Daily Market Report

14/03/2023
11:42

The US Dollar extended its decline on Monday as traders await the latest change in inflation. The FED is actively monitoring inflation levels to decide its future monetary policy.
Looking at the US stock market developments, the Dow and S&P500 ended the day lower while the Nasdaq rose. Investor sentiment remains mixed following Silicon Valley Bank’s collapse.

Moreover, gold prices rallied as buyers managed to push prices above the $1900 psychological barrier.

Later today, the US CPI is expected to have declined in February from 0.5% down to 0.4%.
Therefore, high volatility will be likely following the release.
In the UK, the unemployment rate is seen at 3.8% compared to 3.7% previously, on the opposite, employment change forecasts are pointing to a decline.

Below, we will be analyzing the latest price action in the major currency pairs alongside gold.

EURUSD

The Euro trend has turned positive after buyers succeeded to protect 1.0535 daily support and pushed prices higher above the psychological resistance of 1.0700 which was acting as a strong barrier in the near term.

Therefore, there is a high probability of a continuation higher toward the 1.0775-1.0800 resistance zone in the coming days, meanwhile, a downside retracement remains possible before another rally starts.

Technically, the pair broke above the upper band of the falling price channel, which reinforces the buying pressure seen recently. Consequently, a move lower toward the 1.0690-1.0670 zone is likely to be temporary and find strong buyers for a continuation higher.

GBPUSD

The British pound rallied after successfully breaking above the hourly resistance of 1.2065 paving the way for a re-test of the 1.2145 barrier.

Moreover, the recent advance reached a high of 1.2200 on Monday, the highest level since the beginning of this month. As of now, we can see that the bullish momentum remains strong, and traders are expected to aim for higher prices in the coming days that can extend to the 1.2270 peak.

In the near term, we might see a price stabilization due to potential profit-taking. Therefore, a corrective move is likely to start in the coming hours.
The key level of interest stands at 1.2145 which can turn into support followed by the 1.2100 level. In extension, the 1.2065-1.2050 zone is considered as an important support zone for this week, and any potential decline is expected to be short-lived while the Sterling continues to trade above it.

To conclude, the trend is bullish in this pair and after a short-term decline, prices are likely to extend higher.

USDJPY

The pair fell sharply below the key support of 135.00 on the back of a weak Dollar.
Prices extended the decline to reach a major support level located at 132.50 support.

Looking at the technical picture, the momentum remains negative, while in the short term, traders can expect a bounce toward 133.60 followed by the 134.00 psychological resistance before another decline may start.

If the pair holds below this resistance zone, a move down toward the 133.00 level will be highly anticipated. On the other side, a successful breakout of 134.00 should clear the path for a larger upside corrective move in the direction of 134.65 resistance.

USDCAD

After the strong rally that started earlier last week, the pair found strong resistance from the key level of 1.3855 mentioned in our previous report which represents the highest level seen in October of last year.

Prices managed to extend the decline to reach the formerly broken resistance zone located between 1.3665 and 1.3685 levels, which is expected now to switch roles and act as a support for this pair.

In the short term, any bounce is likely to find sellers at the hourly resistance zone of 1.3765-1.3790 before we see price stabilization in the coming hours.

To conclude, the momentum remains positive in this pair, and the pair is expected to trade sideways to higher unless we see a daily close below 1.3665 support.

GOLD

Gold prices jumped after successfully breaking above the 1860 key resistance.

Yesterday, the yellow metal managed to clear all the important barriers before ending the day above the 1900 psychological resistance. Therefore, the bullish reversal scenario we mentioned last week was confirmed and gold is expected to extend its advance in the direction of $1918 per ounce before seeing new sellers.

To summarize, the gold trend has turned to the upside and any downside retracement is likely to be temporary. The nearest support is located at the 1900 level followed by 1890, on the other side, the key resistance stands at the 1918 level followed by 1930 in extension.

Economic Analyst
Amine Hiani