Daily market report

23/03/2023
10:08

The Federal Reserve raised interest rates by 25 bps on Wednesday as the Fed remains cautious about the recent banking crisis.
US stocks turned sharply lower after being in positive territory, at the same time, the US Dollar weakened across the board while Gold rallied to reach the 1978 level.
The central bank said that additional policy firming may be appropriate, however, following Jerome Powell’s press conference, investors are expecting the rate hike cycle to come to an end in the coming months.
In addition, Powell acknowledged that “the recent events in the banking system were likely to result in tighter credit conditions.”
Later today, the Bank of England is expected to raise interest rates from 4.00 to 4.25%. In the US, initial jobless claims are due to rise from 192K to 197K, on the opposite, forecasts are pointing to a decline in new home sales.
Below, we will be analyzing the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro extended its advance on Wednesday after buyers managed to push prices above the 1.0800 psychological barrier.
The positive momentum is still in place which can lead to a continuation higher toward the 1.0940 resistance level in the coming days. Meanwhile, any potential downside retracement is likely to find strong buyers at the 1.0800 level which is expected to switch its role and become support.
To conclude, the trend has changed from bearish to bullish in the near term, and if the pair continues to hold above 1.0760 support, the downside risks will be limited.

GBPUSD

The British pound closed yesterday near the hourly resistance of 1.2270 after reaching a high of 1.2335 following the FED rate decision. For the time being, the momentum remains positive, and any potential decline is expected to be temporary while above 1.2200-1.2180 levels which represents the support zone. Moreover, since forming a low at 1.1800 earlier this month, the pair had traded higher following a series of higher highs and higher lows which reinforces the bullish outlook. Finally, traders can look for a retest of the 1.2335 high, however, a short-term retracement remains possible before a continuation higher begin.

USDJPY

The pair faced heavy selling pressure after testing the hourly resistance of 132.70 as mentioned in our previous reports. Prices reached a high of 133.00 before reversing lower and giving back previous gains.
From a technical standpoint, the downside trend is intact, and if the pair continues to trade below the 134.00 level, a continuation lower will be highly anticipated. In the near term, the nearest support is located at 131.00 followed by 130.55 level. On the opposite, we expect sellers to appear near the 131.80 followed by the 132.25 level if tested.
Finally, the negative outlook is dominant as the upside potential remains limited.

USDCAD

The pair entered a congestion phase, and we expect prices to trade sideways in the next hours until we see a clear break outside of this rangebound.
As of now, the focus remains on the hourly support of 1.3650 as a break below it can confirm the next leg lower in the direction of the 1.3580-1.3555 support zone.
In the near term, we can see that prices jumped for the third time in a row from the 1.3650 support which reinforces the possibility of a move back higher in the direction of the 1.3775 resistance.
To conclude, 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

After failing to overtake the $2000 barrier, the yellow metal dropped to reach a key support zone located between the 1937 and 1929 levels before bouncing strongly.
Currently, gold remains in a strong uptrend as the recent advance is following a series of higher highs and higher lows, therefore, the bullish momentum is still intact. In the near term, we might see price stabilization with a focus on the nearest resistance zone which stands between the 1985 and 1990 levels.
From an intraday standpoint, any possible decline should be considered as corrective only and traders will be looking for new support around $1953 per ounce initially before another wave higher begins.

Economic Analyst
Amine Hiani