Thu, Jun 08, 2023 @ 17:44 GMT
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Foreign Exchange Market Commentary


The common currency was the worst performer against the greenback, undermined by soft local data and diminished hopes of an end of ECB’s monetary stimulus. The EUR/USD continued retreating and closed the day at 1.0685, its lowest settlement since mid March. The EU Economic Sentiment indicator showed that confidence suffered a setback this month, as it came in at 107.9, below previous 108.00, and also missing expectations. Among business, sentiment also eased although consumer confidence remained flat at -5. Preliminary German’s inflation EU harmonized, was of 0.1% for the same month, well below previous 0.7% or the 0.6% expected, leaving the year-on-year figure at 1.5%, sharply below previous 2.2% and somehow, supporting ECB’s policymakers conviction that massive stimulus should remain in place as higher inflation seen during the past few months was driven by energy and food prices, and hence unsustainable.

In the US, the final revision of US Q4 GDP came in at 2.1% from previous estimate of 2.0%, which helped Wall Street to rebound. Weekly unemployment claims disappointed, reaching 258K in the week ending March 24th, against the 240K expected, although the figure is at multi-decade lows, hardly suggesting the US employment sector is losing momentum.

From a technical point of view, the EUR/USD pair has broken below a critical support, the 1.0700 region, where it has the 38.2% retracement of the late 2016 monthly decline, and looks poised to extend its slide towards given that in the 4 hours chart, the price is also developing far below a bearish 20 SMA and the 100 SMA, whilst technical indicators now head south near oversold readings. Approaches to the 1.0730 region should now attract selling interest, although a recovery above the level should deny the possibility of further declines.

Support levels: 1.0660 1.0620 1.0590

Resistance levels: 1.0730 1.0780 1.0820


The USD/JPY pair ends Thursday modestly higher, although the pair has remained confined to a roughly 50 for the day, holding on the upper end of Wednesday’s range. A tepid upward revision to US Q4 GDP was not enough to boost the pair, also subdued by the poor performance of worldwide equities. The pair advanced in the US afternoon alongside with Wall Street and a modest gain in US Treasury yields. Japan has quite a busy calendar as early Asia, it will release unemployment, industrial, and inflation data, which will likely set the mood for all of the upcoming session. The pair presents a bullish intraday stance, as in the 4 hours chart, technical indicators have resumed their advances within positive territory and stand at their highest in two weeks, although in the same chart, the 100 SMA maintains its bearish slope well above the current level, whilst selling interest contains advances around former yearly lows in the 111.60 region. Unless the pair is able to recover clearly above this last, the risk will remain towards the downside, with a break below 111.00 required to confirm additional declines.

Support levels: 110.95 110.50 110.10

Resistance levels: 111.60 112.00 112.50


The GBP/USD pair surged to a daily high of 1.2523 early in the American afternoon, to end the day marginally higher around 1.2470. There was no certain catalyst behind Pound’s recovery, although Footsie’s weakness may have helped the UK currency. There were no major economic releases in the UK, with market players focused on the Brexit or better said, in EU’s response to the Brexit. Ever since the formal trigger, the EU has gained the power over the matter, with members determinate to remain together and show unity, making things tough for the UK. German Angela Merkel, insisted that upcoming exit negotiations cannot run in parallel with talks on the future UK-EU relationship. “The negotiations must first clarify how we will disentangle our interlinked relationship,” said the German chancellor, remarking also that once that is out of the table, they could begin discussing future relationship. In the 4 hours chart, the pair remained below a bearish 20 SMA, with a spike beyond it being quickly reverted, while technical indicators have turned lower around their mid-lines, indicating that buying interest receded ahead of Wall Street’s close. The downward potential, however, remains limited, with only a break below the 1.2330/40 region signaling a steeper decline ahead.

Support levels: 1.2445 1.2400 1.2365

Resistance levels: 1.2490 1.2520 1.2560


Gold come under strong selling interest in the American afternoon, ending the day not far from its daily low at $1,245.00 a troy ounce, as safe-related assets were affected by a recovery in US equities. The commodity was under pressure ever since the day started, weighed by weak demand in India, later hit by growing demand for the US currency. The bright metal is at its lowest in a week, but the retracement remains corrective according to the daily chart, giving that the price is resting above its 200 DMA, still not able to break below it, whilst technical indicators are barely pulling back from overbought territory. March 24th intraday low at 1,243.59 is the level to break now to confirm further declines this Friday towards 1,230.00 a major Fibonacci support. In the shorter term, the 4 hours chart shows that the price is developing below a bearish 20 SMA, whilst technical indicators have extended their declines within negative territory, heading into the Asian session with a strong bearish momentum that supports a downward extension towards the mentioned Fibonacci level.

