Daily Market Report

09/05/2023
11:08

US stocks were little changed on Monday as investors await the US inflation report due on Wednesday.
The Dow lost 0.17%, the Nasdaq added 0.18% while the S&P500 closed near the flat line adding 0.05% only. In the FX Market, the US Dollar traded higher against its major pairs following a strong jobs report on Friday. On the other side, Gold remains steady above the $2000 mark despite Dollar strength.
As of today, there are only a few economic releases to drive market volatility. In the US, the NFIB small business index is expected to have declined from 90.1 down to 89.6. Later on, investors will be looking at both FOMC’s Jefferson and Williams speeches.
Below, we will be analyzing the latest price action developments in the major currency pairs alongside gold.

EURUSD

The Euro retreated after failing to overtake the 1.1100 barrier which can lead to a retest for the hourly support zone located between the 1.0965 and 1.0940 levels.

Looking at the higher time frames, the Euro is still in an uptrend, however, in the near term turned neutral with a clear lack of bullish momentum. Consequently, we will have to wait for a successful breakout above the 1.1100 resistance in the coming days to confirm another extension to the upside which can target the next resistance located at the 1.1180 level.

Otherwise, a daily close below the support zone mentioned above is likely to lead to more downside in the direction of 1.0830.

GBPUSD

The British pound found sellers from the 1.2670 resistance levels as traders await the Bank of England rate decision later this week. 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, the current decline should be considered a temporary correction before the upside trend resume. As of today, the key support zone stands between 1.2570 and 1.2550 levels from where we can see a bounce if reached. On the opposite, if the mentioned above support zone holds, a move back higher toward 1.2650 will be highly anticipated.

USDJPY

The pair managed to recover some of last week’s losses boosted by stronger than expected job report in the US.
As mentioned in our previous report, the recent break above the falling trendline turned out to be a false breakout, therefore, the trend has turned to neutral, and we expect this pair to continue trading sideways in the coming hours.
Meanwhile, if the pair remains below the 135.75-1.3600 resistance zone, sellers will try to push prices lower toward the 134.65 hourly support. Moreover, a break below this support should lead to a new wave lower in direction 134.00 psychological support.
From an intraday point of view, traders should wait for a break below 134.65 support to confirm the start of a short-term decline.

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 pair extended its decline after breaking below the hourly support of 1.3530 which is now considered as a new resistance.
For now, the short-term trend turned bearish which reinforces the probability of a continuation to the downside in the direction of the next support at 1.3300. Any bounce is likely to be temporary and face strong sellers while the pair stays below 1.3530 resistance, therefore, traders should focus on the dominant trend only which is the downside.
In the near term, the 1.3410-1.3450 zone is likely to act as a key resistance in the face of any recovery attempts.

GOLD

Gold faced heavy selling pressure following the NFP report on Friday after testing its all-time-high levels.
From a wider angle, the trend remains bullish in gold, and we might see another breakout attempt in the coming days while staying above last week’s lows. The recent drop is corrective only as the momentum is still positive.
For the time being, all eyes will be on the $2000 psychological support. If the yellow metal succeeds to stay above it in the coming hours, the upside momentum will likely increase gradually, and we might see another retest of the $2040 resistance.
On the other side, the nearest support zone is located between $2017 and $2012 per ounce.

Economic Analyst
Amine Hiani