Daily Market Report

16/03/2023
11:37

Gold rallied on Wednesday while global stocks suffered another selloff amid Credit Suisse fears.

In the US, the Dow Jones ended the day losing 280 points while the S&P500 dropped by 0.7%.
Moreover, WTI crude oil fell below $70 a barrel for the first time since 2021 on rising concerns about the latest developments in the financial sector.
Meanwhile, European stock markets were strongly down with banking stocks leading the decline.

Later today, all eyes will be on the ECB interest rate decision, market participants are expecting a 50bps hike from 3.00% to 3.50%.

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

EURUSD

The Euro faced heavy selling pressure after reaching a high of 1.0760 on the back of the latest Credit Suisse headlines.

The pair extended its decline to reach the daily support of 1.0525 before bouncing at the end of yesterday’s US trading session. As of today, we can see that the trend has turned neutral again and traders should wait for a breakdown below the support level mentioned above, before confirming another decline. In the meantime, if the current retracement extends higher, then we will be looking at the 1.0610-1.0650 zone to act as the short-term resistance zone.

Finally, it is important to note that high volatility is expected later today as traders await the ECB rate decision.

GBPUSD

The British pound found strong sellers from the 1.2200 psychological barrier before turning down sharply lower.

For the time being, we expect the pair to find some demand as prices have reached the 50% Fibonacci retracement of the recent advance that started from 1.1805 and ended at 1.2200.
This level is located near the 1.2000 level; therefore, the Sterling is likely to remain supported in the coming hours if it continues to trade above this level.

In the near term, we might see a price stabilization followed by an attempt to target the nearest resistance at 1.2095. On the other side, a daily close below 1.2000 should trigger another decline toward 1.1940.

USDJPY

The pair failed to overtake the formerly broken support of 135.00 as it turned into strong resistance.

Looking at the technical picture, the momentum remains negative in the near term, which can lead to the current bounce failing in the coming hours as the upside potential remain limited while below the 135.00 handle.

As of now, the retracement can face strong sellers and the pair is expected to continue trading lower. Moreover, if the pair holds below this resistance zone, a move down toward the 132.50 initially followed by 131.45 support will be possible.

USDCAD

As mentioned in our previous report, the recent decline found strong demand at the hourly support zone of 1.3665-1.3685.

Prices managed to rally after reaching the formerly broken resistance zone which became new support for this pair. However, the pair is trading in the overbought territories and the current advance is likely to find resistance from the 1.3805 resistance level in the coming hours.

Therefore, this pair is expected to trade sideways until we see a clear break either above 1.3800 or below the 1.3650 level. A daily close above the resistance should clear the path for a continuation higher in the direction of 1.3855, while a break below the support is expected to weaken the uptrend in the near term.

GOLD

Gold prices rallied after testing the formerly broken resistance of $1890 per ounce. The yellow metal registered a low at $1885 before trading strongly higher reaching a high of 1837.

As of now, the gold trend is clearly to the upside and the bullish momentum is likely to remain unchanged while gold continues to trade above 1885 low. In the short term, the closest resistance stands in 1928 while the nearest support is located at the 1909 level.

Finally, it is important to note that any decline is likely to be short-lived and traders should wait for a retracement toward support before looking for another continuation to the upside.

Economic Analyst
Amine Hiani