30/01/2023 Daily Reports
- The EUR/USD got rejected from the 1.0900 psychological barrier for two consecutive days and on Friday slipped to the 1.0860 region after data from US cemented the case for a 25 bps rate hike by the Fed. At the time of writing, the EUR/USD is trading at 1.0866.
- Wall Street finished the week with gains, shrugging off worries about an impending recession in the United States. Thursday’s data cemented the case for a robust economy, with Q4’s expanding by 2.9% QoQ above estimates of 2.6%, while Q3 remained at 3.2%. That sparked conversations of a possible “soft landing” by the US Federal Reserve.
- Across the pond, ECB officials had reiterated they would raise rates at the upcoming meeting on February 2. ECB’s President Christine Lagarde said that the bank would “stay the course” with a 50 bps rate hike in January and the next meeting after that, albeit inflation in the Eurozone slid to 9.2%.
- The EUR/USD pair is trading near the 1.0866, down for the day with bullish stance in daily chart. The pair still stabilized above 20 and 50 SMA, indicates bullish strength. Meanwhile, the 20 SMA continued accelerating north and developing far above longer ones, suggests bulls not exhausted yet. On upside, the immediate resistance is 1.0930, break above this level will extend the advance to 1.1000.
- Technical readings in the daily chart support the bullish stance. The RSI indicator is above 63. The Momentum indicator stabilizes in positive territory, indicating bullish potentials. On downside, the immediate support is 1.0830 and below this level will open the gate to 1.0760.
- GBP/USD snaps two days of gains and tumbled below Thursday’s close of 1.2406, slumping toward 1.2370, amidst a choppy trading session. Inflation data revealed in the US augmented the likelihood of small-size rate hikes by the US Federal Reserve. Therefore, the GBP/USD is trading at 1.2391, below its opening price by 0.25%.
- Friday’s data revealed that inflation is cooling down, probably at a faster pace than estimated. The Fed’s favorite inflation gauge, the core PCE was aligned with estimates of 4.4% YoY, but below November’s 4.7%. That augmented speculations around the Fed would slash the size of rate hikes, as December marked the first lift in rates not being at 75 bps. Instead, Powell went for a 50 bps as it was appropriate, as mentioned by them while emphasizing that the pace was not as important as the peak of rates.
- Across the pond, the UK docket showed that economic activity fell at its fastest pace in two years in January, as reported by a survey on Tuesday. Meanwhile, the Bank of England (BoE) is expected to raise rates by 50 bps on February 2, lifting the Bank Rate to 4%. Even though that would bolster the Pound Sterling (GBP), speculations grew that it could probably be the last hike in the BoE’s tightening cycle.
- The GBP/USD offers bullish stance in daily chart. Cable stabilizes above 20 and 50 SMA, indicating bullish strength in short term. Meanwhile, the 20 and 50 SMA continues accelerating north and developing above 200 SMA, suggests bulls not exhausted yet. On upside, The immediate resistance is 1.2450 with a break above it exposing to 1.2670.
- Technical readings in the daily chart support the bullish stances. RSI indicator stabilizes around 61, while the Momentum indicator stabilizes above the midline, suggesting upward potentials. On downside, the immediate support is 1.2260, unable to defend this level will resume the decline to 1.2150.
- Gold price falls for the second consecutive day, but it remains above January’s 26 low of $1,918.70 and stays sideways, following the release of inflation data in the US. The USD shortened its drop during the week, while US Treasury bond yields are rising, two additional reasons behind Gold’s loss of its brightness. At the time of writing, the XAU/USD is trading at $1,926.6 after hitting a daily high of $1,935.
- Wall Street turned green after the US Department of Commerce revealed that the US Fed preferred gauge for inflation, the Core PCE for December, rose 4.4% YoY, aligned with estimates, but lower than November’s 4.7%. The same report showed that headline inflation climbed 5% on a yearly basis, above the Fed’s 2% target. That said, data showed that inflation has begun to trend downwards finally, and traders brace for the Federal Reserve’s meeting next week. Speculations had been mounting that the Fed might raise rates by 25 bps, which would mark the end of 50-plus bps rate increases to theFFR.
