Daily Market Report

The U.S. Dollar continued its recovery on Wednesday despite weak economic data from the housing sector. The Greenback was up against other major currencies while traders await the upcoming FED rate decision. Meanwhile, the recent rebound is likely to be short-lived as the dollar remains in a downtrend following a slowdown in inflation figures seen last week which pushes investors to think that a soft landing scenario is still achievable and can lead the FED to ease its future monetary policy. The probability of a 25 bps rate hike sits at 97% for this month’s FOMC meeting, however, the main focus will be on the future path of interest rates.
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On the other side, the U.S. stocks extended their advance will all three major indexes closing higher. The Dow has registered its eighth consecutive daily close for the first time since 2019 adding 0.31%, the S&P500 rose 0.24% while the Nasdaq composite finished slightly above the flatline rising 0.03%. The second-quarter earnings season is still at the beginning, meanwhile, according to Refinitiv data, 80% of companies’ earnings per share have exceeded expectations which is supporting the U.S. stock market in the near term.
In the commodity market, gold has benefited from the recent weakness in the U.S Dollar and we have seen a strong buying around the 1970 support level yesterday. For the coming days, we will be looking for a continuation higher after the yellow metal has confirmed an inverted head and shoulders bullish reversal pattern. The key support for this week stands at $1945 per ounce and if prices continue to hold above it, gold is expected to reach the 1993 level followed by the psychological barrier of $2000. In the short term, a breakdown below yesterday’s low located at 1970 can lead to a larger correction towards the 1960-1953 support zone before another rally begins. Overall, the positive momentum remains strong, and any decline is likely to be temporary.
In addition, WTI crude retreated after reaching a key resistance level located at $76.80 a barrel. Oil prices are likely to trade sideways in the coming hours, and a potential downside correction toward the 74.70-73.80 area which represents the formerly broken resistance zone cannot be ruled out. From a technical standpoint, this zone is likely to continue acting as a main support if tested again. Therefore, oil prices are expected to stabilize, and we will be waiting for either a break above the 77.00 handle or below the 73.80 low to confirm the next directional move.
In the FX market, the EURUSD pair remains in an uptrend and the key support level in the near term stands at 1.1180 as per the chart below. Consequently, another retest of 1.1280 resistance is likely, on the flipside, a daily close below the support mentioned earlier can trigger a deeper correction toward the next important support at 1.1100 before we see a continuation of the existing uptrend.
As for today, there will be only a few important economic releases to watch. The U.S. existing home sales are expected to have declined from 4.30M to 4.21M, in the meantime, unemployment claims are due to rise from 237K to 239K.

Economic Analyst
Amine Hiani

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