The daily reports for important events that affects the forex, stocks and commodities markets.

10/01/2023 Daily Reports

Support Level: 1.0700 - 1.0630 - 1.0550 Resistance Level: 1.0760 - 1.0800 - 1.0850

EUR/USD

  • EUR/USD leaves behind the 1.0700 barrier and hit a fresh multi-week high to 1.0750 region on the back of the persevering sell-off in the greenback, which comes with investors’ re-assessment of the potential next steps by the Federal Reserve when it comes to future interest rate hikes.
  • This change of perspective from market participants have been reignited soon after the publication of the December’s Non-farm Payrolls last Friday. Indeed, while the mixed tone from the monthly US labour market showed a still healthy job creation, the wage growth seems to have lost some momentum and that is what is leading traders to start pricing in some probable pause in the Fed’s hiking cycle.
  • On another page, and in the euro docket, the Unemployment Rate in the broader Euroland remained at 6.5% in November, while the Investor Confidence gauged by the Sentix Index improved a tad to -17.5 for the current month. Across the pond, the Consumer Credit Change will be the sole release as well as 3-month/6-month bill auctions.
  • EUR/USD has embarked on a strong recovery and has already surpassed the 1.0700 barrier. The extent and duration of the breakout, however, should hinge on the risk trends and dollar dynamics. In addition, the next steps regarding monetary policy – and particularly the ongoing tightening cycles – from both the ECB and the Fed will be crucial in determining the direction of the pair’s price action in the next months.
  • Technical readings in the daily chart support the bullish stance. The RSI indicator is above 50. The Momentum indicator is also above the mid-line, indicating bullish potentials. On downside, the immediate support is 1.0700 and below this level will open the gate to 1.0630.

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    Support Level: 1.2115 - 1.2075 - 1.2000 Resistance Level: 1.2210 - 1.2300 - 1.2443

    GBP/USD

    • The Pound Sterling advances against the US Dollar in the North American session due to an upbeat market mood on speculations that the US Federal Reserve (Fed) would slowdown rate hikes in a week that an inflation report in the United States is the spotlight.
    • Wall Street opens with solid gains. An absent US economic docket on Monday keeps traders adrift to UK news. As reported by Reuters, UK Prime Minister Rishi Sunak said that inflation is not guaranteed to decline in 2022 and that the government would need to be disciplined to curb inflation. Regarding strikes and other themes, UK’s PM Sunak added that he was willing to discuss pay increases for nurses in an effort to finish strikes.
    • In the meantime, Bank of England (BoE) policymakers led by Catherine Mann said that energy price caps could bring inflation up in other sectors as it could boost consumer spending. She added that what would happen to inflation is unclear when lids are removed. the BoE Chief Economist Huw Pill said that the BoE would continue to act to reach the inflation target, saying that the Monetary Policy Committee (MPC) “will respond forcefully” if needed. Pill stated that domestic prices and wages are key to the MPC outlook.
    • Technical indicators developing above the mid-lines. RSI indicator is around 60, while the Momentum indicator hovering around 0, which suggesting  a bullish strength. On downside, the immediate support is 1.2115, unable to defend this level will resume the decline to 1.2075.
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    Support Level: 1860 - 1842 - 1825 Resistance Level: 1880 - 1900 - 1915

    XAU/USD

    • Gold prices are holding up above $1,870 area on Monday, supported by another slide of the US Dollar across the board, amid risk appetite and lower US Treasury bond yields. Technical bias points to further gains for the yellow metal.
    • The US Dollar, measured by the DXY is trading at the lowest level since June 2022, approaching 103.00, down 0.75% for the day, falling for the second day in a row. The greenback weakened on Friday following US economic data that included a mixed NFP report and an concerning ISM Service Sector PMI report.
    • Last week’s economic data boosted speculations about a slowdown in the Fed rate hike cycle, favoring an increase of 25 basis points instead of a 50 bps. US Treasury yields tumbled on Friday and remains near the lows on Monday, with the US 10-year Treasury yield at 3.55%, the lowest since December 19 and the 2-year at 4.22%.
    • Economists at Erste Group Research report, “Real yields remain in negative territory in 1Q 2023 despite Fed rate hikes. This is a factor that favors a rising Gold price. However, real yields will rise due to the continuation of the Fed’s rate hike cycle and the expected decline in the US inflation rate during 1Q but will remain in negative territory. As long as that is the case, Gold has very strong support.”
    • From a technical perspective, the RSI indicator holds above the mid-line and stabilized around 65, still on a bullish strength. The Momentum indicator continued developing above the mid-line, suggests more upside potentials. On downside, the immediate support is 1860, below this area may resume the decline to 1842.