- Meanwhile, US Treasury bond yields continue to be headwinds for Gold. The US 10-year Treasury bond yield continues to edge higher, almost four bps, and yields 3.540%, underpinning the greenback. The US Dollar Index, which tracks the buck’s performance against a basket of six peers, advanced 0.22%, and reclaimed the 102.000 mark at 102.051.
- Gold price stabilized around 1926.6, down 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 and 50 SMA continued accelerating north and developing above 200 SMA, indicating bulls not exhausted yet. On upside, the immediate resistance is 1950, break above this level will open the gate for more advance to 1982 area.
- From a technical perspective, the RSI indicator holds above the mid-line and stabilizes around 65, still on a bullish strength. The Momentum indicator continues developing in positive territory, suggests more upside potentials. On downside, the immediate support is 1911, below this area may resume the decline to 1895.
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- USD/JPY slumps in a choppy New York trading session and edges beneath 130.00 after a round of US economic data, suggesting the US Federal Reserve (Fed) could begin to hike rates in 25 bps sizes. Therefore, the JPY strengthened, so the USD/JPY is down 0.24%. At the time of writing, the USD/JPY is trading at 129.92.
- The US Dollar trimmed a part of its modest intraday gains in reaction to the mixed PCE figures, which, in turn, exerts some pressure on the USD/JPY pair. The US Bureau of Economic Analysis reported this Friday that the Core PCE Price Index – Fed’s preferred inflation gauge – declined to the 4.4% YoY rate in December from 4.7% previous. The monthly print, however, edged up to 0.3% against the 0.2% in November and estimated. Nevertheless, the data cements bets for a smaller 25 bps Fed rate hike in February and acts as a headwind for the Greenback.
- JPY, on the other hand, draws support from fresh speculation that high inflation may invite a more hawkish stance from the BoJ later this year. This further contributes to the offered tone surrounding the USD/JPY pair. That said, signs of stability in the equity markets undermine the safe-haven JPY and might help limit losses for the major. Traders might also refrain from placing aggressive bets and prefer to move to the sidelines ahead of next week’s key central bank event risk – the highly-anticipated FOMC decision on Wednesday.
- The USD/JPY pair stabilized around 129.83, down for the day and bearish in the daily chart. The price maintains the downward slope and develops below all main SMAs, suggests bearish strength in short term. Meanwhile, 20 SMA continued accelerating south and developing below longer ones, indicating bears not exhausted. On upside, overcome 131.10 may encourage bulls to challenge 131.60, break above that level will open the gate to 133.00.
- Technical indicators still suggest the bearish strength. RSI fell to 43, while the Momentum indicator stabilize in negative territory, suggests downward potentials. On downside, the immediate support is 129.00, break below this level will open the gate to 128.00 area.
- DJI continued the advance, climbed to high 34241 area after hit intraday low 33900. It trimmed most gains in the last hour of the week and ended Friday around 34037, indicates bullish sign in the hourly chart. Right now market is standing above 20 and 50 SMAs, suggests a bullish strength. Meanwhile, 20 SMA continued accelerating north and heading towards 200 SMA, suggests bulls not exhausted yet. On upside, overcome 34250 may encourage bulls to challenge 34500, break above that level will open the gate to 34680.
- Technical indicators also suggest the bullish movement, developing above the mid-line. RSI stabilized around 52, while the Momentum indicator hovering well above the mid-line, suggests upside potentials. On downside, the immediately support is 33900, break below this level will open the gate for more decline to 33700 area.
- The Brent continued the advance on the first half day of Friday, jumped to high 89.00 area. It retreated sharply and ended Friday around 86.35. The price stabilized below 20 and 50 SMA, suggests bearish strength in the hourly chart. Meanwhile, the 20 SMA started turning south and heading toward longer ones, indicates bears not exhausted yet. On upside, overcome 89.20 may encourage bulls to challenge 90.50, break above that level will open the gate to 92.50.
- Technical indicators also suggest bearish movement, hovering below the midline. RSI drops to 36, while the Momentum index stabilizes in negative territory, suggests downward potentials. On downside, the immediately support is 85.40, break below this level will open the gate for more decline to 83.70 area.
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