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Daily Technical Insights 29 March 2023


EURUSD (4-Hour Chart)

On Tuesday, the EUR/USD pair continued its upward trend, hitting a daily high of 1.0840 before the opening of Wall Street. The market’s optimism is fueled by receding concerns about the banking sector’s health, which is benefiting the Euro and high-yielding assets in general. Asian shares ended a two-day losing streak and closed in the green, helping European and American futures stay afloat. Although Treasury yields rose, the US Dollar weakened. The rise in yields can be attributed to falling bond prices in a risk-on scenario. While the Eurozone did not release any significant macroeconomic figures, the United States released the preliminary estimate of the February Goods Trade Balance, which showed a deficit of $91.6 billion, worse than expected, and Wholesale Inventories for the same period, up a modest 0.2% MoM.

The EUR/USD pair has seen two consecutive days of gains, with a steady recovery since it hit 1.0750 on Monday. Buyers are protecting the pair’s downside at around 1.0745, with the 61.8% Fibonacci retracement of the 2022 yearly decline. In the daily chart, the pair is above bullish moving averages, with the 20 Simple Moving Average extending its bullish slope above and also the bullish 100 SMA. Technical indicators are heading north within positive levels and flirting with two-month highs. According to the 4-hour chart, there is an increased chance of upward momentum as the pair has recovered above a mildly bearish 20 SMA, and the 100 SMA has crossed above the 200 SMA.

Resistance levels: 1.0903, 1.0990

Support levels: 1.0784, 1.0669

XAUUSD (4-Hour Chart)

The Russian central bank recently announced that it purchased 1 million ounces of Gold, which has provided support to the domestic Gold industry. However, Commerzbank strategists do not expect the bank to continue purchasing Gold due to the limited success of re-routing exports to Asia compared to Crude Oil. Additionally, the largest buyers of Gold in Russia, the banks, have been affected by sanctions imposed by the West. Despite the increase in Gold reserves, the Gold price remains volatile due to uncertainty over future interest rates. The 10-year US T-bond yield holding above 3.5% has limited the upside for Gold. On Tuesday, Gold settled around $1,950 in a quiet start to trading but gained traction and turned positive, reaching $1,960 amid selling pressure surrounding the US Dollar. The Gold price is expected to be supported in the long term due to the pressure on central banks to fight inflation and avoid a replay of the 1970s. However, short-term movements will be determined by developments in growth and inflation.

Technically, the Gold price appears to be exhibiting a measured move pattern resembling a zig-zag pattern consisting of three waves, starting from the $2,003 highs. In this pattern, waves 1 and 3 typically have the same length or a Fibonacci ratio. This suggests that XAU/USD may decline towards the support level at the $1,934 March 22 lows, which could also function as the neckline for a bearish double-top pattern.

Resistance: 1980, 2003

Support: 1934, 1914