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Daily Technical Insights 18 April 2023


Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

The EUR/USD experienced its worst day in a month on Monday, losing over 50 pips and hitting a low of 1.0908 before rebounding to 1.0930. The Euro was the weakest among major currencies due to a stronger US Dollar, which was boosted by positive economic data from the US. The Empire Manufacturing Index rose unexpectedly from -24.6 in March to 10.8 in April, well above the market consensus of -18. The data strengthened expectations for a Federal Reserve (Fed) rate hike at the May 2-3 meeting, with the odds at 88%, according to the CME FedWatch Tool.

Despite higher Euro Zone bond yields, the Euro lost ground against its G10 rivals, including the US Dollar. European Central Bank (ECB) policymaker Martins Kazaks, who is considered a hawk, suggested the ECB could make a 25 or 50-basis point move in May. On Tuesday, the German ZEW Survey is expected, with the Current Situation Index predicted to have improved to -40 from -46.5 and the Economic Sentiment to 15.1 from 13. ECB’s Frank Elderson is also scheduled to deliver a speech.

Looking at the technical analysis, on Monday the EUR/USD experienced a significant decline, breaking below our support level at 1.0962 and causing the lower band of the Bollinger band to be pushed even lower. The next support level is now at 1.0921, and we expect the market to consolidate with the possibility of an upward move. The RSI is currently at a level of 40.

Resistance: 1.0974, 1.1026

Support: 1.0921, 1.0866

XAU/USD (4 Hours)

Gold prices started the week on a negative note, with XAU/USD hovering around $1,990 per troy ounce, after dropping to $1,981.16 at the beginning of the American session. The US Dollar gained strength, extending its Friday rally amid increasing risk-aversion. Although the Greenback’s advance pared during European trading hours, it bounced back due to persistent negative sentiment that kept US stock indexes in the red.

Market concerns focused on economic growth and the likelihood that the United States Federal Reserve (Fed) may decide to extend the tightening cycle beyond May. Last week’s US economic data came in weaker than expected, raising concerns about a possible recession before the end of the year. Additionally, a couple of Fed officials expressed hawkish views that suggest the central bank may not be finished tightening yet.

Rising US Treasury yields also provided further support to the US Dollar, with the 10-year Treasury note yields standing at 3.59%, up 7 basis points (bps) on the day, while the 2-year note offers 4.20%, up 10 bps.

Looking at the technical analysis, the XAU/USD is currently in a consolidation phase between our established support and resistance levels. The Bollinger band is expanding, suggesting that there may be potential for further movement. Our key support level remains at $1,990 while our resistance level is set at $2,005. The RSI is hovering around the 40 levels, indicating the potential for additional downward pressure.

Resistance: $2,005, $2,017

Support: $1,990, $1,984

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.