03/01/2023 Daily Reports
- The Euro (EUR) sheds some ground against the US Dollar (USD) on the first trading day of 2023 amidst thin liquidity conditions in the financial markets. The release of S&P Global PMIs in the Eurozone failed to bolster the shared currency on Monday. At the time of writing, the EUR/USD is trading at 1.0657 after hitting a daily high of 1.0699.
- European equities are trading in the green. S&P Global revealed the Purchasing Managers Index (PMI) for factory activity in the EU, which came mixed with Spain and France’s Manufacturing PMI exceeding estimates, contrarily to Germany, which extended its downward trajectory to 47.1. Italy and the whole Euro area remained unchanged, each at 48.5 and 47.8.
- In the meantime, the Bundesbank President and European Central Bank (ECB) policymaker Joachim Nagel crossed newswires on a German newspaper, and he said he’s optimistic that Germany can avoid a serious economic slump. Nagel added that the ECB was not seeing a wage spiral and reiterated that the ECB needs to take further action to curb inflation expectations.
- The EUR/USD daily chart suggests the pair might be peaking at around 1.0700, unable to crack in December, and it’s trimming some of its early gains, edged toward 1.0660s. Even though it broke above an eight-month-old downslope trendline, the EUR/USD faltered to extend its gains, opening the door for a re-test of the previously mentioned trendline at around 1.0550.
- Technical readings in the daily chart support neutral. The RSI indicators started to aim down, suggesting that sellers are beginning to gather momentum. Therefore, the EUR/USD first support would be the 1.0600 mark, followed by the 20-day Exponential Moving Average (EMA) at 1.0584, ahead of 1.0550.
- GBP/USD stretched lower to the 1.2050 area in the early European morning after having spent the Asian session moving sideways in a very tight range slightly below 1.2100.
- Markets seem to have turned cautious on the first trading day of 2023 but trading volumes remain thin with the observance of the New Year holiday in major economies. Investors grow increasingly concerned over the impact of the surging number of coronavirus cases in China on the global economic activity as the country stays on the reopening path.
- Additionally, the data from China over the weekend revealed that NBS Manufacturing PMI and the Non-Manufacturing PMI declined to 47 and 41.6 in December, respectively, pointing to a contraction in business activity ay an accelerating pace.
- The FOMC will publish the minutes of its December meeting on Wednesday and investors will look for fresh clues regarding the Fed’s near-term policy outlook. The ISM Manufacturing and Services PMI surveys, the ADP’s private sector employment report and December Nonfarm Payrolls data will also be featured in the US economic docket later in the week.
- The GBP/USD offers neutral to bearish stance in daily chart. Cable stabilized between 20 and 50 SMA, indicating neutral strength in short term. However, the 20 SMA started turning south and heading towards 50 SMA, suggests bears not exhausted yet. On upside, The immediate resistance is 1.2150 with a break above it exposing to 1.2250.
- Technical readings in the daily chart support the neutral to bearish stances. RSI indicator stabilized around 50, while the Momentum indicator stabilized below the midline, suggesting downward potentials. On downside, the immediate support is 1.1990, unable to defend this level will resume the decline to 1.1900.
- Gold prices are hovering around $1,824 about to end 2022 practically flat for a wild year. On Friday, XAU/USD rose to as high as $1,826 and hold nearby. The bias point to the upside and still bullish in the daily chart.
- Economic optimism and hopes of lower rates likely to have favored gold buyers could be the recently softer US data, as well as a pullback in the US Treasury bond yields. It’s worth mentioning that Asian economies like India and China are likely to be the growth engine in the next and could help the Gold buyers to keep the reins due to their higher consumption of the bullion.
- Alternatively, Covid woes in China and the geopolitical fears surrounding Ukraine could join the recent weakness in global equities, on a monthly and quarterly basis, to probe the Gold buyers. Additionally, a light calendar and the holiday mood also challenge the metal’s recent moves.
- Gold price stabilized around 1824.5, up for the day and bullish in the daily chart. The gold price still stabilized above 20 and 50 SMA, suggesting bullish strength in short term. Meanwhile, the 20 SMA continued accelerating north and developing above 50 SMA, indicating bulls not exhausted yet. On upside, the immediate resistance is 1834, break above this level will open the gate for more advance to 1858 area.
- From a technical perspective, the RSI indicator hold above the midline and stabilized around 60, suggesting bullish strength. The Momentum indicator stabilized above the midline, suggests upward potentials. On downside, the immediate support is 1797, below this area may resume the decline to 1784.
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- The USD/JPY is testing the December lows near 130.60, falling for the third day in a row on a quiet session with US markets closed. Price action remains limited across the FX board and the Yen is among the top performers. The pair is falling for the third consecutive day and is approaching the December intraday low at 130.56. A slide below would put the USD/JPY at the lowest level since August 2. Last Friday, it posted the lowest daily close since early June.
- Wall Street is closed on Monday. On Tuesday, market activity will return to normal. The economic calendar shows key events ahead in the US with the FOMC minutes on Wednesday and the official US employment report on Friday. The employment numbers and the FOMC minutes will likely weigh on market expectations regarding monetary policy.
- The USD/JPY lost more than 5% in December after losing 8.50% in November. The decline was helped by the change in the Bank of Japan’s Yield Curve Control allowing a bigger price range in the 10-year JGB. Market participants saw that as a sign of a potential shift in BoJ’s ultra-dovish monetary policy, reducing the divergence with the Fed.
- The bias remains bearish for USD/JPY. A slide under 130.50 would expose the next support at 130.35 and then the 130.00. Earlier on Monday, the pair tested levels above 131.00 but it was rejected and pulled back. A consolidation above could trigger a deeper bullish correction. Only a break above 135.20 would change the current bearish short-term outlook to neutral/bullish.
- Technical indicators also suggest the bearish strength. RSI stabilized around 33, while the Momentum indicator continued developing below the midline, suggests downward potentials.
- DJI under the sell pressure, tumbled from intraday high 33450 area to low 33000. It made a U turn and surged to 33310 area to ended the year, slight down for the day and bullish in the daily chart. The price stabilize above 20 and 50 SMA, suggest bullish strength in short term. Meanwhile, 20 SMA started turning flat but continued trading above 50 SMA, suggest bulls not exhausted yet. On upside, overcome 33460 may encourage bulls to challenge 33570, break above this level will open the gate to 34000.
- Technical indicators suggest the bullish strength. RSI stabilize at around 56, while the Momentum indicator stabilize in positive territory, suggest upward potentials. On downside, the immediate support is 33300, break below this level will open the gate for more decline to 33000 area.
- Brent continued the advance, climbed from intraday low 82.80 to intraday high 86.00 and ended the year nearby, up for the day and bullish in the hourly chart. The price stabilizes above 20 SMA and 50 SMA, suggests bullish strength in short term. Meanwhile, the 20 SMA continue accelerating north and developing above 50 SMA, indicating bulls not exhausted yet. On upside, overcome 86.10 may encourage bulls to challenge 88.10, break above this level will open the gate to 89.10.
- Technical indicators suggest the bullish movement, hovering above the midline. RSI stabilize at around 70, while the Momentum indicator stabilize in positive territory, suggest upward potentials. On downside, the immediate support is 84.00, break below this level will open the gate for more decline to 82.90 area.
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