Daily Market Report

02/03/2023
11:31

Both the S&P500 and Nasdaq composite fell on Wednesday as bond yields extended their advance. The 10-year yield topped 4% which is the highest since November.

On the other side, the Dow Jones index ended the day on a positive note.
Looking at the important economic releases of the day, all eyes will be on the eurozone inflation data. The CPI (YoY) is expected to have declined from 8.6% down to 8.2%, few hours later, the ECB will publish its account of the monetary policy meeting.

In the US, initial jobless claims are due to rise from 192K up to 195K.

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

EURUSD

The Euro managed to extend its advance after successfully breaking above the falling trendline drawn from the 1.0723 high.

Looking at the short-term price action, we can see that momentum has turned positive as buyers succeeded to push prices above a key resistance zone which was located between the 1.0640 and 1.0660 levels.

For the time being, we might see a price stabilization on the back of profit-taking ahead of Eurozone inflation data, meanwhile, any downside retracement is likely to be temporary and the pair should find support near the 1.0640-1.0620 zone for another continuation to the upside toward the 1.0700-1.0720 area.

To conclude, the trend is positive, and the Euro is likely to remain well-supported above the 1.0620 low. On the opposite, only a daily close below this level can put the single currency under pressure again.

GBPUSD

The British pound continues to fight for a clear direction in the near term.

As of now, the trend remains neutral, and traders should wait for more price action to confirm the next direction in this pair. Technically, the important support zone stands between 1.1990 and 1.1960 levels while the key resistance level is located at 1.2090.

Earlier this week, when looking at the RSI technical indicator, the pair showed a bullish divergence before bouncing from the daily support of 1.1920 which reinforces the probability of a bullish reversal in the coming hours.

However, a break above the 1.2045 hourly resistance followed by a daily close above the 1.2090 resistance is needed to confirm the positive scenario.

On the other side, a daily close below 1.1960 support will trigger strong selling pressure.

USDJPY

The bullish momentum remains intact in this pair as buyers aim for higher prices.

Looking at the recent price action, the pair managed to bounce back from the formerly broken resistance zone located between 135.35 and 135.00 levels. This zone is important in the short term as it stands near the rising trendline. Therefore, traders should expect this zone to switch roles and provide support for prices.

From a wider angle, the pair is following a series of higher highs and higher lows and buyers will likely target the hourly resistance of 136.50. The pair is expected to trade sideways to higher especially if we see a break above the resistance mentioned above which can open the way for a retest of the weekly highs at 136.90.

If the resistance holds, sellers can target lower prices with 135.70 as the first support, while a successful breakdown below it will likely expose the next support at 135.35.

USDCAD

The recent rally stalled at a key resistance level of 1.3665 which represents the highest point registered on the 6th of January as per the chart below.

Technically, the momentum remains positive as buyers managed to push prices above 1.3520. This level was acting as a formerly broken resistance and for the time being, it is playing the role of support.

From a wider angle, we can see that prices are trading sideways inside a wide range located between the 1.3700 peak and 1.3225 low, meanwhile, the near term has turned positive in this pair and prices are expected to stabilize in the coming hours.

From a technical standpoint, the nearest support lies at the 1.3560 level followed by 1.3535, on the other side, the closest resistance is located at 1.3620.

GOLD

Gold managed to bounce, and the recent recovery was able to overtake the falling trendline coming from 1870 peak.

We have witnessed more buying pressure yesterday after gold showed a double-bottom pattern from 1806 support earlier this week. The yellow metal succeeded to clear the short-term barrier of $1830 per ounce which keeps the current trend to the upside.

In the coming hours, we can see a downside correction of the recent advance, however, any drop is likely to be temporary and new buyers are expected around $1830 which will play the role of new support.

A continuation higher will likely target the next resistance zone which stands between the 1845 and 1851 levels. On the opposite, a break below 1830 can lead to a retest of an important support level located at the 1823 level.

Economic Analyst
Amine Hiani