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Daily market analysis

Market awaited US GDP and Jobless Claims data

January 26, 2023

U.S. equities closed mostly mixed throughout Wednesday’s trading. The Dow Jones Industrial Average gained 0.03% to close at 33743.84. The S&P 500 lost 0.02% to close at 4016.22. The tech-heavy Nasdaq Composite lost 0.18% to close at 11313.36. U.S. equities experienced a sharp drop at the beginning of Wednesday’s trading as Microsoft issued weaker guidance than expected; however, equities were able to strongly bounce back as market participants assessed corporate earnings and recessionary fears.

The benchmark 10-year treasury yield retreated slightly and was last seen trading at 3.451%. The short-term 2-year treasury yield gained slightly and was last seen trading at 4.133%.

EV maker Tesla reported earnings after the bell. The tech giant reported a beat on both earnings and revenues. Tesla reported revenue of $24.32 billion for the quarter, beating estimates of $24.16 billion. Despite cutting retail prices on its cars worldwide, Tesla has found abundant cash flow from its services business and continued government subsidies.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, dropped 0.27% throughout yesterday’s trading. The Dollar remains subdues ahead of the GDP and initial jobless claims figures, both scheduled to be released before the bell on Thursday. Market participants will also be tuning in on the U.S. PCE price index, scheduled for release on the 27th.

EURUSD continued to rise throughout Wednesday’s trading. The Euro advanced 0.27% against the Dollar. The Euro-Dollar pair has now entered its 6th straight winning session and now faces an immediate psychological resistance level of 1.1.

GBPUSD gained 0.51% throughout yesterday’s trading. The British Pound recovered most of its losses from Monday and Tuesday after the Dollar failed to attract bidding.

XAUUSD advanced 0.47% throughout Wednesday’s trading. Market participants’ concerns over growth and recession have opened the floodgates to the recent rally of Gold. The short-term interest rate expectation has allowed the Dollar to weaken and Gold to climb.

Technical Analysis

EURUSD (4-Hour Chart)

EUR/USD edged lower on Wednesday as cautious market sentiment helps the US dollar index hold its ground. At the time of writing, EUR/USD stays marginally below 1.0900, trading at 1.0867.  The US dollar index holds around 102. The IFO index from Germany on Wednesday showed that business sentiment improved modestly in January but failed to help the pair. The IFO index rose to 90.2, up from 88.6 in December, aligning with the forecast of 90.2. For more price action, eye on the release of the United States Gross Domestic Product (GDP) data and the Initial Jobless Claims on Thursday, which will directly influence the financial market.

For the technical aspect, RSI indicator 51 figures as of writing. The RSI indicator maintains neutral in the near term, signaling that the market is lack main traction. As for the Bolling  Bands, the price holds above the upward-moving average. The upward momentum seems weak as the pair trades in a narrow range in the near term. In conclusion, we think EUR/USD is in consolidation mode based on the technical analysis. The price is lack main traction. Market participants now await a key event on Thursday, which will act as a price catalyst, pushing the financial market. For the uptrend scenario, the pair need a breakthrough above the current resistance at 1.0912 to confirm the further uptrend. For the downtrend scenario, if the price drop below the support at 1.0780, it may lose its upward momentum and head to test the next support at 1.0710.

Resistance:  1.0912, 1.1048, 1.1131

Support: 1.0780, 1.0710, 1.0582

GBPUSD (4-Hour Chart)

GBP/USD trades in a narrow range around 1.2300 on Wednesday. In the absence of major macroeconomic data releases, the cautious market sentiment helps the US dollar index hold its ground and keeps the financial market non-volatile for now. On the other hand,  the various stimulus and energy payments have led to a record deficit in the UK but failed to solve the British workers’ problem, which sends more negative signals for GBP/USD. Market participants await the release of the US Gross Domestic Product (GDP) for the fourth quarter (Q4) and the Initial Jobless Claims on Thursday which will let market participants better understand the current market and trigger more price action.

For the technical aspect, RSI indicator 47 figures as of writing, still holding around the neutral region, signaling no main traction. As for the Bolling  Bands, the price trades between the moving average and lower band, suggesting that the is a lack of direction in the near term. In conclusion, we think GBP/USD may continue on consolidation until further breakthrough. For the uptrend scenario, the pair is establishing itself above the current support at 1.2273. It must not drop below the current support for any following upward movement. For the downtrend scenario, if the price drop below the support at 1.2273, it may stage more downward correction.

Resistance: 1.2430, 1.2600

Support: 1.2273,  1.2161, 1.2021

XAUUSD (4-Hour Chart)

Gold prices fell despite the weak US Dollar and falling US Treasury bond yields. Technical moves or near-term profit-taking could be the main reason. In the meantime, the US economic calendar would be busy on Thursday, led by US Gross Domestic Product (GDP) for the fourth quarter (Q4), expected at 2.6%. Further, Durable Good Orders are expected at 2.5%, compared to -2.1% of the previous. Initial Jobless Claims for the last week would also be updated, expected 205K, compared to 190K previous.

For the technical aspect, RSI indicator 51 figures as of writing, moving marginally around mid-line, signaling the lack of price movement. For the Bollinger Bands, the price is moving up and down between the upper band and the lower band, suggesting that the pair is lack traction. In conclusion, we think the market is in consolidation mode ahead of US key event on Thursday. The market needs a decisive breakthrough to confirm the following trend as  Gold price is trading between a narrow range. For the uptrend scenario, the next resistance is at $1,952. If the price breakthrough the resistance, it may head to test the next resistance at $1,977. For the downtrend scenario, if the price drop below $1,920, it may change its current trend and head to test the pivotal round figure mark at $1,900.

Resistance: 1952, 1977

Support: 1920, 1900, 1873

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDCore Durable Goods Orders (MoM) (Dec)21:30-0.2%
USDGDP (QoQ) (Q4)21:302.6%
USDInitial Jobless Claims21:30205K
USDNew Home Sales (Dec)23:00617K
Market awaited US GDP and Jobless Claims data