Daily market report

17/03/2023
10:18

The ECB raised interest rates by 50bps on Thursday and will be closely monitoring future inflation developments in the Euro area to decide its next move.
In the US, the three major indexes closed higher as First Republic Bank and Credit Suisse secured funding of $30 billion and $54 billion respectively. In the FX market, the US Dollar was down yesterday, heading for a modest decline ahead of the weekly close.
Looking at the key economic releases for today, the Eurozone CPI is expected to rise from -0.2% to 0.8% while Industrial production in the US is seen at 0.2% in February up from 0.0% registered previously.
Below, we will be analyzing the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro closed slightly higher yesterday after a volatile day following the release of the ECB rate decision. The single currency managed to stabilize above the 1.0600 mark, which keeps the short-term outlook neutral.

Looking at the key levels for future price action, we can see that the nearest resistance zone is located between 1.0635 and 1.0650 levels and buyers should overtake this barrier for a potential bullish reversal. However, the positive momentum is still lacking strength and prices are likely to trade sideways in the coming hours until we see a successful breakout above the resistance zone mentioned above.

On the other hand, 1.0550 is considered the short-term level of support, and the Euro is expected to remain steady while trading above this level.

To conclude, the trend has become neutral, and we will be looking for more price developments to confirm the next direction.

GBPUSD

The British pound bounced near the 50% retracement of the recent advance as we mentioned in our previous report which keeps the pressure to the upside.

For the time being, the momentum remains positive, and any potential decline is expected to face new buyers from the 1.2030-1.2000 support zone. From a wider angle, buyers will try to aim for higher prices in the coming hours with 1.2140 as the next level of interest.

Moreover, a successful breakout above this resistance can lead to a strong rally in the direction of the 1.2200 psychological barrier ahead of the weekly close.

Finally, the pair managed to break above the falling trendline as shown in the chart below, consequently, the downside potential is expected to be limited and traders should focus on a continuation move to the upside.

USDJPY

After reaching a low of 131.85 during yesterday’s US trading session, this pair jumped strongly to reach a strong resistance located at the 134.00 level.

From a technical standpoint, the downside pressure remains intact, and sellers are expected to stop all recovery attempts. The pair is showing a series of lower highs and lower lows since forming a top on March 8th which keeps the upside risks limited.

From an intraday perspective, important support is located at the 132.90 level while 133.80-134.00 is likely to continue acting as the main resistance zone for this pair.

USDCAD

The pair failed to overtake the 1.3810 resistance as expected, and we have seen prices falling toward the 1.3720 level.

Previously, buyers succeeded to push prices above the 1.3665 resistance. This level was acting as a formerly broken resistance and for the time being, it is expected to act as support.

In the near term, we can see that prices are trading sideways inside a range located between the 1.3810 high and 1.3655 low; therefore, traders should wait for a clear break outside of this band for future guidance.

When looking at the higher timeframes, it is clear this pair has reached an important resistance zone that comes from November 2022 which can lead to a price stabilization before the bullish momentum resume.

GOLD

Gold was little changed yesterday after finding support at the hourly support of 1909 level.

The yellow metal continues to move higher in a defined wedge pattern which reinforces the bullish outlook in the near term. In addition, the positive momentum is supported by a series of higher highs and higher lows, therefore, the gold trend is expected to remain positive if prices hold above 1885 low in the coming days.

From an intraday perspective, the 1914 level is seen as the hourly support while the 1933-1938 resistance zone is the key area to break.

To summarize, the positive outlook will stay valid unless we see a daily close below the 1885 level which is considered the main support level for this week. Meanwhile, the 1909 -1907 levels are likely to continue to act as an important demand zone for gold.

Economic Analyst
Amine Hiani