Daily Market Report

17/02/2023
11:26

The US Dollar extended its advance while all US major stock indexes closed lower on Thursday. This decline in the stock market came after Fed’s Bullard mentioned that he can’t rule out a 50 basis point interest rate hike at the March meeting. Looking at the European trading session, traders await retail sales data from the UK which are expected to come higher than the previous numbers. Analysts’ forecasts are pointing to -0.3% compared to -1.0% previously. In today’s US trading session, both import and export figures relative to the month of January will be released. In Canada, the raw materials price index is due to rise from -3.1% up to -0.2%. Looking now at the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro failed to overtake the bearish trendline drawn from the February 15th high as per the chart below, and we have seen prices falling toward the key support of 1.0660 as sellers took control of this pair again. Looking at the short-term trend, the bearish momentum remains intact after yesterday’s close, and we will be looking for a breakdown below 1.0660 support to confirm a new wave of decline that can reach the 1.0600 psychological support in the coming hours. Technically, the nearest resistance zone stands between 1.0700-1.0720 levels and the single currency is likely to stay under pressure if prices manage to continue trading below it. On the other side, a daily close above the resistance zone mentioned above should weaken the short-term bearish trend and send prices higher toward the 1.0770 level.

GBPUSD

The British pound reversed lower after reaching the hourly resistance of 1.2075 level. The pair failed to recover early losses and printed new lowest levels under the 1.2000 psychological support. Therefore, all eyes will be turned on 1.1960 daily support as a breakdown below it will likely trigger another selloff that can extend to 1.1870. In the near term, as long as prices continue to trade below the 1.2030 high, the pair is expected to trade sideways to lower. To conclude, an increase in volatility is highly expected as we approach the weekly close which will be key for future price action in this pair.

USDJPY

The pair continues to trade higher as the bullish trend remains intact after a successful breakout of 132.90 resistance. From a technical standpoint, the current advance is taking the form of a series of higher highs and higher lows, reinforcing the positive outlook. Therefore, buyers will likely aim for the highest level registered on February 6th as a potential target in the next hours. In the short term, the nearest support stands at 133.65 while the closest resistance is located at 134.40 followed by the 134.80 level.

USDCAD

The currency pair started to show signs of strength after buyers succeeded to push prices back above the 1.3440 hourly resistance. For the time being, we can see that the bullish momentum is increasing, and the trend is about to change from neutral to positive, therefore, we expect the pair to trade higher in the coming hours, especially if we do see a breakout above 1.3470 level, which is likely to clear the path for another rally in the direction of 1.3520. Moreover, any decline is likely to be limited while prices continue to trade above 1.3440 support in the near term. On the opposite, only a daily close below the 1.3395 level will cancel this positive scenario.

GOLD

Gold traded in line with our expectations yesterday as prices succeeded to bounce from the 1830 support level initially, however, the recovery has failed from the short-term resistance level located at $1842 per ounce. Looking at the recent price action, we can see that trend remains bearish in the yellow metal, and if sellers succeed to keep prices below the 1845 high, more losses cannot be ruled out. Traders should focus on 1830 support today, as a break below it can lead to more downside toward 1824 support followed by the 1814 level in extension, on the other hand, if this support holds, then we can see a move back higher in the direction of the 1842-1845 resistance zone.

Economic analyst
Amine Hiani