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Daily Technical Insights 16 May 2023


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

EUR/USD (4 Hours)

Euro Makes Modest Gains Against Weakening US Dollar, Concerns Remain Over Eurozone Data and Debt Ceiling Drama

EUR/USD rose slightly on Monday as the US Dollar weakened following disappointing economic data. However, the Euro faced further losses against the Pound, nearing multi-month lows. Industrial Production in the Eurozone declined by 4.1% in March, surpassing the expected 2.5% decrease. In Germany, the Wholesale Price Index fell 0.4% in April, better than the anticipated -0.9%, while the annual index dropped from 2% in March to -0.5% in April. On Tuesday, Eurozone employment and GDP data for Q1 will be released, along with the May German ZEW survey. The Eurozone is expected to see a marginal expansion, avoiding contraction.

The US Dollar weakened on Monday amid mixed market conditions, influenced by the sharp decline in the US New York Empire Manufacturing index from 10.8 in April to -31.8 in May. Key data to watch on Tuesday includes April’s Retail Sales report. President Biden is set to meet with House Speaker Kevin McCarthy to discuss the debt ceiling issue. Despite higher US bond yields, the decline in the Dollar occurred alongside an improvement in market sentiment.

Chart EURUSD by TradingView

According to technical analysis, the EUR/USD pair is currently attempting to recover after a few days of downward movement, aiming to reach the middle band of the Bollinger band. It is anticipated that the EUR/USD will make a slight upward move and endeavor to reach the middle band. The Relative Strength Index (RSI) is currently at 36, indicating an overall bearish trend in the EUR/USD market.

Resistance: 1.0885, 1.0930

Support: 1.0820, 1.0785

XAU/USD (4 Hours)

Gold (XAU/USD) Gains Modestly Amid Debt Ceiling Concerns, Stocks and Bond Yields Mixed

Spot gold (XAU/USD) started the week with modest gains, trading around $2,020 per troy ounce. The advance in XAU/USD was supported by a decrease in demand for the US Dollar and an improved market mood. However, caution remained as negotiations related to the US debt ceiling were extended. Investors are closely watching the potential for a US default, with President Joe Biden scheduled to meet with lawmakers on Tuesday to find a resolution.

In the stock markets, there was a positive trend, although momentum was limited. The Dow Jones and S&P 500 saw gains of less than 0.10%, while the Nasdaq Composite performed the best, rising by 56 basis points (bps). Concurrently, government bond yields also increased, with the 10-year Treasury note reaching a yield of 3.51%, up by 4 bps, and the 2-year note remaining unchanged at 4.0%. The rise in US yields acted as a limiting factor for the bullish potential of XAU/USD.

Chart XAUUSD by TradingView

According to technical analysis, XAU/USD has been trading in a flat range for the past few days and has recently reached and is moving around the middle band of the Bollinger Band. The proximity of the upper band to the lower band suggests a potential consolidation phase for XAU/USD. Currently, the Relative Strength Index (RSI) stands at 48, indicating that XAU/USD is in a consolidation mode.

Resistance: $2,023, $2,036

Support: $2,010, $2,000

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