The upcoming week will bring much anticipation for the financial community as the Reserve Bank of Australia (RBA) is set to announce its latest monetary policy decision. The central bank has been on a streak of consecutive rate hikes, but speculation has been brewing about whether or not it will continue this trend.
With the economy showing signs of growth and inflation pressures on the rise, many are asking: will the RBA raise rates this month?
Here are the key market events for the week ahead:
RBA Rate Statement (7 February)
The RBA raised the cash rate by 25bps to 3.1% in its last meeting of 2022, its eighth consecutive hike.
Analysts anticipate RBA to increase rates by 20bps to 3.3% this month.
UK Monthly Gross Domestic Product (GDP) (10 February)
The British economy saw a growth of 0.1% in November, a decrease from October’s 0.5%.
Analysts predict a 0.1% decrease in the UK (GDP) for December 2022.
Canada Employment Change (10 February)
The Canadian economy saw the creation of 104,000 jobs in December 2022, with an unemployment rate of 5%, the lowest since hitting a record-low of 4.9% in June and July. The unemployment rate dropped from 5.1% in November.
Analysts forecast a smaller increase of 15,000 jobs in January and a slightly higher unemployment rate of 5.2%.
US Prelim University of Michigan Consumer Sentiment (10 February)
The University of Michigan consumer sentiment for the US was revised upward to 64.9 in January 2023, the highest it has been since April 2022, from a preliminary reading of 64.6.
Analysts anticipate the data to be around 65 for this month.
US stocks declined lower last Friday, posting weekly gains but ended its three-day advance after a volatile Friday session as investors contended with data pointing to a robust labor market.
On Friday, the US Bureau of Labor Statistics (BLS) surprised markets by revealing that the Nonfarm Payrolls (NFP) rose by 517K in January, which came much higher than the markets’ expectation of 185K. Moreover, the Unemployment Rate also dropped to 3.4% from 3.5% prior.
The figure strong US economic figure renewed inflation fears and favored the odds of further rate increases from the Fed. Meanwhile, yields on Treasuries also spiked higher after a surprisingly strong jobs report that should give the Fed room to remain aggressive if inflation stays elevated, sending the US Dollar to rose the most on Friday since late September.
On the Eurozone front, European Central Bank (ECB) President Christine Lagarde signaled that the risks to inflation and growth are more balanced after the bank announced a 0.50% interest rate hike last week by matching the market expectations.
The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower last Friday but the S&P 500 still notched a weekly gain that took the index to its highest level since August as equities swerve between modest gains and losses. The S&P 500 was down 1.0% daily and the Dow Jones Industrial Average also dropped slightly with a 0.4% loss for the day. All eleven sectors in S&P 500 stayed in negative territory as the Consumer Discretionary sector and the Communication Services sector are the worst performing among all groups, losing 3.11% and 2.22%, respectively. The Nasdaq 100 meanwhile retreated the most with a 1.8% loss last Friday and the MSCI World index was up 1.2% for the day.
Main Pairs Movement
The US dollar advanced sharply last Friday, gathering upside strength during the US trading session, and rose to a new three-week high around the 103.00 mark after a surprisingly strong jobs report from the United States. Investors’ sentiment turned sour as January’s Nonfarm Payrolls report increased speculations that the Fed could raise rates back above Wednesday’s 25 basis points mark.
GBP/USD plunged lower last Friday with a 1.42% loss after the cable witnessed heavy selling and dropped sharply towards the 1.2100 mark after robust US economic data. On the UK front, the Bank of England (BoE) announced a 0.50% interest rate hike by matching the market expectations. Meanwhile, EUR/USD also suffered from heavy losses and collapsed to new 2-week lows near the 1.0800 level amid downbeat market sentiment. The pair was down almost 1.07% for the day.
Gold tumbled sharply with a 2.45% loss for the day after dropping from daily highs at $1918 and collapsing toward the $1870 area during the US trading session, as the US Nonfarm Payrolls report showed that more jobs were added to the economy than expected. Meanwhile, WTI Oil dropped sharply with a 3.53% loss for the day. The US crude oil failed to preserve its upside strength that due to a surprising report from the US Department of Labor.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair declined lower on Friday, reversing its initial gains, and retreated sharply towards the 1.0850 level after the release of a solid January US job report. The pair is now trading at 1.0859, posting a 0.46% loss daily. EUR/USD stays in the negative territory amid renewed US Dollar strength, as the greenback was lifted by a surprisingly upbeat US Nonfarm Payrolls report and reached a new two-week high at 102.63 level. The report showed that US Nonfarm Payrolls rise by 517,000 in January, which came in much higher than the market expectation of 185,000. The US labor market shows no signs of weakness so far, therefore further Fed action is expected. In the Eurozone, ECB President Christine Lagarde refrained from committing to any move about the possibility of additional rate actions after March, which is acting as a headwind for the shared currency.
