Daily market report

28/03/2023
11:22

US stocks closed slightly higher on Monday as banking crisis fears eased following the recent Silicon Valley bank deal.
First Citizens agreed to buy SVB assets while technology shares declined to limit Monday’s gains. The S&P500 index rose by 0.2%, the Dow was up 0.6% while the Nasdaq lost 0.5%.
On the other side, Gold traded lower reaching a low of $1944 per ounce while Crude Oil prices rallied approaching $73 per barrel.
Later today, a few economic releases are due, while the focus will be on ECB president Lagarde’s speech.
Below, we will be analyzing the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro bounced on Monday after reaching the 50% Fibonacci retracement which stands at the 1.0720 level.
Looking at the short-term price action, we can see that the uptrend remains intact as the old resistance of 1.0760 turned into support. In the coming hours, the Euro is expected to hold steady while remaining above the rising trendline drawn in the chart below. Therefore, the downside potential is likely to be limited in the Euro continues to hold above the 1.0715 low.
In the short term, the pair is expected to trade higher toward the 1.0840 level, representing a strong resistance.
To conclude, the recent decline should be considered temporary, and the Euro buyers will likely aim for the 1.0840-1.0870 zone before seeing a price stabilization.

GBPUSD

The British pound managed to recover from Friday’s losses as buyers succeeded to protect the 1.2180 support as mentioned in our previous report.
For the time being, the momentum remains positive, and a continuation higher in the direction of 1.2350 remain possible, while a successful break above it, should lead to another rally toward the 1.2400 psychological barrier.
On the other side, any decline is expected to be limited and face new buyers from the 1.2280-1.2260 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 1.2180 support.

USDJPY

This pair remains under pressure as prices continue to show a series of lower highs and lower lows since the beginning of March.
In the near term, the trend is down, and sellers are expected to keep control if the pair continues to trade below the 131.80 level which is considered the hourly resistance. On the opposite, we might see a recovery attempt from the 130.50 which represents strong support.
From an intraday perspective, we might see a bounce on the back of profit-taking as the pair remains extended to the downside, meanwhile, any potential advance is likely to be short-lived as the bearish momentum is still strong.
Finally, the negative outlook should persist while below the 131.80 resistance, and a breakdown below 130.50 support is needed to confirm a new wave lower in this pair.

USDCAD

The pair showed signs of weakness after sellers managed to push prices below the important support of 1.3650.
As of today, we will focus on this level as a successful breakdown below it is likely to trigger another sell-off in the direction of the next support zone located between the 1.3580 and 1.3550 levels. Looking at the chart below, we can see that demand is weakening as the pair failed to overtake the 1.3800 resistance twice.
In the near term, prices are challenging the lower band of the recent range located between the 1.3810 high and 1.3630 low, consequently, traders should wait for a clear break outside of this band to confirm the next direction.

GOLD

Gold failed to hold post-FOMC gains as the bullish momentum started to weaken in the short term.
Following the recent advance, the yellow metal has tested a key psychological resistance of $2000 per ounce before retreating. Moreover, on Monday we have seen a break below the hourly support of 1967 which can lead to a continuation lower in the direction of the 1943-1935 support zone.
However, the current decline is likely to be temporary as the trend remains to the upside on the higher time frames. Meanwhile, traders should wait for clear signs of positive trend reversal before looking for a continuation higher.
In addition, prices broke below the rising trendline as per the chart below, which reinforces the probability of a deeper correction to the downside before the uptrend resume.
To summarize, if gold manages to hold above the support zone mentioned above, a move back higher in the direction of the 1967 level will be highly anticipated, on the opposite, a breakdown below the 1943-1935 support zone is expected to clear the path for 1925 followed by 1913 level in extension.

Economic Analyst
Amine Hiani