Daily market report ​

The US Dollar extended its decline after the FED decided to raise interest rates by 25bps from 4.50% to 4.75 which is the highest since October 2007.
The FED continues to anticipate that ongoing increases will be appropriate to achieve a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.
Looking at today’s main economic releases, both the Bank of England and the ECB are expected to raise interest rates by 50bps. Traders will be waiting for Governor Bailey and President Lagarde’s speeches to guide their investment decisions.
In addition, US initial jobless claims are due to rise from 186K to 200K while factory orders forecasts are pointing for 2.3% compared to -1.8% previously.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.



The Euro rallied against the US Dollar following the latest interest rate decision by the FOMC. After finding strong demand near the 1.0800 psychological support earlier this week, the single currency succeeded to bounce back and break out higher above the 1.0930 key resistance level. Moreover, the pair has reached new highs for this year as we have seen the current rally extending above the 1.1000 mark reinforcing the bullish outlook. As of now, the trend is clearly to the upside and prices are likely to extend higher in the direction of the next barrier located at the 1.1055 level. On the other hand, any retracement is likely to find demand near the 1.0970 level which represents the short-term support in this pair.


The British pound remains firm as buyers managed to preserve the hourly support of 1.2280 which was tested several times in January. For the time being, the bullish trend remains dominant, however, it is still lacking momentum. After yesterday’s jump, the pair has entered a wide-range trading phase again located between the 1.2440 peak and 1.2280-1.2260 lows. From a wider angle, the pair continues to hold its positive price structure, which keeps odds in the favor of a higher breakout. Meanwhile, the confirmation will come only with a clear penetration of the 1.2440 resistance level, which will likely clear the path for a continuation higher in the direction of the 1.2500-1.2520 area. On the other side, if the pair stays below the resistance level mentioned above, the near-term trend should remain neutral in the coming hours.


USDJPY failed to overtake the 130.60 barrier, as highlighted in our previous reports which keep the dominant trend to the downside. When looking at the higher time frames we can see that the daily trend is strongly bearish, which keeps the negative outlook in this pair intact. In addition, we can witness that the short-term has turned bearish too, following yesterday’s breakdown below the 129.00 psychological support. Therefore, another wave of decline is expected in this pair that can extend to the next support which stands at the 128.20 level. To conclude, the upside potential in this pair is likely to remain limited and any recovery attempt may find strong sellers from the 129.00-129.20 which is seen as the new resistance zone.


Despite the current weakness in the US Dollar across the board. This pair has fallen but with a slow bearish momentum, making it the least attractive pair to trade between the majors. Looking at the daily chart, we can say that the main trend is still sideways in this pair, on the opposite, the short-term trend has turned bearish and should remain as it is if prices continue to trade below the 1.3380 high. Meanwhile, we can see an extension of the current decline in the direction of the 1.3230 level which represents the November low. From an intraday point of view, the nearest resistance lies at the 1.3300 level, while the next support is seen at the 1.3230 level.


Gold traded in line with our expectations and prices succeeded to rally strongly after breaking above two key resistance levels which are the 1935 and 1949 levels. Technically, the positive trend remains unchanged, and the bullish momentum has grown significantly, which might push the current advance toward the 1970 level in the coming days before seeing a price stabilization. However, the yellow metal should clear an important resistance located at the 1956 level first. In the meantime, any drop is likely to be temporary due to profit taking and we can see aggressive buyers from the 1947 level if tested later today. In extension, a deep correction can be challenged at the 1939 level which is considered an important support in the near term.

Economic analyst
Amine Hiani

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