For the technical aspect, RSI indicator 41 figures as of writing, suggesting that the risk skews to the upside as the RSI is recovering towards the mid-line. As for the Bollinger Bands, the price failed to preserve its downside momentum and rebounded slightly higher, therefore some upside movements can be expected. In conclusion, we think the market will be bullish as long as the 1.0830 support line holds. On the downside, a break below that support could bring in additional sellers and open the door for an extended slide toward 1.0780.
Resistance: 1.0930, 1.1020
Support: 1.0830, 1.0780, 1.0722
GBPUSD (4-Hour Chart)
GBP/USD dropped sharply to the 1.2100 area after US Nonfarm Payrolls and January Unemployment Rate was released on Friday. The US Bureau of Labor Statistics revealed that Nonfarm Payrolls rose by 517K in January, much higher than the 185K expected. The unemployment rate dropped to 3.4% with the expectation of 3.6%. The US Dollar rose sharply across the board after the report, currently at 102.90, while the benchmark 10-year US Treasury bond yield rose 3.65% to 3.519, exerting heavy pressure on GBP/USD. At the time of writing, the pair is trading at 1.2061, posting a 1.33% loss daily.
For the technical aspect, RSI indicator 23 figures as of writing, placed in the oversold zone as the price is staging strong downward movement in the near term. Though the indicator shows strong bearish momentum, traders should be aware of upside correction risk as the RSI indicator is placed in an oversold zone. As for the Bollinger Bands, the expansion of the bandwidth implies enormous volatility in prices, which also suggests correction risk. In conclusion, we think the market is in bearish mode as both indicators show bearish potential. The recent below 1.2200 area constitutes the formation of a bearish top pattern on the daily chart, which favors a bearish trend. That said, there is a correction risk as GBP/USD dropped sharply in the short term. For the downtrend scenario, if the price drop below 1.2000, it may trigger some follow-through selling and drag the pair further toward the next support at 1.1860.
Resistance: 1.2270, 1.2426, 1.2493
Support: 1.2000, 1.186
XAUUSD (4-Hour Chart)
Gold price extended its slide from the previous day and touched its lowest level since January 10 below $1,870 on Friday as US Nonfarm Payrolls and January Unemployment Rate surpass the expectation. The US Bureau of Labor Statistics revealed that Nonfarm Payrolls rose by 517K in January, much higher than the 185K expected. The unemployment rate dropped to 3.4% with the expectation of 3.6%. The US labor market shows no signs of weakness, therefore further action from Fed is expected. The US Dollar rose sharply across the board after the report, currently at 102.94, while the benchmark 10-year US Treasury bond yield rose 4.04% to 3.532, exerting heavy pressure on Gold prices. At the time of writing, the pair is trading at $1,865, posting a 2.47% loss daily.
For the technical aspect, RSI indicator 26 figures as of writing, placed in the oversold zone as the price is staging strong downward movement in the near term. Though the indicator shows strong bearish momentum, traders should be aware of upside correction risk as the RSI indicator is placed in an oversold zone. As for the Bollinger Bands, the expansion of the bandwidth implies enormous volatility in prices. An upside correction could occur as the indicator shows high volatility and the price drop sharply. In conclusion, we think the market is in bearish mode as both hands show bearish potential. A failure to defend the critical support at $1,900 suggests that the bulls have surrendered. The selling pressure that comes from buyers could drag Gold’s price further.
The Nasdaq and S&P 500 indexes closed higher and hit roughly five-month highs on Thursday (Feb. 2), as a more dovish-than-expected message from Fed Chairman Jerome Powell boosted stocks and Meta Platforms shares surged on tight cost controls.
The S&P 500 rose 1.47% to 4,179.76, its highest level since August. Meanwhile, the technology-focused Nasdaq Composite Index rose 3.25% to 12,200.82, its highest level since September. The Dow Jones Industrial Average underperformed, falling 39.02 points, or 0.11%, to 34,053.94.
On Wednesday, investors are still digesting the Fed’s policy decision and comments from Powell, who acknowledged progress in fighting inflation and seemed reluctant to stop the rally in stocks and bonds.
