Daily Technical Insights 16 March 2023

　　

EURUSD (4-Hour Chart)

The EUR/USD pair experienced a significant decline on Wednesday, marking its worst day in months and hitting a two-month low below the 1.0530 mark. Currently, the pair is trading at 1.0535, reflecting a daily loss of 1.83%. The negative trend continues due to renewed strength in the US Dollar and concerns about the banking sector. The intraday US Dollar rally of over 1% and banking concerns have had a major impact on the EUR/USD pair. The global risk sentiment also took a hit due to negative news about the Swiss lender Credit Suisse, which triggered a sell-off in banking shares worldwide. Additionally, mixed US economic data added to the dismal mood, with the February Producer Price Index (PPI) rising at an annualized pace of 4.6% and Retail Sales declining 0.4% in February. In the Eurozone, concerns about the European banking sector have heightened, leading to a flight-to-safety mood among market participants.

In terms of technical analysis, the RSI indicator currently stands at 32, indicating strong bearish momentum and the potential for the pair to extend its decline as the RSI is around 30. The Bollinger Bands suggest that the price has undergone heavy selling and has moved out of the lower band, suggesting a continuation of the downward trend.

In conclusion, we believe that the market sentiment for the EUR/USD pair will remain bearish, with the pair potentially testing the 1.0531 support level. Traders should remain cautious and keep an eye on any developments in the global banking sector, as well as any economic data releases that could impact the pair’s performance.

Resistance: 1.0624, 1.0745, 1.0791

Support: 1.0531, 1.0467

XAUUSD (4-Hour Chart)

Gold prices have dropped to a new intraday low of around $1,890, and remain stagnant during mid-week inaction while sticking to short-term key support. This is due to the recently widening difference between the US 10-year and two-year Treasury bond yields, which is affecting the XAU/USD price. The inability of global policymakers to convince the market of the risks emanating from the latest fallouts of the Silicon Valley Bank and Signature Bank is also exerting downside pressure on gold prices. Furthermore, the recent run-up in the Fed fund futures, favoring a 0.25% rate hike in March, has made the US dollar more solid, which has further weighed on gold prices.

Despite this, US data relating to Retail Sales, Industrial Production, and Producer Price Index showed that the odds favoring the downtrend have limited upside room for gold trades. At the time of writing, gold is trading at $1,932.

On the technical side, gold has found support above its 200 DMA at $1,775, and further support at the 55 DMA at $1,869. According to strategists at Credit Suisse, a weekly close above $1,890/1900 is needed to clear the way for a retest of $1,973/90. The RSI sits at 75 at the time of typing.

Resistance: 1924, 1947, 1956

Support: 1900, 1885, 1859