Daily Market Report

03/03/2023
11:24

US stocks closed higher on Thursday after being under pressure since the beginning of the week. The turnaround came after comments from Atlanta Federal reserve Bostic, who reiterated his support for a 25bps hike.

In the FX market, major currencies were down against the US Dollar while gold prices remain steady. Later today, both composite and services PMIs in the UK are expected to rise to 53.0 and 53.3 up from 48.5 and 48.7 respectively.

In Canada, traders will be looking for January building permits figures which are due to rise from -7.3% up to 1.5%. A few moments later, the US services PMI will be released and forecasts are pointing to a higher reading.

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

EURUSD

The Euro retreated near the 1.0700 psychological barrier following the latest inflation data from the Eurozone.

Looking at the short-term price action, we can see that the pair is trading inside a falling channel which keeps the downside pressure intact. However, new buyers are likely to appear from the key support level of 1.0565 if tested in the coming hours.

For the time being, we might see a bounce in the Euro ahead of the weekly close, in the meantime, traders should keep an eye on the hourly support of 1.0565 while the nearest resistance stands at 1.0630.

To conclude, the trend has turned neutral in the near term, and the Euro is likely to trade sideways in the coming hours as further price action is needed to confirm the next direction.

GBPUSD

The British traded lower as sellers pushed prices lower toward a crucial support zone located between 1.1925 and 1.1910 levels.

As of now, the momentum remains negative, and any potential recovery is expected to face new sellers from the 1.1965-1.1990 resistance zone. From a wider angle, buyers will try to protect February lows at 1.1915 and if this level holds, we might see a bounce in the coming hours toward the resistance zone mentioned above.

To conclude, despite the current downside trend, the pair is lacking strong bearish momentum which can lead to a bullish reversal if we do see a close above the 1.1990 level.

On the opposite, a clear breakdown below 1.1900 psychological support should lead to a strong sell-off that can extend to as low as 1.1840 level.

USDJPY

This pair traded briefly above the 137.00 barrier, before ending the day a few points below it.

From a technical standpoint, the upside pressure remains intact, and buyers are expected to challenge yesterday’s high again. The pair is showing a series of higher highs and higher lows since February the 10th which keeps the downside risks limited.

From an intraday perspective, important support is located at the 136.25 level while the 137.00 handle is likely to continue acting as the main resistance.

In the short term, we might see a downside retracement on the back of potential profit-taking, however, any drop is likely to be temporary while prices remain above the 135.30 low.

USDCAD

The pair entered a consolidation phase after reaching a key resistance level located at 1.3665 which represents the highest point registered on the 6th of January.

Last week, buyers succeeded to push prices above 1.3520. This level was acting as a formerly broken resistance and for the time being, it is expected to act as support.

In the near term, we can see that prices are trading sideways inside a range located between the 1.3665 high and 1.3535 low, consequently, traders should wait for a clear break outside of this band for future guidance.

To conclude, the nearest support lies at the 1.3560 level followed by 1.3535, on the other side, the closest resistance is seen at 1.3630.

GOLD

Gold was little changed yesterday after finding support as mentioned in our previous report.

The yellow metal managed to overtake the short-term barrier of $1830 and stabilized above it which reinforces the bullish reversal scenario. In addition, the falling trendline drawn from the 1870 peak was broken, which supports the positive momentum.

In the coming hours, buyers are expected to aim for higher prices and gold is likely to target the next resistance zone located between 1845 and 1851 levels.

The positive outlook will stay valid unless we see a daily close below the 1823 level which is considered the main support level in the near term. Meanwhile, 1830 will continue to act as an important demand accumulation level in the coming hours.

Economic Analyst
Amine Hiani