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Daily market analysis

US Stock fell as market worries about recession

December 20, 2022

As global investors worry about a recession, U.S. stocks fell on Monday. The Dow fell 162.92 points to 32757.54. S&P 500 dropped 34.7 points to 3817.66. Tech-heavy Nasdaq rose 159.38 points to 10546.03. The Fed, BoE, and ECB raised rates by 50 basis points last week to curb inflation.

The benchmark 10-year U.S. government yield rose to 3.596% yesterday. The S&P500 lost 0.9% and the DJIA 0.5%. Communication Service had the worst day, dropping 2.19%. Ten of eleven sectors were negative. On Monday, only the Energy sector rose 0.13%.

Main Pairs Movement

Investors were cautious on Monday, keeping the US Dollar index flat. In the first part of the day, the DXY index fell dramatically to a daily low of around 104.1 in the middle of UK trading. In the second part of Monday, the US dollar recovered most of its losses.

As market players await stories indicating more economic pain for the UK and the next move of the safe-haven greenback, the GBPUSD has not moved today. In the morning, the pair rose to 1.2240 before turning south. Late UK trading erased the cables’ daily gain. The EURUSD fell sharply in the late UK trading hour and gained 0.2% on Monday.

No catalyst changed sentiment, therefore Gold fell 0.3%. After reaching a daily high at $1799, the XAUUSD fell below $1787 in the American trading session.

 Technical Analysis

EURUSD (4-Hour Chart)

EURUSD rose Monday. Euro bullishness peaked throughout the European trading session due to the better-than-expected German Ifo Business Climate index. Today, the U.S. Greenback struggled. The U.S. Dollar began the day trading lower and only found bidding towards the conclusion of the European trading session, but support for the Greenback faltered during the American trading session as U.S. equities suffered another selloff. On the 22nd and 23rd, the U.S. will report quarterly GDP and PCE.

Technically, EURUSD is below our 1.0785 resistance line. Short-term support for the pair is around 1.05, but longer-term support is around 1.035. RSI is 63.58 for the pair. EURUSD is above its 50, 100, and 200-day SMA on the four-hour chart.

Resistance: 1.0785

Support: 1.0538, 1.031

GBPUSD (4-Hour Chart)

After Thursday’s selloff erased all weekly gains, GBPUSD is below its opening price. The pound tumbled from highs to lows, breaking through three key support levels before stabilising above the 20 and 200-day averages. Price rose 0.33% today, slipping below 1.2200 at writing. This may prevent a short-term drop to 1.1940 and 1.1907. Christmas may boost the pound. Despite many unfavourable variables, the Cable price may fall further if the UK Q3 GDP report disappoints. As the Fed’s preferred inflation gauge, Friday’s US core PCE price index, forecast to rise to 4.6% from 5%, may potentially benefit sellers.

The pair may not test last week’s high of 1.2447, but the medium-term technical view is encouraging. Despite last week’s rising wedge break, the bullish 21-day moving average at 1.2146 supports GBP bulls.

RSI(14) is 48.67 for the pair. GBPUSD is below its 50, 100, and 200-day SMA on the four-hour chart.

Resistance: 1.2320, 1.2600

Support: 1.2100,1.1940, 1.1907

XAUUSD (4-Hour Chart)

Spot gold rose to $1,798.68 per troy ounce before falling to $1,786. The US currency fell today. As COVID-19 restrictions lifted, some multinational technology companies resumed operations in China, boosting market sentiment. Next year, local authorities will boost spending and help the private sector to boost the economy. Stocks fell and government bond yields rose before the US opened. Since the mood changed for no reason, the dollar’s gains were restricted. Gold price failed to achieve $1,804 again and again in the past three weeks, indicating that gold prices stabilised above $1,770, but if the market loses, it could fall to $1,740.

Technically, gold fell after touching $1,800, but the dollar weakening restrained losses. The daily chart shows that it is losing upward momentum, although the 20-day SMA is advancing below a mildly bearish 200-day SMA, offering intraday support around $1,776.40. The yellow metal’s RSI(14) is 45.24. On the four-hour chart, XAUUSD is below its 100 and 200-day SMA but above its 50-day SMA.

Resistance: 1798.70, 1810, 1824.50

Support: 1776.4, 1765, 1752.80

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDRBA Meeting Minutes08:30N/A
CNYPBoC Loan Prime Rate09:15N/A
JPYBoJ Monetary Policy Statement11:00N/A
JPYBoJ Press Conference11:00N/A
USDBuilding Permits (Nov)21:301.485M
CADCore Retail Sales (MoM) (Oct)21:301.4%