Daily Market Report

24/02/2023
10:30

US stocks managed to rebound and reverse early losses on Thursday after the recent FED meeting minutes raised concerns over the interest rates path.

On the other side, the US Dollar was slightly higher against a basket of major currencies.

Later today, investors await the latest inflation developments in the US as the PCE price index remains in focus. Moreover, forecasts are pointing to a rise in new home sales registered in January, the figures are seen at 620K compared to 616K previously.

In the meantime, personal spending is likely to rise from -0.2% to 1.3% while in Canada, traders will be waiting for the recent manufacturing sales data.

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

EURUSD

The Euro extended its decline to reach the daily support mentioned in our previous report, located at the 1.0580 level.

For the time being, we can see that the short-term trend remains on the downside as prices continue to move inside the bearish channel as per the chart below.

Meanwhile, when looking at technical indicators, the pair is oversold which can lead to a potential recovery attempt in the coming hours. If buyers manage to protect yesterday’s low, the Euro can bounce toward the nearest resistance level which stands at 1.0630 followed by 1.0660 in extension.

On the other side, a break below 1.0580 support can lead to further downside in the direction of the 1.0550 level.

GBPUSD

The British pound turned lower from the hourly resistance zone located between 1.2070 and 1.2085 levels which keep the short-term neutral.

As of now, the pair is likely to remain well supported above the 1.1985 low, and traders should expect volatility to expand further in the coming hours until we see a clear break either above the 1.2140 resistance or below the 1.1985 support level. This is the current range for the pair.

Technically, the nearest resistance level is located at 1.2035 while the closest support is located at 1.1985.

A break higher can lead to a new wave of advance toward the 1.2075 level, on the other side, a breakdown is likely to trigger a strong decline.

USDJPY

The pair failed for the third time to overtake the hourly resistance of 135.10, we have seen a false breakout following the release of the US GDP as prices reached a high of 135.38 before ending the day below the 135.00 psychological barrier.

Looking at the recent price action, we can see that the bullish momentum is weakening which can lead to a move back lower in the direction of 134.35 hourly support. This level is important in the short term as it coincides with the rising trendline. Therefore, traders should keep an eye on the market reaction in the next hours.

If the support holds, buyers will aim for higher prices that can reach the 134.90 level again.
On the other side, a successful breakdown is likely to expose the next support at 133.95 followed by the 133.60 level in extension.

USDCAD

The recent rally stalled at a key resistance level of 1.3570 which represents the point of intersection with the falling trendline as per the chart below.

Technically, the momentum remains positive as buyers managed to push prices above 1.3520. This level was acting as a formerly broken resistance and for the time being, it is playing the role of support.

From a wider angle, we can see that prices are trading sideways inside a wide range located between the 1.3700 peak and 1.3225 low, meanwhile, the near term has turned positive in this pair and prices are expected to trade sideways to higher.

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 failure should expose 1.3520 initially, while a daily close below that support can call for a deeper correction.

GOLD

The gold technical picture has not changed as buyers continue to fight to protect last week’s low which stands at $1817.

Prices faced more selling pressure yesterday, after failing to overtake the 1834 resistance which represents the short-term barrier for gold. The yellow metal remains in a clear downtrend as prices continue to respect the bearish structure formed with a series of lower highs and lower lows.

Meanwhile, we might see price stabilization in the coming hours, however, the upside potential is likely to remain limited below the 1834 high. As of today, the resistance zone is seen between 1830 and 1834 levels while the support zone is still unchanged between 1820 and 1817 levels.

Therefore, traders should wait for a break outside of this band to confirm the next direction ahead of the weekly close.

Economic analyst
Amine Hiani