Daily Market Report

05/05/2023
11:50

The ECB joined the FED and raised key interest rates by 25 bps from 3.50% to 3.75% on Thursday meeting expectations. The Euro dropped below the 1.1000 mark for a short period following the decision before bouncing back.

In addition, the USD Dollar extended its decline while Gold remains firm as prices hover around $2050 per ounce. In the US stock market, indices continue to face selling pressure for the fourth day on renewed bank concerns.

The Dow shed 0.86%, and the Nasdaq slid 0.49% while the S&P500 retreated by 0.72% with the main earning release coming from Apple. The tech giant’s sales fell for the second quarter in a row, meanwhile, the company reported Q2 earnings that came out above expectations.
Apple shares were up 2.49% in extended trading hours.

Looking now at the key economic releases for today, the focus will be on the US Non-farm payrolls which are expected to have declined in April from 236K down to 181K only. In the meantime, the unemployment rate is due to rise from 3.5% up to 3.6% while average hourly earnings are likely to remain unchanged at 0.3%.

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

EURUSD

The Euro dropped briefly below the 1.10000 mark following the ECB rate decision before bouncing back as the pair remain firm.

Looking at the higher time frames, the Euro is still in an uptrend, however, in the near term the trend is neutral, and we will have to wait for a successful breakout above the 1.1100 barrier in the coming hours to confirm another extension to the upside which can target the next resistance located at the 1.1180 level.

On the opposite, an important support zone stands between the 1.0985 and 1.0940 levels, consequently, the bullish momentum should remain in place while the single currency continues to trade above this zone.

GBPUSD

The British pound was little changed on Thursday as buyers remain in control.

From a technical standpoint, the pair remains in an uptrend in the higher time frames, and the bullish momentum is expected to stay unchanged if the Sterling continues to trade above the 1.2435 low. Therefore, later today we will be looking for a breakout confirmation of the 1.2590 resistance to anticipate another advance in the direction of the 1.2670 level.

On the opposite, any decline is likely to be temporary as the short-term trend is expected to stay strong while the pair is holding above the 1.2550-1.2535 support zone.

USDJPY

The pair extended its decline for the third day in a row as expected.

As mentioned in our previous report, the recent break above the falling trendline turned out to be a false breakout, therefore, sellers took control of this pair, and the current decline is expected to continue toward the 133.50-133.35 support zone in the coming hours.
The trend is likely to remain intact while the pair continues to trade below the 134.85 high.

From an intraday point of view, the nearest resistance stands at 134.30 and any potential bounce should find new sellers from it.

USDCAD

The pair traded in line with our expectations as prices turned lower from a key resistance level located at 1.3670. In addition, the falling trendline shown in the chart below continues to play as a strong barrier to prices.

For now, the short-term trend became bearish which reinforces the probability of a continuation to the downside in the direction of the next support at 1.3470. On the other side, the trend remains neutral when looking at the higher time frames.

Finally, the 1.3540-1.3580 zone is likely to act as a key resistance in the near term, capping all recovery attempts.

GOLD

Gold traded sideways yesterday following the recent rally that followed the latest FED rate decision.

For the time being, it is important to note that both the short and long-term trends are positive in gold. Therefore, the yellow metal is expected to stay strong while the 2030 support holds.
In extension, key resistances are at $2057 followed by $2063.

On the other side, the nearest support is located at $2043 per ounce and high volatility is likely during the NFP release.

Economic Analyst
Amine Hiani