Support levels: 1.243.60 0 1,230.00 1,222.70

Resistance levels: 1,251.45 1,263.80 1,272.80


Oil prices extended their recovery this Thursday, with West Texas Intermediate crude futures settling at $50.33 a barrel, its highest in over three weeks, as different news from the sector backed the commodity. In Libya, oil production disruption has led the country to produce around 560,000 barrels a day, well below the 700,000 pledged. Also, Kuwait oil minister Essam al-Marzouq said his country was among several OPEC and non-OPEC nations supporting the extension of a deal to limit output. Finally, the EIA reported that natural gas storage fell by more-than-expected last week, as gas storage fell by 43 billion cubic feet in the week ending March 24th. The daily chart for WTI shows that the price surpassed the 200 SMA while technical indicators head north within positive territory, maintaining the downside risk limited. In the 4 hours chart, technical indicators have turned flat within overbought territory, whist the 20 SMA accelerated its advance below the current level, now breaking above a bearish 100 SMA, also favoring additional gains for the upcoming sessions, although limited.

Support levels: 49.70 49.00 48.30

Resistance levels: 50.70 51.25 51.90


Wall Street closed with gains, although US major indexes retreated from their daily highs in the last hours of trading. The Dow Jones Industrial Average advanced 69 points to settle at 20,728.52, while the Nasdaq Composite gained 0.28% or 16 points, to 5,914.34 a new record high. The S&P added roughly 7 points to 2,368.06, backed by a strong recovery in oil prices and a firmer sentiment towards the greenback after an upward revision to local GDP. Within the Dow, Exxon Mobil was the best performer, up 1.84%, followed by American Express up 1.27% and Goldman Sachs that added 1.23%. Nike was the worst performer by losing 1.13%, followed by Procter & Gamble that shed 0.41%. As for the technical picture, the DJIA daily chart shows that the Dow still develops below a bearish 20 DMA, currently providing a dynamic resistance at 20,783, whilst technical indicators have extended their recovery within negative territory, indicating that a limited upward potential at the time being. In the 4 hours chart, the index bounced sharply from a now bullish 20 SMA, but technical indicators lost upward momentum within positive territory, whilst the index remains below its 100 and 200 SMAs, both converging around 20,790, in line with the longer term perspective.

Support levels: 20,677 20,623 20,562

Resistance levels: 20,783 20,830 20,881

FTSE 100

The FTSE was unable to extend its advance and closed 4 points lower at 7,369.52, undermined by the poor performance of Asian equities, and with speculative interest cautious after the formal beginning of the Brexit process. Mining-related equities were among the top performers, with Antofagasta leading the way higher by adding 2.94%, followed by Ashtead Group that advanced 2.44% on a revision of its rating to buy. Mediclinic International was the worst performer, down 3.00% followed by Associated British Food that lost 2.04%. The index stands around the mentioned close ahead of the Asian opening, and the daily chart shows that its standing around its 20 SMA that lost its upward strength, whilst technical indicators turned modestly lower within neutral territory, not enough to confirm additional slides. In the 4 hours chart, the index remains above horizontals 20 and 100 SMAs whilst technical indicators have turned horizontal within positive territory, offering a neutral stance.

Support levels: 7,355 7,332 7,301

Resistance levels: 7,387 7,415 7,448


European equities closed again with gains, with the German DAX adding 53 points on the day to settle at 12,256.43, a fresh almost two-year high. Mining and industrial stocks led the way higher in the region, although within the DAX, Deutsche Boerse, an exchange operator, was the best performer, up 2.29%, followed by Continental, which added 1.72%. Only 8 members closed down, with Commerzbank topping losers’ list with a 1.34% decline. The daily chart for the German benchmark shows that it keeps posting higher high and higher lows, above bullish moving averages, whilst the limited intraday range barely helped technical indicators to advance within positive territory, overall bullish. In the shorter term and according to the 4 hours chart, technical indicators have lost upward momentum within overbought territory, still far from suggesting upward exhaustion, whilst the 20 SMA heads sharply higher well below the current level, supporting additional advances, particularly on an upward acceleration above the intraday high of 12,261, the immediate resistance.

Support levels: 12,221 12,180 12,139

Resistance levels: 12,261 12,318 12,365

Henyep Capital Markets
Henyep Capital Markets
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