Daily market report
The US Dollar extended its decline following the latest US jobs report.
As of this week, the focus will be on the upcoming inflation data from the US scheduled for Thursday.
Later today, traders will be waiting for Fed Chair Powell’s speech to seek more details about the future monetary policy.
However, as mentioned before, all eyes will be on the US CPI for the month of December which is likely to remain unchanged at 0.1% while the (YoY) figures are expected to drop from 7.1% to 6.5%. In the meantime, initial jobless claims are due to rise from 204K to 215K.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro resumed its advance after breaking the hourly resistance of 1.0630.
Moreover, prices managed to test the December high which is located near the 1.0740 level before stabilizing.
Technically, the pair is likely to find some offers in the coming hours as it entered a strong resistance which stands between 1.0740 and 1.0790 levels.
Therefore, a short-term downside correction cannot be ruled out before we see another rise.
However, it is important to note that the trend remains bullish, and any drop is likely to be temporary.
Finally, the nearest support zone is located between 1.0660 and 1.0630 levels, and only a daily close below this zone can weaken the current positive outlook.
The British pound started the week on a positive note and the pair traded above the 1.2200 psychological barrier briefly before retracing lower.
Currently, prices have reached a strong resistance zone located between 1.2200 and 1.2240, consequently, we may start to see a slowdown in the current advance in the coming hours.
For the time being, the trend is still bullish, however, if we do see a failure from the current resistance zone, a move back lower in the direction of 1.2110 remains possible.
On the opposite, a break above yesterday’s high can expose the next resistance at the 1.2240 level.
USDJPY traded in line with our expectations as the pair found strong selling pressure from the main resistance level mentioned in our previous report located at 134.55.
As of now, the pair remains in a clear downtrend and more downside is expected in the coming hours, however, when looking at the price action from the 20TH of December, we can see that prices entered a consolidation phase between 134.55 and 129.50 levels.
Therefore, the pair is expected to continue trading in a volatile way until we see a clear exit of this wide range in the coming days.
From a technical standpoint, the momentum remains bearish, and the next important support stands at the 131.30 level.
On the flip side, the short-term resistance stands at the 132.20 resistance level and a break above it is likely to clear the path for a move back higher toward the 133.00 barrier.
The currency pair’s short-term trend has turned bearish after sellers succeeded to send prices below the 1.3500 psychological support
Prices were stuck inside a 200-pip range for several days located between 1.3700 and 1.3500 levels. In the near term, prices are likely to extend the current decline toward the next support level which stands at 1.3320.
This scenario will remain valid if the pair continues to trade below the 1.3500 mark which will likely switch roles and become a new resistance if tested in the future.
Finally, the nearest resistance is seen at the 1.3420 level and a break above it will signal the start of a potential corrective move to the upside.
Gold continues to trade higher after buyers succeeded to push prices above the 1825 hourly resistance last week.
Yesterday, the yellow metal reached an important resistance at $1880 per ounce, from where we can see some price stabilization in the near term.
From a technical perspective, gold is following a bullish trend formed with a series of higher highs and higher lows, which reinforces the positive outlook. However, prices should continue to trade above the 1825 support level to preserve its positive trend in the short term.
To summarize, a break above the 1880 resistance, should lead to a continuation higher toward 1893 followed by the 1910 resistance level in the coming days, while if prices reverse from the current resistance, we can see a move back toward 1765 initially, followed by the 1852 level in extension, before another rise may start.
Finally, the trend remains bullish, and any drop should find strong buyers as the downside potential remains limited in gold.