Daily Analytics

23/02/2023
11:23

The US Dollar extended its advance while the US stock market continue to face more selling pressure after the release of the latest FED meeting minutes.

The Federal Reserve remains committed to bringing inflation down in the future. Several officials welcomed the idea of slowing the pace of future interest rate hikes, in the meantime, they highlighted the importance of seeing more evidence of inflation decline in a broader range of prices before deciding the future monetary policy.

The minutes also showed that more rate hikes will be necessary later this year.

During today’s European trading session, traders will be looking at the Eurozone inflation data.
The January Eurozone CPI is expected to have risen from -0.4% to -0.2%.

In the US, the quarterly GDP is likely to come unchanged at 2.9% while initial jobless claims forecasts are pointing to an increase to 200K compared to 194K previously.

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

EURUSD

The Euro sell-off continued as sellers succeeded to push prices below last week’s low which stands at the 1.0613 level.

The short-term trend remains bearish; therefore, prices are expected to trade lower in the coming hours toward the 1.0580-1.0560 support zone. Meanwhile, any potential bounce is likely to be limited and find resistance from the 1.0625-1.0640 zone.

From a wider angle, the negative pressure is expected to remain intact as long as this pair continues to trade below the 1.0660 high.

GBPUSD

The British pound failed to overtake the hourly resistance of 1.2130 before retreating lower to end the day below the 1.2100 mark.

As of now, the trend has turned neutral in the near term, and the pair is likely to trade sideways in the coming hours until we see a clear break either above the 1.2140 resistance or below the 1.1985 support level.

Technically, the nearest resistance zone stands between 1.2065 and 1.2085 levels while the closest support is located at 1.2030 level.
A break higher can lead to a new wave of advance toward the 1.2110 level, on the other side, a breakdown is likely to push the pair lower in the direction of the 1.1985 low.

USDJPY

The pair is holding steady as the bullish momentum is still strong in the near term.

Looking at the recent price action, the pair formed a series of higher highs and higher lows reinforcing the current positive trend and buyers are likely to challenge the hourly resistance of 135.15 in the next hours.

If the pair fails to overtake that resistance, sellers can aim for lower prices that can reach the 134.40 support level. On the flip side, a successful breakout above last week’s high should expose the 135.50-135.70 resistance zone.

Finally, it is important also for traders to keep an eye on the rising trendline shown in the chart below to confirm the strength of the current advance.

USDCAD

The currency pair traded in line with our expectations after the 1.3520 level switched its role to become the new support. This level was acting as a formerly broken resistance and for the time being, the pair is likely to remain well supported if it continues to trade above it.

From a wider angle, we can see that prices can face resistance in the coming hours from the falling trendline as shown in the chart below. Therefore, more price action is needed to confirm the next direction in this pair.

A breakout above that trendline can lead to a continuation higher and can target the next resistance located at the 1.3600 level, on the opposite, a reversal to the downside might send prices toward the 1.3520-1.3500 support zone.

GOLD

Gold faced strong selling pressure after prices failed to overtake the 1845 resistance level.
The yellow metal has reversed lower, and now sellers are testing a key support level located near $1820 per ounce.

Meanwhile, we might see price stabilization in the near term, however, any advance is likely to find sellers from the new resistance zone located between the 1830 and 1834 levels.

As of now, the trend remains bearish, and the more aggressive scenario will be a break below last week’s low at $1818 which can lead to another wave of decline in the direction of the 1808-1803 support zone. The downside pressure is here to stay unless we see a daily close above $1845 resistance which will then warn about a positive trend reversal in the near term.

To conclude, gold prices are testing again an import support zone and traders will keep an eye on today’s close to confirm the next direction.

Economic analyst
Amine Hiani