Data showed that initial jobless claims fell to a nine-month low last week, underscoring the resilience of the labor market, with monthly employment data due out Friday.
The 50-day moving average of the S&P 500 broke above its 200-day moving average, a pattern known as a “golden cross” that many see as a bullish technical signal for near-term momentum. The energy sector was one of the top performers last year, down 2.5%, while the healthcare sector was down 0.7%.
Main Pairs Movement
The greenback, in terms of the USD Index, adds to the weekly leg lower and breaks below the 101.00 support to print new 10-month lows on Thursday. However, the price started to return to the north during the Asia trading session. At the time of writing, trading at 101.73.
EUR/USD pair is displaying a back-and-forth action around 1.0900 after a pullback move from 1.0885 in the early Asian session. The major currency pair has turned sideways ahead of the United States Nonfarm Payrolls data, which will release on Friday. At the time of writing, trading at 1.8993.
GBP/USD sees a further downside near 1.2200 as anxiety soars ahead of US NFP. At the time of writing, trading at 1.22160.
Gold price nosedived to near 1,912.00 after a blockbuster recovery move from the DXY on Thursday. The precious metal is staring at the round-level resistance of 1,900.00 as further downside looks possible ahead of the NFP data. At the time of writing, trading at 1916.40
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair declined lower on Thursday, coming under renewed bearish pressure, and declined below the 1.0900 mark after the European Central Bank’s interest rate decision. The pair is now trading at 1.0914, posting a 0.67% loss daily. EUR/USD stays in the negative territory amid recovering the US Dollar across the board, as the greenback was bolstered by the market’s reaction to the BoE’s and ECB’s decisions and trimming some of its losses towards the 101.8 area. The US Federal Reserve lifted rates yesterday but sounded dovish, as Fed chair Powell said the disinflation process has started. In the Eurozone, the European Central Bank has decided to raise interest rates by 50 basis points as broadly expected. Still, ECB President Christine Lagarde refrained from committing to additional rate hikes after March, which caused the Euro to lose strength. The decision on future rate raises will remain data-dependent and in a meeting-by-meeting approach.
For the technical aspect, RSI indicator 51 figures as of writing, suggesting that the risk skews to the downside as the RSI is falling sharply towards 50. As for the Bollinger Bands, the price witness heavy selling and retreated from the upper band, therefore a downside trend continuation can be expected. In conclusion, we think the market will be bearish as the pair is now testing the 1.0918 support level. Technical indicators also retreated from overbought conditions and headed to negative territory, which reflects bear signals.
Resistance: 1.1020, 1.1092, 1.1131
Support: 1.0918, 1.0830, 1.0780
GBPUSD (4-Hour Chart)
GBP/USD tumbled to multi-week lows near 1.2250 on Thursday. GBP/USD failed to benefit from the Bank of England’s decision to raise the Bank Rate by 50 bps to the 4% threshold. The pair dropped after the Bank of England lifted rates and gave no signals for further increases. Governor Bailey’s optimistic comments on the inflation outlook seem to be weighing on the pair. At the time of writing, GBP/USD is trading at 1.2244, posting a 1.04% loss daily, while the US dollar index recover part of its loss from yesterday, posting a 0.46% daily gain.
For the technical aspect, RSI indicator 34 figures as of writing, sharply falling through mid-line and currently placed in the bearish region. A downtrend movement could persist. As for the Bollinger Bands, the price dropped through the downward moving average and holds around the lower band now, signaling the downtrend and strong bearish momentum in the near term. In conclusion, we think the market is in bearish mode as both indicators show bearish potential—the price dropped below the previous support at 1.2292. A break out of the previous consolidation range suggests that the bulls have surrendered and the pair could see fresh follow-through selling, dragging GBP/USD down further. For the downtrend scenario, if the price drop below 1.2188, it may head to test the next support at the round-figure mark at 1.2000.
Resistance: 1.2426, 1.2493, 1.2593
Support: 1.2188, 1.2000, 1.186
XAUUSD (4-Hour Chart)
The gold price hit $1,959, the highest level since mid-April, on Thursday and then dropped sharply in the second half of the day, losing all post-FOMC gains. The dollar index recovers part of its loss after having suffered heavy losses late Wednesday, weighting on Gold price. At the time of writing, Gold price is trading at $1,913.33, posting a 1.89% loss daily, while the US dollar index rises to 101.71, posting a 0.53% daily gain. For more price action, keep an eye on the Nonfarm Payrolls report and the ISM Non-Manufacturing PMI report on Friday, which will update the status of the US economy.
