Daily Market Report

10/02/2023
11:20

To end the trading week, traders will be looking for a set of economic releases from the UK and Canada.

The US Dollar fell earlier on Thursday before bouncing during the US trading session pushing Gold sharply lower toward the key technical support of $1860 per ounce.

Moreover, all major US stock indexes ended the day lower as investors fears a looming recession.

The UK GDP figures are expected to decline from 1.9% to 0.4% while industrial production is likely to come unchanged at -0.2%. In the meantime, forecasts are pointing at a potential increase in manufacturing production from -0.5% to -0.2% in December.

Later today, employment change in Canada is expected at 15K only in January compared to 104K previously while the unemployment rate is set to increase from 5.0% to 5.1%.

Looking now at the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro failed from the hourly resistance zone highlighted in our previous report and located between 1.0765 and 1.0800 levels.

In the near term, the trend remains bearish, and prices are likely to stay under pressure if EURUSD keeps trading below this key resistance zone.

For the time being, the pair is likely to end this week lower as the upside potential is limited.

Meanwhile, the nearest support for the Euro stands at the 1.0710 level and a break below it should expose the weekly low at 1.0670, while a stabilization above the support mentioned above, can lead to a re-test of 1.0765 level in the coming hours.

GBPUSD

The British pound recovery has stalled at a key resistance located near the 1.2170 level.
Prices have reached a high of 1.2192 before retreating sharply lower.

Technically, prices continue to respect a bearish price structure, which keeps the Sterling under pressure. As of now, prices are likely to extend the decline in the direction of 1.2100-1.2085 levels before seeing rising demand. This zone was acting as an old resistance, which is likely to turn into support in the coming hours.

From a wider angle, the pair is likely to continue trading sideways to lower, and the short-term trend can switch to the upside only if we do see a daily close above the 1.2200 mark.

USDJPY

USDJPY traded in line with our expectations as the pair found strong buyers near the 130.60 hourly support.

Looking at the short-term price action, the pair is trading sideways as the trend has turned neutral. Prices are trading inside a range located between 131.85 and 130.40 levels; therefore, the sentiment is likely to stay neutral unless a clear breakout happens in the next hours.

Traders should wait for a breach of the 131.85 resistance to aim for higher prices that can reach the 132.25 level, on the other side, a failure below that resistance could lead to another wave lower toward the 131.00 handle.

USDCAD

The currency pair continues to edge higher as buyers managed to defend the hourly support zone of 1.3360-1.3380.

Despite the current bounce in the pair, prices are still lacking bullish momentum and traders should focus on the 1.3475 resistance level in the coming hours, as a successful breakout above it can lead to more gains in the direction of the 1.3520 level.

Technically, we can see that USDCAD has reintegrated its short-term range located between the 1.3520 and 1.3360 levels. This pair can see increased volatility later today, following the release of Canadian job data; therefore, traders should wait until we see a clear break outside of the range mentioned above to confirm the next direction in this pair.

GOLD

Gold faced strong selling pressure after prices failed to overtake the 1886 resistance level.
The yellow metal has reversed lower, and now sellers are testing a key support level located at $1860 per ounce.

Meanwhile, we might see a positive reaction in the near term, however, any advance is likely to find sellers from the new resistance zone located between the 1869 and 1872 levels.

The more aggressive scenario will be a break below 1860 support which can lead to another wave of decline in the direction of the 1852 level.

To conclude, gold has reached an import support zone and traders will keep an eye on the weekly close to confirm the next direction.

Economic analyst
Amine Hiani