Daily Market Report

07/02/2023
12:18

Following the recent bounce in the US Dollar from a 9-month low, the Greenback is likely to stabilize in the near term due to the lack of important economic releases from the US this week.

In Australia, the reserve Bank of Australia decided to raise interest rates to 3.35% up from 3.10% initially, while later today, traders will be waiting for Chair Powell’s speech about the FED‘s future monetary policy.

In the US, stock indexes ended lower on Monday as investors will be looking for another week packed with earnings.

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

EURUSD

The Euro extended its decline on Monday to reach the daily support of 1.0710 level.
In the near term, the trend has turned bearish in this pair, however, when looking at the technical indicators we can see that prices are extended to the downside, therefore, a potential bounce can start in the coming hours on the back of potential profit-taking.

If the Euro succeed to recover from the key support level mentioned above, then we expect prices to start a corrective wave that can reach the 1.0765 level followed by an important resistance located at the 1.0800 level before another decline may start.

To summarize, provided that prices continue to trade below the 1.0800 psychological barrier, the sellers are likely to remain in control. On the other side, a daily close below Monday’s low should lead to a strong decline in the direction of 1.0660 support.

GBPUSD

The British pound is still under pressure in the short term as prices suffered from heaving selling after breaking below the support zone mentioned in our previous report and located between 1.2280 and 1.2260 levels.
Moreover, prices continue to form a series of lower highs and lower lows, which keeps the bearish momentum in place.

For the time being, the pair is likely to stabilize in the coming hours, and traders should wait for a retracement toward the 1.2100 resistance which is considered as an important barrier for prices in the short term.

In extension, If the decline resumes, we might see new sellers that are likely to send prices lower toward 1.1970 support in the coming hours. On the flip side, if the 1.2100 barrier is cleared, buyers can target the 1.2150 level followed by 1.2170 resistance.

USDJPY

USDJPY trend has turned bullish after bulls managed to push prices above a key resistance that was located at the 131.10 level.

Meanwhile, the current rally is likely to stall from a strong daily resistance that stands at the 132.90 level. Therefore, a retracement to the downside can start soon, which can lead to a re-test of the formerly broken resistance of 131.55.

From a technical standpoint, the pair remains bullish in the near term, however, if prices fail to clear the 132.90 level, the pair is likely to enter a sideways market and the momentum should become neutral as the higher time frames are still negative.

USDCAD

The currency pair continues to trade sideways as traders await Canada’s employment figures due on Friday, to drive their trading decisions.

Technically, we can see that USDCAD has reintegrated its short-term range located between the 1.3520 and 1.3230 levels. This 300-pip range can see increased volatility in the coming days; therefore, traders should wait until we see a clear break outside of this zone.

In the near term, if prices remain below the 1.3520 resistance, there are higher chances to see the pair heading south in the direction of the lower side of the current range at the 1.3270-1.3230 zone.

Conversely, a confirmed break above 1.3520 resistance can open the way for more advance in the direction of the 1.3700 mark.

GOLD

Gold lost ground after facing a strong offer from the key technical resistance of $1950 per ounce. In the short term, we might see a price stabilization as new buyers are likely to defend the 1860 support.

From a technical standpoint, the yellow metal is following a bullish price structure that started from November’s low at $1724, and the recent drop should be considered a short-term correction only.

Consequently, if the yellow metal manages to hold above 1860 short-term support and buyers push prices above the 1881 barrier, then we can expect a continuation higher in the direction of the 1895-1900 key resistance zone.

On the flip side, a daily close below 1860 support is likely to trigger another sell-off in the direction of the next level of interest which stands at $1842 per ounce.

Economic Analyst
Amine Hiani