Daily Market Analysis

21/07/2023
09:11

U.S. stocks had a mixed close on Thursday as earnings season continues to drive the stock market volatility. In the meantime, unemployment claims fell from 237K to 228K while the existing home sales declined from to 4.30M to 4.16M. In addition, shares of Johnson & Johnson soared 6% after the company’s financial results exceeded analysts’ expectations which helped the Dow extend its winning streak for the ninth day in a row. This is the best rally for the Dow since 2017. Conversely, Netflix and Tesla’s stocks missed estimated and suffered heavy selling pressure losing 8% and 9.7% respectively, which dragged the S&P500 and the Nasdaq composite lower. Looking at the recent price action for major U.S. stocks indexes, the Dow rose 0.47%, the S&P500 slid 0.68% and the Nasdaq composite closed 2.05% lower.

In the FX market, the U.S. Dollar managed to extend its advance on Thursday despite mixed economic data as the focus shifted to the upcoming FED rate decision. The technical correction is likely to remain in place on the back of end-of-the-week profit-taking. EURUSD fell below the 1.1180 support which cleared the path for a deeper correction that can extend to the 1.1100-1.1080 zone before the upside momentum resume, the recent drop is corrective as the trend remains bullish.

In the commodity market, the gold rally has stalled from the key technical resistance of $1985 mentioned in our previous report. In the near future, we will be looking for a continuation higher, however, traders should wait for a new fundamental catalyst to drive prices to the upside. 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 coming days. In the short term, a breakdown below yesterday’s low located at 1965 can lead to a larger correction towards the 1955-1950 support zone before another rally begins. To summarize, the positive momentum remains strong, and any decline is likely to be short-lived.

Meanwhile, WTI crude short-term trend has turned neutral, and prices are likely to trade sideways in the coming hours, the key support zone is located at the 74.70-73.80 area which represents the formerly broken resistance zone and from where we can see rising demand. 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 addition, the recent break above the consolidation triangle as per the chart below is supporting the positive momentum and can lead to a continuation higher after the current sideways movement end.

In today’s economic calendar, the focus will be on the UK and Canadian retail sales figures which are expected to decline from 0.3% to 0.2% and from 1.1% to 0.5% respectively.

Economic Analyst
Amine Hiani