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    Support Level: 131.30 - 130.00 - 129.50 Resistance Level: 132.60 - 134.60 - 136.00

    USD/JPY

    • The USD/JPY pair attracts some dip-buying near the 131.30 area on Monday and hits a fresh daily high during the mid-European session, though lacks follow-through. The pair, however, reversed during the North American session and is currently placed around the 131.80 region.
    • A generally positive tone around the equity markets undermines the safe-haven Japanese Yen and lends some support to the USD/JPY pair. The global risk sentiment gets a lift in the wake of China’s biggest pivot away from its strict zero-COVID policy. In fact, China opened its borders over the weekend for the first time in three years, though worries about a deeper global economic downturn keep a lid on any further optimism.
    • Apart from this, the prevalent US Dollar selling bias, amid rising bets for a less aggressive policy tightening by the Fed, acts as a headwind for the USD/JPY pair. Friday’s mixed US jobs report (NFP) and the disappointing release of the US ISM Services PMI fueled speculations that the US central bank will soften its hawkish stance. Moreover, the markets are now pricing in 25 bps at the next FOMC policy meeting in February.
    • Meanwhile, the recent reports that the Bank of Japan (BoJ) plans to raise its inflation forecasts could lend support to the JPY and contribute to capping the USD/JPY pair. This, in turn, suggests that the path of least resistance for spot prices is to the downside. Hence, attempted recovery could be seen as a selling opportunity and remain capped, at least for the time being, in the absence of any relevant macro data from the US.
    • Technical indicators suggest the bearish strength, hovering below the mid-line. RSI fell to 40, while the Momentum indicator continued  in negative territory, suggests bear potentials. On downside, the immediately support is 131.3, break below this level will open the gate to 130 area.

    Support Level: 33575 - 33425 - 33230 Resistance Level: 33800 - 34078 - 34300

    DJI

    • DJI gained strength last Friday, hit intraday high of 34078 area, then reversed to major support 33640 area. Market shows a bit bearish sign in the hourly chart. It cross below 20MA but supported buy 50MA, suggests a bearish sign. However, the 20 SMA still crossing above longer ones, a firm break below the 50MA will confirm the bear. On upside, overcome 33800 may encourage bulls to challenge 34078, break above that level will open the gate to 34300.
    • Technical indicators also suggest the bearish movement, developing below the mid-line. RSI stabilized around 40, while the Momentum indicator hovering well below the mid-line, suggests downwards potentials. On downside, the immediately support is 33575, break below this level will open the gate for more decline to 33425 area.

    Support Level: 77.60 - 75.65 - 74.50 Resistance Level: 80.00 - 80.58 - 82.00

    BRENT

    • The Brent continued its narrow range on Monday, the prices did climb to a fresh high of 81.37 on early US session. However, It gave up the gains and continued its side-way moves to 79.70 area. The market flat for the day and showing slightly bearish to neutral sign in the hourly chart. The 20 SMA slightly crossing above 50MA,  indicating some bulls. On upside, overcome 81.37 may encourage bulls to challenge 82.00, break above that level will open the gate to 83.00.
    • Technical indicators also suggest the bearish to neutral movement, hovering around the mid-line. RSI stabilized around 50, while the Momentum index slightly below the mid-line, suggests neutral condition. On downside, the immediately support is 77.60, break below this level will open the gate for more decline to 75.65 area.

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