For the technical aspect, RSI indicator 40 figures as of writing, slightly below from mid-line. The big move up and down across the mid-line shows high volatility of the price but no clear direction in the near term. As for the Bollinger Bands, the price is moving up and down across the horizontal moving average, showing high volatility as well. In conclusion, we think the market is in consolidation mode. The sharp decline in the Gold price of more than $30 looks like a reversal but is still too soon to tell. For the uptrend scenario, the current resistance is $1,947. A firm break above the level could trigger some follow-through buying and push gold higher toward the next resistance at $1,957. For the downtrend scenario, as long as the Gold price remains under the $1,920 area, a slide toward critical support at $1,900 is possible. On the other hand, a drop below $1,900 could trigger a deeper correction.
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The Dow closed flat Wednesday, as investors weighed up the Federal Reverse’s widely expected quarter-point rate hike and Fed Chairman Jerome Powell’s lack of pushback on the recent rally in stocks and easing financial conditions.
The Dow Jones Industrial Average was up 0.02%, or 6 points, the S&P 500 rose 1.1%, and the Nasdaq Composite rose 2%.
On the economic front, data continued to show the labor market running hot. Weekly job openings and the December private jobs report came in better than expected, threatening to boost wage pressures and inflation.
Monetary policy decisions from other major central banks and US Nonfarm Payrolls will be crucial for clear directions.
The energy was the only sector in the red, falling more than 2% as oil prices fell after U.S. weekly crude stockpiles increased more than expected and OPEC and its allies stuck with their output policy unchanged. Final return rate at -1.89%.
Main Pairs Movement
DXY holds lower grounds near 100.90 as traders lick their wounds near the lowest levels since April 2022 during Thursday’s Asian session. At the time of writing, the DXY price at 102.205, dropped around 0.9% on the daily chart.
EUR/USD bulls cheer the Federal Reserve’s acceptance of easing price pressure, as well as Chairman Jerome Powell’s readiness for rate cuts if needed, by rising the most since November 2022 to poke the highest levels in 10 months, making rounds to 1.1000.
GBP/USD rallied overnight on US Dollar weakness following the Federal Reserve event. The pair burst through 1.2350 resistance. GBP/USD now depends on the Bank of England and US jobs data on Friday. At the time of writing, the price at 1.23822.
Gold price makes rounds to the highest levels since late April 2022, close to $1,955 during the mid-Asian session on Thursday. At the time of writing, the price trades at 1955.06.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair advanced higher on Wednesday, preserving upside momentum, and hit fresh highs above the 1.0910 mark after the release of US economic data. The pair is now trading at 1.0919, posting a 0.54% gain on a daily basis. EUR/USD stays in the positive territory amid a weaker US Dollar across the board, as the greenback lost its strength and stayed on the back foot following the disappointing Manufacturing PMI data. Meanwhile, the ADP employment report showed US private sector added 106K jobs in January, which is below the market expectation for an increase of 178K and also the lowest reading since January 2021. Investors are now waiting for the US Federal Reserve to announce its policy decisions following the first meeting of the year, as the central bank is expected to slow the pace of tightening further and deliver a 25 bps rate hike. In the Eurozone, the European Central Bank is also expected to raise interest rates by 50 basis points on Thursday as policymakers recently commented that more significant rate hikes are on the table.
For the technical aspect, RSI indicator 64 figures as of writing, suggesting that the risk skews to the upside as the RSI is rising sharply towards 70. As for the Bollinger Bands, the price moves out of the upper band, therefore a strong upside trend continuation can be expected. In conclusion, we think the market will be bullish as the pair is now testing the 1.0918 resistance level. Technical indicators also crossed their midlines into positive territory, which reflects bull signals.
Resistance: 1.0918, 1.0943, 1.1003
Support: 1.0830, 1.0780, 1.0722
GBPUSD (4-Hour Chart)
GBP/USD maintains nonvolatile ahead of the FOMC decision. The pair trimmed early gains and holds above 1.2300 on cautious market sentiment. The Fed is widely expected to raise interest rates by 25 bps amid signs of easing inflationary pressures. The bets were cemented by the US wage growth data released on Tuesday, which showed that labor costs increased less than expected in the fourth quarter. On the other hand, traders also focus on BoE Interest Rate Decision on Thursday. The BoE is estimated to raise rates by 50bps, leaving the Bank Rate at 4%. This and Fed Interest Rate Decision will provide some meaningful impetus to GBP/USD.
