01/03/2023 Daily Reports
- EUR/USD peaked at 1.0644, but turned south during the American afternoon and now hovers around 1.0590, down for the day and bearish in the daily chart.
- USD reverse early losses and finished the day unevenly across the FX board. Correlations were off amid month-end flows, although the risk-averse sentiment remained the same. Most European indexes finished the day in the red, while Wall Street ended mixed.
- The focus was on higher-than-anticipated inflation in Spain and France, boosting speculation the ECB will continue on the tightening path for longer than expected. Also, US Consumer Confidence fell for a second consecutive month in February, taking its toll on the Greenback. On a positive note, the report also showed inflation expectations decreased from the previous month.
- The EUR/USD pair is trading near the 1.0580, down for the day with bearish stance in daily chart. The pair still stabilized below 20 and 50 SMA, indicates bearish strength. Meanwhile, the 20 SMA started turning south and heading towards longer ones, suggests bears not exhausted yet. On upside, the immediate resistance is 1.0650, break above this level will extend the advance to 1.0700.
- Technical readings in the daily chart support the bearish stance. The RSI indicator stabilizes around 40. The Momentum indicator holds below the midline, indicating downward potentials. On downside, the immediate support is 1.0530 and below this level will open the gate to 1.0470.
- GBP/USD was making good ground on Tuesday following on from the rally that started on Monday in an agreement that was made and hailing the end of a tense dispute between Britain and the EU over Northern Ireland. The Pound Sterling climbed to a high of 1.2143 from 1.2026, but failed to hold that gains and back to 1.2055 area to ended the day.
- New trade rules were put together that could resolve import issues and border checks in Northern Ireland and that could help to ensure Northern Ireland was not somehow treated separately from the rest of the United Kingdom. The deal has been dubbed the “Windsor Framework” — a change to the original Northern Ireland Protocol — attempts to solve those issues.
- Also, the cost of insuring British government debt against default dropped to its lowest in three weeks, close to January’s five-month lows, reflecting greater investor confidence. But analysts said that any positives for the pound from the newly minted post-Brexit rules would likely not last, given the economic outlook.
- The GBP/USD offers bearish stance in daily chart. Cable stabilizes below 20 and 50 SMA, indicating bearish strength in short term. Meanwhile, the 20 SMA continued accelerating south and heading towards longer ones, suggests bears not exhausted yet. On upside, The immediate resistance is 1.2150 with a break above it exposing to 1.2270.
- Technical readings in the daily chart support the bearish stances. RSI indicator stabilizes around 46, while the Momentum indicator stabilizes below the midline, suggesting downward potentials. On downside, the immediate support is 1.1910, unable to defend this level will resume the decline to 1.1840.
- Gold price is recovering after hitting a new YTD low of $1804.78, rising above 1825. Factors like a mixed sentiment and a soft USD are tailwinds for the yellow metal, even though there are growing speculations for higher rates in the US. Hence, the XAU/USD is trading at $1827.5, above its opening price by 0.56%.
- The financial markets narrative has not changed. Last Friday’s US Core PCE, the Fed’s preferred gauge for inflation edging higher above expectations and closing to the 5% mark, caused a repricing for the Federal Funds Rate terminal rate. Money market futures estimates 25 bps rate increases in March, May, and June, which would drag the FFR to the 5.25% – 5.50% range. Nevertheless, some investors are betting the Fed will ease in Q4 2023.
- In the meantime, the US economic docket features housing data. According to the US Federal Housing Finance Agency’s data released on Tuesday, house prices in the US decreased by 0.1% from November to December. The S&P/Case-Shiller Home Price Index for December was also released and showed a year-over-year increase of 4.6%, lower than the previous month’s 6.8% and lower than the 6.1% estimated.
- Gold price stabilized around 1827, up for the day and bearish in the daily chart. The gold price stabilized below 20 and 50 SMA, suggesting bearish strength in short term. Meanwhile, the 20 SMA continued accelerating south and heading towards longer ones, indicating bears not exhausted yet. On upside, the immediate resistance is 1834, break above this level will open the gate for more advance to 1860 area.
- From a technical perspective, the RSI indicator holds below the mid-line and stabilizes around 40, on a bearish strength. The Momentum indicator hold below the midline, suggests downward potentials. On downside, the immediate support is 1800, below this area may resume the decline to 1788.
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- After hitting a new YTD high at 136.91, the USD/JPY fell short of piercing the 137.00 figure and is staging a recovery as the New York session progresses. At the time of writing, the USD/JPY is trading at 136.15, unchanged for the day.
- A fresh leg up in the US Treasury bond yields, bolstered by hawkish Fed expectations, helps revive the US Dollar demand, which, in turn, acts as a tailwind for the USD/JPY pair. The markets seem convinced that the US central bank will continue to tighten its monetary policy to bring inflation down back to the 2% target. The bets were reaffirmed by the stronger US PCE Price Index last week, which indicated that inflation isn’t coming down quite as fast as hoped. This remains supportive of elevated US bond yields and lends some support to the Greenback.
- The JPY, on the other hand, is weighed down by the overnight dovish remarks from the incoming BoJ Governor Kazuo Ueda. Addressing the upper house of the parliament, Ueda said that the benefits of the BoJ’s stimulus outweigh its side effects. He also stressed the need to maintain the ultra-loose policy to support the fragile economy and reinforced that the BoJ isn’t seeking a quick move away from a decade of massive easing. This, in turn, is seen as another factor that provides an additional lift to the USD/JPY pair.
- The USD/JPY pair stabilized around 136.15, unchanged for the day and bullish in the daily chart. The stabilizes above 20 and 50 SMA, suggests bullish strength in short term. Meanwhile, 20 SMA continued accelerating north and heading towards longer ones, indicating bulls not exhausted. On upside, overcome 137.00 may encourage bulls to challenge 138.20, break above that level will open the gate to 139.60.
- Technical indicators suggest the bullish strength. RSI stabilizes around 68, while the Momentum indicator stabilizes in the positive territory, suggests upward potentials. On downside, the immediate support is 135.20, break below this level will open the gate to 134.00 area.
- DJI still under the sell pressure, tumbled from intraday high 33020 area to low 32657. It recovered modestly and ended Tuesday around 32720, indicates bearish sign in the hourly chart. Right now market is standing below 20 and 50 SMA, maintains the downward slope, suggests bearish strength. Meanwhile, 20 and 50 SMA continued developing far below 200 SMA, suggests bears not exhausted yet. On upside, overcome 32850 may encourage bulls to challenge 33030, break above that level will open the gate to 33270.
- Technical indicators suggest the bearish movement. RSI stabilizes around 37, while the Momentum indicator stabilizes below the midline, suggests downward potentials. On downside, the immediately support is 32650, break below this level will open the gate for more decline to 32400 area.
- Brent continued the rally on Tuesday, advanced from intraday low 81.70 area to high 84.28. It retreated modestly and ended the day around 83.85. The price currently stabilizes above 20 and 50 SMA, suggests bullish strength in the hourly chart. Meanwhile, the 20 SMA continued accelerating north and developing above longer ones, indicates bulls not exhausted yet. On upside, overcome 84.30 may encourage bulls to challenge 85.70, break above that level will open the gate to 87.00.
- Technical indicators also suggest bullish movement, hovering above the midline. RSI climbs to 64, while the Momentum indicator stabilizes in positive territory, suggests upward potentials. On downside, the immediately support is 82.70, break below this level will open the gate for more decline to 81.70 area.
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