Daily market report

24/03/2023
10:22

All major US indexes edged higher on Thursday despite rising volatility as investors remain cautious about the FED’s next move.
Stocks were up before retreating at the end of the day, the downturn started a few moments before Treasury Secretary Janet Yellen’s speech.
Yellen said that the government has used important tools to act quickly to prevent contagion in the banking sector and that some of those tools can be used again to ensure the safety of deposits.
On the other side, the Bank of England raised interest rates by 25bps as the central bank continues to fight high inflation.
In the FX market, major currencies were down against the US Dollar while gold prices remain steady. Later today, UK retail sales are expected to fall from 0.5% down to 0.2%.
In Canada, traders will be looking for January retail sales figures which are due to rise from 0.5% up to 0.7%. A few moments later, the US services PMI will be released, and forecasts are pointing to a lower reading.
Below, we will be analyzing the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro retreated near the 1.0940 resistance level mentioned in our previous report due to profit-taking ahead of the weekly close.
Looking at the short-term price action, we can see that the pair is trading in an uptrend. However, in the coming hours, we might see a continuation lower in the direction of the 1.0800-1.0760 zone which is likely to act as support before seeing a bounce. Therefore, the current retracement is expected to be limited if the Euro continues to hold above the 1.0700 level.
In addition, the single currency managed to overtake the falling trendline as per the chart below, which keeps the bullish momentum intact.
To conclude, a temporary drop is highly anticipated in the Euro followed by a continuation higher after reaching the support zone highlighted above.

GBPUSD

The British pound retreated yesterday as sellers pushed prices lower following the Bank of England rate decision.
As of now, the momentum remains positive, and any potential decline is expected to face new buyers from the 1.2220-1.2180 support zone. From a wider angle, the trend is likely to stay to the upside in the coming days if the pair manages to hold above the 1.2010 low registered last week.
On the opposite, a continuation higher should target the next barrier at the 1.2340 level followed by key resistance at 1.2400 which represents the February high.

USDJPY

This pair traded in line with our expectations after prices failed to overtake the hourly resistance of 131.80 which keeps the downside pressure intact.
From a technical standpoint, the trend is down, and sellers are expected to challenge the hourly support of 1.3050. Moreover, the pair is showing a series of lower highs and lower lows since the beginning of this month, reinforcing the bearish momentum.
From an intraday perspective, important resistance is located at the 131.00 level while the 130.50 is likely to continue acting as the main support, meanwhile, a break below it should expose the next support at 129.80 in the coming hours.
In the short term, we might see a limited retracement before new sellers appear.
Finally, any bounce is likely to be temporary while prices remain below the 131.00 resistance.

USDCAD

The pair dropped below the 1.3650 hourly support initially, however, buyers succeeded to push prices back up and we have seen a close on the positive territory above the 1.3700 level which signals that the recent breakdown was not valid.
Looking at the chart below, we can see that demand is increasing and prices are likely to extend higher toward the 1.3750-1.3775 resistance zone.
In the near term, we can see that prices are trading sideways inside a range located between the 1.3810 high and 1.3630 low, consequently, traders should wait for a clear break outside of this band for future guidance.

GOLD

Gold extended its advance yesterday as the bullish momentum remain strong.
The yellow metal managed to overtake the short-term barrier of $1985 and stabilized above it, which reinforces the bullish outlook. At the same time, prices need to break above this week’s high of $2010 to clear the path for another rally.
In the coming hours, we might see price stabilization, in the meantime, buyers are expected to keep control if prices manage to hold above the 1967 support. Only a daily close below this support should weaken the current uptrend.
Moreover, traders should keep an eye on the rising trendline to assess the strength of the existing uptrend.

Economic Analyst
Amine Hiani