09/02/2023 Daily Reports
- The EUR/USD still trades in the familiar range, between high 1.0760 and low 1.0706 area. It failed to make a breakout on upside and continued under the sell pressure. It ended the day around 1.0725, still bearish in the daily chart.
- The US Dollar comes under some renewed selling pressure amid a modest downtick in the US Treasury bond yields and turns out to be a key factor acting as a tailwind for the GBP/USD pair. Fed Chair Jerome Powell failed to offer fresh hawkish signals on Tuesday and reiterated that the process of disinflation was underway. This, in turn, raises hopes that interest rates may not rise much further, which, in turn, exerts some downward pressure on the US bond yields and undermines the Greenback.
- The Euro remains among the weakest US Dollar rivals, currently trading at around 1.0725. European Central Bank (ECB) officials were on the wires repeating their hawkish rhetoric. ECB policymaker Klaas Knot said that headline inflation appears to have peaked but added that keeping the current pace of hikes into May could well be needed if underlying inflation does not materially abate.
- The EUR/USD pair is trading near the 1.0725, unchanged 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 42. The Momentum indicator holds below the midline, indicating downward potentials. On downside, the immediate support is 1.0670 and below this level will open the gate to 1.0580.
- The GBP/USD pair builds on the overnight bounce from the 1.1960 area, or over a one-month low and gains some positive traction for the second successive day on Wednesday. Spot prices, however, struggle to capitalize on the move or find acceptance above the 1.2100 mark and retreat around 35 pips from the daily top. The pair is currently placed around the 1.2075 region, still up over 0.30% for the day.
- The prevalent risk-off environment – as depicted by a generally weaker tone around the equity markets – assists the safe-haven US Dollar to recover a major part of its intraday losses. This, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair. That said, the prospects for an imminent pause in the Fed’s rate-hiking cycle hold back the USD bulls from placing aggressive bets and remain supportive of the bid tone surrounding the major.
- A generally weaker risk tone helps limit losses for the safe-haven buck and keeps a lid on any further upside for the GBP/USD pair, at least for the time being. The market sentiment remains fragile amid worries about economic headwinds stemming from the continuous rise in borrowing costs, the latest COVID-19 outbreak in China and the protracted Russia-Ukraine war. Apart from this, fears about worsening US-China relations temper investors’ appetite for perceived riskier assets.
- 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 1.2110 with a break above it exposing to 1.2260.
- Technical readings in the daily chart support the bearish stances. RSI indicator stabilizes around 42, 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.
- Gold price is almost flat during the North American session, meandering around the $1870 area after hitting a daily high of $1886.35, though it failed to gain traction as the USD pares some of its earlier losses. At the time of writing, XAU/USD is trading at around $1875, above its opening price.
- US equity futures continued to trade negatively amidst a slew of Federal Reserve (Fed) officials emphasizing the need to raise rates to curb elevated inflation. Policymakers led by the New York Fed President John Williams said there’s “uncertainty” around inflation. He added that a jump in inflation could trigger a reaction by the US central bank.
- Market participants reacted, sending US Treasury bond yields higher, with the 10-year benchmark note rate at 3.679%. Consequently, the greenback, as shown by the US Dollar Index, registers minuscule gains of 0.09%, at 103.42. Despite US Treasury yields being up and the buck too, the yellow metal clings to gains, underpinned by falling US Real Yields. The US 10-year TIPS, a proxy for Real Yields, stumbles from 1.351% to 1.326%, a tailwind for precious metals.
- Gold price stabilized around 1875, slightly up for the day and neutral in the daily chart. The gold price stabilized between 20 and 50 SMA, suggesting neutral 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 47, on a bearish strength. The Momentum indicator hold near 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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- The USD/JPY pair edges higher but remains on the defensive through the US session on Wednesday. The pair is currently placed around the 131.40 region, above the opening price and neutral in the daily chart.
- Fed Chair Jerome Powell on Tuesday acknowledged that rates might need to move higher than expected if the economy remained strong, though struck a balanced tone on inflation. This, in turn, fuelled speculations about an imminent pause in the Fed’s policy-tightening cycle, which, in turn, is seen dragging the US bond yields lower.
- The JPY, on the other hand, draws support from expectations that high inflation could invite a more hawkish stance from the BoJ later this year. The market sentiment remains fragile amid worries about economic headwinds stemming from rising borrowing costs, the COVID-19 outbreak in China and fears about worsening US-China relations.
- The USD/JPY pair stabilized around 131.40, up for the day and neutral 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 under the sell pressure again after rejected by 34230 strong resistance zone. It tumbled to intraday low 33910 area and hold nearby to ended Wednesday, down for the day and indicates bullish sign in the hourly chart. Right now market is standing below 20 and 50 SMAs, suggests bearish strength. Meanwhile, 20 SMA started turning south and heading towards longer ones, suggests bears 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 bearish movement, developing below the mid-line. RSI stabilizes around 43, while the Momentum indicator stabilizes in the negative territory, suggests downward potentials. On downside, the immediately support is 33880, break below this level will open the gate for more decline to 33350 area.
- The Brent continued the advance on Wednesday, climbed from intraday low 83.50 area to high 85.10 and hold near the top to ended The day. 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 86.10 may encourage bulls to challenge 87.20, break above that level will open the gate to 88.70.
- Technical indicators also suggest bullish movement, hovering above the midline. RSI climbs to 67, while the Momentum indicator stabilizes in positive territory, suggests upward potentials. On downside, the immediately support is 83.50, break below this level will open the gate for more decline to 81.50 area.
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