positive close not seen since August 2021. In the meantime, the technology index rose 4.1% which represents its best winning streak since April 2021. Later this week, the focus will be on the upcoming Non-Farm payrolls.
From a technical standpoint, the Dow Jones remains in an uptrend as the daily chart is showing a series of higher highs and higher lows. The key support for today is located at the 35200 level and if prices continue to trade above it, the index is expected to retest the 35700 high, while a break above it can lead to another rally toward the next resistance level which stands at 35875.
In the FX Market, the USDJPY currency pair managed to overtake the 142.00 barrier which reinforced the bullish outlook in the near term. The trend has shifted from neutral to positive, therefore, prices are expected to extend higher toward the next resistance level located at the 143.65 level. On the flip side, 141.90 is considered as the key support for this week and if the pair continue to hold above it, the downside potential is likely to be limited. Moreover, the GBPUSD pair trend has turned negative in the short-term, and prices are expected to face more selling pressure while staying below the 1.2887 level which can lead to a retest of the 1.2740 support in the coming hours. However, when looking at the higher time frames, we can see the main trend is still pointing to the upside as prices continue to trade above the lower band of the rising channel as per the chart below, in addition to the 50-exponential moving average. A break below the 1.2740 level can lead to a strong decline in the direction of the 1.2680-1.2590 support zone, while a daily above 1.2887 barrier can target a retest of the 1.3000 psychological resistance.
In the commodity market, gold failed again to overtake the 1985 barrier which led to a larger correction. Last week’s drop is expected to be temporary as the yellow metal bigger trend is still bullish while the short-term trend has turned flat. In the coming days, we will be looking for support between the 1945 and 1935 levels and if gold manages to hold above this demand zone, the positive technical picture should remain unchanged, meanwhile, prices can recover gradually over the coming days. On the flip side, a close below the support zone mentioned above can clear the path for a bearish reversal scenario that can reach the 1910-1900 area.
Looking now at the important economic releases for today, traders will be waiting for the ADP Non-Farm employment change alongside the latest crude oil inventories figures.

Economic Analyst
Amine Hiani

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