Daily Market Report

16/02/2023
12:03

The US Dollar rose to a six-week high boosted by higher inflation and better-than-expected retail sales figures.

Later today, traders await a set of economic releases from the US to drive the market sentiment. Housing starts are expected to have declined in January from 1.382M down to 1.360M, meanwhile, analysts are seeing a high reading in building permits which are due to rise from 1.337M up to 1.350M.

Moreover, forecasts are pointing to a rise in initial jobless claims from 196K up to 200K.

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

EURUSD

The Euro is likely to find some demand in the coming hours after reaching a key support level located at 1.0660. Looking at the short-term trend, we can see that the bearish momentum remains strong which can keep the upside potential limited in this pair. Since February the 7th low, prices are trading sideways inside a defined range that stands between 1.0660 support and 1.0800 resistance. Therefore, the technical outlook is likely to stay neutral until we see a clear break outside of the range mentioned above. In the coming hours, if the pair holds above 1.0660 support, buyers will try to push prices toward the 1.0735 level which represents the hourly resistance. On the other side, a breakdown below 1.0660 support should trigger another selloff in the direction of the 1.0600 mark.

GBPUSD

The British pound fell sharply as sellers managed to push prices below the 1.2100 handle. As of now, the pair is trying to recover some of yesterday’s losses after testing the hourly support of 1.1990. The first level of interest will be the 1.2035 resistance and a break above it can clear the path for a continuation higher in the direction of the 1.2075-1.2085 area before seeing new sellers. From a technical standpoint, as long as prices continue to hold above the 1.1960 low, the pair is expected to hold steady and trade sideways to higher. In the near term, any retracement lower is likely to find strong buyers near the 1.2000 psychological support for another wave higher in the coming hours. To conclude, despite yesterday’s negative price action, the pair is expected to hold support and stabilize in the near term.

USDJPY

The pair extended its advance after successfully breaking above the key resistance of 132.90. As mentioned in our previous reports, we highly anticipated the recent rally to reach the 134.00-134.80 area as a potential price target following the strong breakout. The pair reached a high at 134.40 and for the time being, the pair is likely to retreat in the near term due to potential profit-taking. Looking at the short-term price action, a corrective drop can lead to a re-test of the formerly broken resistance near the 132.90-133.20 zone before seeing rising demand again.

USDCAD

The currency pair failed to reach the 1.3470 resistance level mentioned in our previous report which keeps the short-term outlook unclear. From a wider angle, the trend remains neutral in this pair, therefore, USDCAD is expected to trade sideways to lower in the coming hours if prices stay below the 1.3440 resistance. A continuation lower can target the next support located at 1.3335, on the opposite, a successful break above yesterday’s high should send prices toward the 1.3470-1.3520 daily resistance zone.

GOLD

The gold decline is likely to pause as prices have reached a major support level which stands at $1832 per ounce. In the near term, any potential advance should find resistance at the 1842 level, while a break above it can send the yellow metal toward the next resistance zone located between the 1850 and 1852 levels. Moreover, the bigger technical picture is showing that the recent decline is corrective, and prices might find new demand after reaching the 50% Fibonacci retracement drawn from the 1957 peak to 1725 low. To summarize, the short-term momentum remains bearish for the time being, however, technical indicators are showing that gold has reached the oversold territory which can lead to a short-term bounce.

Economic analyst
Amine Hiani