08/02/2023 Daily Reports
EUR/USD
- The EUR/USD surged to high 1.0770 area post Fed Powell’s speech, but failed to hold that gains and back to 1.0730 area to ended Tuesday, still bearish in the daily chart.
- The steep sell-off in EUR/USD post-US NFP remains unabated on Tuesday and drags the pair to briefly test multi-week lows in the sub-1.0700 zone. In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB after the central bank delivered a 50 bps at its meeting last week.
- The US Dollar, as measured by the DXY index, fell from a high of 103.49 to a low of 103.001 after comments from Federal Reserve’s Jerome Powell circulated the wires. Powell is peaking at The Economic Club of Washington, D.C. Signature Event and repeated much of the same as he did at the press conference that followed last week’s interest rate decision.
- The EUR/USD pair is trading near the 1.0730, down for the day with bearish stance in daily chart. The pair 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 1.0800, break above this level will extend the advance to 1.0930.
- Technical readings in the daily chart support the bearish stance. The RSI indicator stabilizes around 46. The Momentum indicator holds near the midline, indicating neutral potentials. On downside, the immediate support is 1.0670 and below this level will open the gate to 1.0580.
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GBP/USD
The GBP/USD made a big jumped just after Powell’s speech, surged to high 1.2095 area. However, it failed to hold that gains and back to 1.2045 to ended Tuesday, slightly up for the daily and bearish in the daily chart.
The US Dollar, as measured by the DXY index, fell from a high of 103.49 to a low of 103.001 after comments from Federal Reserve’s Jerome Powell circulated the wires. Powell is peaking at The Economic Club of Washington, D.C. Signature Event and repeated much of the same as he did at the press conference that followed last week’s interest rate decision.
Meanwhile, the UK’s Monetary Policy Committee recently raised its policy rate by 50bp to 4.00%, which was in line with consensus but above our forecast for a 25bp hike. The vote was split 7-2, with the two members voting against preferring no change at all in Bank Rate. However, the Bank of England is now moving into data-dependent mode and given that inflation is expected to be significantly lower by year-end and prospects of a rising unemployment rate, there are downside risks for the Pound should the BoE flip the script.
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 started turning south and heading towards longer ones, suggests bears not exhausted yet. On upside, The immediate resistance is 1.2100 with a break above it exposing to 1.2260.
Technical readings in the daily chart support the bearish stances. RSI indicator stabilizes around 37, while the Momentum indicator stabilizes below the midline, suggesting downward potentials. On downside, the immediate support is 1.1960, unable to defend this level will resume the decline to 1.1840.
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XAU/USD
- Gold consolidated in the familiar range between 1960 to 1884 despite Powell’s speech made big volatile in FX market. It stabilized in the familiar range to ended Tuesday, still bullish in the daily chart.
- US Federal Reserve Chairman Jerome Powell participated in a moderated discussion at the Economic Club of Washington DC. He repeated his hawkish message, stating they would probably need to do further interest-rate increases adding that the process is going to be “bumpy.” The market welcomed the concept delivered by Powell that stronger than anticipated data will see the Fed raising rates accordingly.
- The US Dollar fell as Wall Street soared as an immediate reaction. Nevertheless, he then added that strong labour market report, or higher inflation reports will result in the Fed raising rates by more than what is currently priced in. The USD recovered as stocks collapsed to fresh daily lows, but then again changed course and finished the day with substantial gains.
- Gold price stabilized around 1869, unchanged for the day and neutral to bearish in the daily chart. The gold price stabilized between 20 and 50 SMA, suggesting neutral to bearish strength in short term. However, the 20 and 50 SMA continued accelerating north and developing above 200 SMA, indicating bulls not exhausted yet. On upside, the immediate resistance is 1896, break above this level will open the gate for more advance to 1920 area.
- From a technical perspective, the RSI indicator holds below the mid-line and stabilizes around 45, on a bearish strength. The Momentum indicator to the midline, suggests directionless potentials. On downside, the immediate support is 1860, below this area may resume the decline to 1830.
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USD/JPY
- The USDJPY erased Monday’s gains and collapsed to the 131.00 area after hitting a week-high of 132.90. Intervention by Japanese authorities weakened the USD, giving way to a 140 pip drop. At the time of writing, the USD/JPY exchanges hand at 131.20, below its opening price by 1.08%.
- Tuesday’s resurgence of the selling pressure in spot comes amidst the pick-up in the risk-off sentiment, which eventually lends support to the demand for the Japanese safe haven.
- Additionally, the mixed performance in US yields see the short end of the curve giving away part of the recent strong advance vs. extra gains in the belly and the long end. In the Japanese debt market, the JGB yields drop marginally below the 0.50% level. Data wise in Japan, Household Spending dropped 1.3% in the year to December, while advanced prints for the same month saw the Coincident Index and the Leading Economic Index at 98.9 and 97.2, respectively.
- The USD/JPY pair stabilized around 131.20, down for the day and bullish in the daily chart. The price broke above the downward bearish trend line and develops above 20 SMA, suggests bullish strength in short term. However, 20 SMA started turning flat but continued developing far below longer ones, indicating bears not exhausted. On upside, overcome 131.50 may encourage bulls to challenge 133.00, break above that level will open the gate to 134.70.
- Technical indicators still suggest the neutral strength. RSI climbs to around 52, while the Momentum indicator stabilizes just below the midline, suggests downward potentials. On downside, the immediate support is 130.50, break below this level will open the gate to 129.00 area.
DJI
- DJI was very volatile on Tuesday due to Powell’s speech, tumbled to intraday low 33660 area, but trimmed all the losses and surged to 34160 to ended Monday, up for the day and indicates bullish sign in the hourly chart. Right now market is standing far above 20 and 50 SMAs, suggests bullish strength. Meanwhile, 20 SMA started turning north and heading towards 200 SMA, suggests bulls not exhausted yet. On upside, overcome 34230 may encourage bulls to challenge 34400, break above that level will open the gate to 34680.
- Technical indicators suggest the bullish movement, developing below the mid-line. RSI stabilized around 59, while the Momentum indicator hovering above the midline, suggests upward potentials. On downside, the immediately support is 33600, break below this level will open the gate for more decline to 33350 area.
BRENT
- The Brent continued the advance on Tuesday, climbed from intraday low 81.40 area to high 83.90 and hold near the top to ended Tuesday. The price now stabilizes above 20 and 50 SMA, suggests bullish strength in the hourly chart. Meanwhile, the 20 SMA continued accelerating north and developing towards longer ones, indicates bulls not exhausted yet. On upside, overcome 84.20 may encourage bulls to challenge 86.10, break above that level will open the gate to 87.20.
- Technical indicators also suggest bullish movement, hovering above the midline. RSI climbs to 73, while the Momentum indicator stabilizes in positive territory, suggests upward potentials. On downside, the immediately support is 82.90, break below this level will open the gate for more decline to 81.40 area.
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