For the technical aspect, RSI indicator 36 figures as of writing, falling below mid-line on a continued downside correction. As for the Bollinger Bands, they are edging lower between the downward moving average and lower band, signaling that the bearish trend is more favored. A downtrend could persist. In conclusion, we think the market is in modest bearish mode as both indicators show some bearish potential. The pair is currently trading in a narrow range. A firm break out of the range is needed to confirm the follow-through trend. For the uptrend scenario, the price needs a firm break above resistance at 1.2426 to show bullish impetus. For the downtrend scenario, if the price drop below the support at 1.2292, it may trigger some technical selling and drag the GBP/USD pair further toward the next support at 1.2188.
Resistance: 1.2426, 1.2493, 1.2593
Support: 1.2292, 1.2188, 1.2000
XAUUSD (4-Hour Chart)
Gold rises to $1,940 area after Fed Interest Rate Decision. Following the Fed’s decision to raise interest rates by 25 bps, the benchmark 10-year US Treasury bond yield drops 3.25% to below 3.4%, helping the Gold price push higher. Meanwhile, the US dollar index declines 0.85% to 101.221, which also favors the dollar-denominated gold. At the time of writing, the Gold price is trading at $1,940.07, posting a 0.65% gain on a daily basis.
For the technical aspect, the RSI indicator is 60 figures as of writing, advancing to a bullish region from mid-line on bullish price action. As for the Bollinger Bands, the price surged to the upper band from the moving average, showing strong bullish momentum. In conclusion, we think the market is in bullish mode. A continued rise could be expected. For the uptrend scenario, the pair is testing resistance at $1,947. A firm break above the level could trigger some follow-through buying and push gold higher toward the next resistance at $1,957. For the downtrend scenario, the current support is at $1,920. If the Gold price closes below $1,920 on the 4H chart. It may trigger some technical selling and drag the pair toward critical support at $1,900.
The Dow climbed Tuesday, to end the month in the green as investors digested a slew of mostly better-than-expected results just as focus shifts to the Federal Reserve decision due Wednesday.
The Dow Jones Industrial Average gained 1.1%, or 368 points, ending the month with a gain of about 2%. The Nasdaq Composite closed 1.7% higher. The S&P 500 rose 1.4% notching its best January since 2019.
US Treasury bond yields are downtrend slightly by 0.013% to 3.516%.
The Employment Cost Index (ECI) report released on Tuesday had an unusual impact across financial markets, with the US Dollar weakening after the numbers. Analysts at Well Fargo point out that the figures are one more in the list of inflation readings over which the Federal Reserve is breathing a little easier. They point out that while the report further supports inflation moving back toward the 2% target, labor cost growth remains too strong to be consistent with it staying there for the long haul.
Main Pairs Movement
DXY gauges the greenback vs. a bundle of its main rivals comes all over the way down to the 102.30 region after climbing to as high as the 102.60 area earlier on Tuesday. At the time of writing, the DXY exchanges hand at 102.089, dropping around 0.15% on the daily chart.
The EUR/USD pair is showing signs of a loss in the upside momentum after reaching near the immediate resistance of 1.0870 in the early Tokyo session. The shared currency pair has already displayed a responsive buying action after dropping to near the round-level support at 1.0800.
GBP/USD fails to cheer the US Dollar weakness much as Cable’s recovery from the weekly low fades around 1.2320 during early Wednesday. In doing so, the quote seems to justify the downbeat catalysts at home, mainly relating to inflation and housing markets.
XAUUSD stopped consecutive three days down trend, rebound around 0.26%, and closed at 1928 marks.
The yellow metal managed to cheer the broad US Dollar weakness, backed by the United States data and firmer equities.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair edged lower on Tuesday, coming under pressure but then rebounded slightly towards the 1.0850 area amid recovering market sentiment. The pair is now trading at 1.0854, posting a 0.06% gain on a daily basis. EUR/USD stays in the positive territory amid renewed US Dollar weakness, as the greenback lost its strength following the release of US labor costs data for the fourth quarter and allowed the EUR/USD pair to pull away from session lows. The US Employment Cost Index rises by 1% in Q4, which came in below the market expectation of 1% and points to more evidence of a slowdown in inflation. Therefore, the greenback tumbled after the report and lend support to the EUR/USD pair. In the Eurozone, the better-than-anticipated Euro-Zone Gross Domestic Product (GDP) failed to push the Euro higher as German Retail Sales plunged by 5.3% MoM in December, which is much worse than expected.
