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Daily Technical Insights 22 March 2023


EURUSD (4-Hour Chart)

On Tuesday, the EUR/USD pair rose higher, with buyers entering the market ahead of the European session. The pair continued its recent rally, reaching the 1.0780 area, driven by a persistent hawkish narrative from some ECB speakers. The EUR/USD pair is currently trading at 1.0765, posting a 0.45% gain on a daily basis. The positive sentiment in the financial markets and the weaker US dollar are also contributing to the pair’s rise.

Traders are anticipating that the Fed may cut rates due to the failure of two banks in the United States and another on the brink of default, which has shifted global central banks’ interest rate increase expectations. In the Eurozone, measures to support the global financial system and news that JPMorgan Chase is assisting First Republic Bank have helped the market mood recover, providing support to the shared currency.

From a technical standpoint, the RSI indicator currently stands at 65, indicating that the chances favor the bears as the RSI begins to turn south below 70. The price failed to extend its upside traction and retreated from the upper band of the Bollinger Bands, suggesting that some downside movement may be expected. Overall, the market is expected to be bearish as long as the 1.0790 resistance line holds. However, a break above this resistance could open up the possibility of additional gains.

Resistance: 1.0790, 1.0830

Support: 1.0730, 1.0688

XAUUSD (4-Hour Chart)

The XAUUSD has stopped its upward trend and has started heading south this week due to improvements in risk appetite and rising US Treasury bond yields. At the time of writing, the gold price is trading at a day low of $1,941 and continues to trend downwards. Traders’ fears have calmed in the last 48 hours after the UBS takeover of Credit Suisse, and US banks have continued to try to stabilize First Republic Bank. The Federal Reserve is expected to begin its March monetary policy meeting, with traders anticipating a 25 bps rate hike as Powell and Co. continue their efforts to curb stubbornly high inflation. Another reason for gold’s fall is the rising US Treasury bond yields, with the US 10-year Treasury bond yield up nine bps at 3.58%. The 10-year Treasury Inflation-Protected Securities, a proxy for US Real Yields, stands at 1.351% after tumbling as low as 1.142% on March 16.

From a technical standpoint, the XAUUSD’s daily chart indicates a bullish bias in the yellow metal. However, the price action in the last three days could form an evening star candlestick chart pattern, indicating that gold may drop in the near term. The first support would be the March 15 daily high turned support at $1933, followed by the $1914 barrier. Once cleared, the 20-day Exponential Moving Average (EMA) at $1892 is next. The RSI sits at 62.

Resistance: 1958, 1996

Support: 1933, 1914