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Daily Technical Insights 16 December 2022


EURUSD (4-Hour Chart)

EURUSD saw an extremely turbulent trading session throughout Thursday’s trading. The ECB announced a 50 basis point interest rate hike and a signal for further tightening. The hawkish move by the ECB sent the Euro-Dollar pair to its highest level since June during the European trading session, but the pair could not preserve momentum and soon met selling pressure, which forced the pair down into correction territory. Another key economic event that worked against the Euro was the surprisingly low U.S. retail sales figure, which triggered a quick sell-off of the Dollar and a subsequent rally that overshadowed the first wave of selloffs. U.S. equities retreated dramatically after Fed Chair Jerome Powell’s statement yesterday echoed through markets. All three major U.S. equity indices saw a drop of more than 2% as recessionary fears continue to grow. On the economic docket, E.U. CPI will be released during the final hours of today’s European trading session.

On the technical side, EURUSD could not break through our previously estimated resistance level of 1.0785, despite hawkish signals from the ECB. An upside surprise from today’s CPI release could provide the momentum that is needed for the Euro to finally advance above its short-term resistance. The support level for EURUSD remains at around the 1.031 price region. RSI for the pair sits at 48.76, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1.0785

Support: 1.046,1.031

GBPUSD (4-Hour Chart)

Cable dropped more than 1.7% throughout Thursday’s trading. The BoE, which raised interest rates by 50 basis points, failed to fuel the Pound upwards; instead, the slightly less hawkish signal from the BoE combined with a downward surprise of the U.S.’ retail sales figure sent Cable tumbling below the 1.22 price region. Despite a 50 basis point interest rate hike by the BoE, who raised rates by 75 basis points last time, the central bank continues to echo the Fed and its determination to bring inflation down as soon as possible. The BoE faces unique domestic and regional price pressures that the U.S. has not had to deal with; furthermore, with a gloomy economic outlook on the horizon, the Bank of England has decided to take a more cautious route as the bank navigates the British economy into 2023. On the economic docket, Britain will release its PMI figures during the latter part of today’s European trading session.

On the technical side, GBPUSD failed to reach our previously estimated resistance level of near the 1.26 price region. The short-term support level for the pair remains at around the 1.19 and 1.176 price region. RSI for the pair sits at 35.95, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.2666, 1.3000

Support: 1.1900, 1.176

XAUUSD (4-Hour Chart)

Gold fell more than 1.5% throughout Thursday’s trading. The yellow metal failed to find any traction throughout Thursday as global central banks raise rates in unison. Moreover, the downbeat industrial production and retail sales data from China amplified the losses for the precious metal. The lower-than-expected U.S. retail sales figures also hurt Gold prices as recessionary fears rise with consumer spending dropping more than analyst estimates. The Dollar index snapped its two-day losing streak and gained more than 0.9% to close out Thursday. The Greenback has recently been on a steady downward trend as interest rate expectations ease; however, the tumbling equities market could attract market participants into other asset classes such as fixed-income securities, which have been trading at a discount over the past two months due to soaring treasury yields. The yellow metal, on the other hand, remains a non-yielding asset class whose pricing is highly dependent on global geopolitical tensions and the performance of the Greenback.

On the technical side, Gold successfully defended our previously estimated support level of $1775 per ounce. The lower support level for Gold forms around the $1736 per ounce price region. RSI for the yellow metal sits at 35.81, as of writing. On the four-hour chart, XAUUSD currently trades below its 50-day SMA but above its 100, and 200-day SMA.

Resistance: 1810,1830

Support: 1800, 1795, 1775