Daily Market Report

21/03/2023
10:26

Global stocks closed higher on Monday after UBS took over Credit Suisse which helped to ease investors’ fear. All three US indexes managed to end the day in positive territory with the Dow Jones gaining 1.20%, the S&P 0.89%, and the Nasdaq 0.39%. Meanwhile, gold rallied reaching the highest level for this year at $2010 per ounce before retreating.

“Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares,” UBS said in a statement yesterday. However, this transaction means a complete write-down of 16 billion CHF ($17.28 billion) of Credit Suisse bonds that will become worth nothing.

On the other side, New York Community Bancorp unit is set to buy Signature Bank assets as per the latest statement by the FDIC as regulators continue to look for rescue plans to halt the current banking crisis.

Later today, Canada’s CPI is expected to remain unchanged at 0.5% while in the US existing home sales are due to rise from 4.00M to 4.17M.

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

EURUSD

The Euro managed to bounce for the third time in a row from the daily support of 1.0525.
Moreover, the single currency managed to recover last week’s losses and closed above the 1.0700 psychological barrier on Monday.

Therefore, the positive momentum is likely to remain unchanged and prices are expected to trade higher in the coming hours toward the 1.0760 level followed by 1.0800 key resistance.

On the other hand, 1.0630 is considered the short-term level of support, and the Euro is expected to remain steady while trading above this level. Meanwhile, traders should keep an eye on the falling trendline drawn from the 1.0800 peak.

To conclude, the trend has changed from bearish to neutral, and if the pair holds above 1.0630 in the coming days, there is a high probability to see a bullish reversal and the Euro reaching 1.0800 key resistance.

GBPUSD

The British pound continues to advance after successfully breaking above the 1.2145 resistance last week.

For the time being, the momentum remains positive, and any potential decline is expected to be temporary. Technically, the pair is testing a strong resistance located at 1.2270 and if we see a continuation higher, buyers are expected to target the next barrier at the 1.2320 level.

On the opposite, if the pair fails to overtake the resistance level mentioned above, we will be looking for a short-term retracement toward the 1.2200 zone which is likely to turn into support before seeing another advance.

Finally, the trend remains on the upside and traders should focus on a continuation higher following a brief correction.

USDJPY

The pair is facing strong selling pressure and any recovery attempt is expected to fail below the 133.80 high in the coming days.

From a technical standpoint, the recent decline took the form of a series of lower highs and lower lows since forming a top on March 8th which reinforces the bearish outlook in this pair.
Looking at the key levels in the short-term, important support is located at 132.00 followed by 132.65, while 130.90-130.60 is likely to continue acting as the main support zone for the next hours.

Finally, a break below the support zone should trigger a strong decline in the direction of the 129.80 level, on the flip side, a daily close above 132.65 can weaken the negative outlook.

USDCAD

The pair failed to break above the 1.3810 resistance, and we have seen a new lower higher formed in the recent hours which might signal a pause in the current uptrend.

As of today, we will focus on the hourly support of 1.3650 as a break below it can confirm that the pair has entered a downside corrective phase. Sellers are expected to target the 1.3580-1.3555 support zone.
In the near term, if the pair manages to bounce from the current levels, a move back higher in the direction of 1.3740 will be possible.

To conclude, the bullish momentum has lost strength and the trend has become neutral which can lead to sideways trading in the near term, therefore, traders should wait for more price action to confirm the next direction in the future.

GOLD

Gold rallied on Monday during the first trading hours of the European session, reaching a new high for this year at $2010 per ounce.

The yellow metal remains in a strong uptrend, the advance is following a series of higher highs and higher lows, therefore, the bullish momentum is still intact. In the near term, the nearest support stands in 1965 and if gold continues to trade above it, prices might retest the 1990 hourly resistance initially. From an intraday point of view, a break of 1965 support should lead to a deeper correction in the direction of 1956 followed by 1947 levels before seeing the uptrend resume.

While on the higher time frames, the positive outlook will stay valid unless we see a daily close below the 1885 level which is considered the main support for this month.

Economic Analyst
Amine Hiani