For the technical aspect, RSI indicator 49 figures as of writing, suggesting that the risk skews to the upside as the RSI is rising sharply towards the mid-line. As for the Bollinger Bands, the price regained upside momentum and rebounded toward the moving average, therefore a continuation of the upside trend can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 1.0868 resistance level. Bulls could take control of the pair if it breaks above the aforementioned resistance.
Resistance: 1.0868, 1.0918, 1.0942
Support: 1.0830, 1.0780, 1.0722
GBPUSD (4-Hour Chart)
GBP/USD continued to trade lower towards 1.2300 early Tuesday as the US dollar index maintained its strength amid risk-off sentiment. The pair is now trading at 1.2328, posting a 0.19% loss on a daily basis. GBP/USD could suffer additional losses in the near term if buyers fail to hold 1.2300. On Wednesday, the Fed would be the first to release the interest rate, expected to increase by 25bps, while the BoE is estimated to raise rates by 50bps, leaving the Bank Rate at 4%. Most analysts expect this would be the last increase by the BoE, which could exert some pressure on GBP/USD as rates in the US are expected to peak at 5%.
For the technical aspect, RSI indicator 41 figures as of writing, falling below mid-line as GBP/USD witnessed some short selling. As for the Bollinger Bands, the moving average started to move down, signaling that the current trend started to change modestly. A downtrend could persist. In conclusion, we think the market is in modest bearish mode as both indicators show some bearish potential. For the uptrend scenario, the price needs a firm break above resistance at 1.2426 to show bullish impetus. For the downtrend scenario, if the price drop below the support at 1.2292, it may trigger some technical selling and drag the GBP/USD pair further toward the next support at 1.2188.
Resistance: 1.2426, 1.2493, 1.2593
Support: 1.2292, 1.2188, 1.2000
XAUUSD (4-Hour Chart)
The gold price was volatile on Tuesday. Earlier, the Gold price tumbled to $1,900.94, slightly above the round-figure mark of $1,900, as the US dollar index strengthened. However, traders turned their back on the US dollar later in the US trading session, and the Gold price managed to recover its lost territory back to the $1930 level. At the time of writing, the Gold price is trading at $1,929.94, posting a 0.36% gain on a daily basis. On the other hand, The Fed will announce its policy decision at the end of a two-day meeting on Wednesday and is expected to raise interest rates by 25 bps. Apart from this, traders will focus on the Bank of England (BoE) meeting and the European Central Bank (ECB) decision, both scheduled on Thursday. Any hawkish signals from major central banks will more likely be negative for Gold prices.
For the technical aspect, RSI indicator 53 figures as of writing, surging from oversell region as prices recover strongly from $1900. As for the Bollinger Bands, the price surged from the lower band and currently holds around the moving average. In conclusion, we think the market is in a modest bearish mode. Though both indicators show no strong bearish signal, the price has made a lower low on correction and the fundamental outlook seems weighing on the gold price as well. For the downtrend scenario, the current support is at the $1900 round-figure mark. If the price closes below critical support at $1900, bulls may surrender and trigger some follow-through selling. For the uptrend scenario, the pair should establish itself above the current support at $1900. To regather bullish strength, it should also recover the lost territory from the multi-month high around the $1,949 zone, which has become a strong barrier in the near term for bulls.
The Nasdaq 100, tumbled almost 2%. The S&P 500 and the Dow Jones slashed 1.30% and 0.77% of their value as traders prepared for the US Federal Reserve Open Market Committee (FOMC) decision on Wednesday. Hence, a busy US economic calendar was one of the main reasons for the US Dollar to appreciate against most G8 currencies.
Reflection of the aforementioned is US Treasury bond yields, precisely the US 10-year benchmark note rate, finished Monday with gains of three and a half basis points. Up at 3.542%, underpinned the greenback.
Tech stocks pulled the major indexes lower ahead of the Fed’s announcement. The central bank is expected to raise interest rates another quarter of a percentage point on Wednesday, and investors are hoping to get a hint of where the Fed is headed this year.
The Federal Reserve kicks off its two-day meeting on Tuesday, but with the prospect of a downshift to a 25-basis-point rate hike almost priced in for Wednesday, investors are expecting Fed chairman Jerome Powell to signal more hikes ahead and push back against expectations that the Fed could cut rates later this year. (Reference from Investing. com)
Main Pairs Movement
DXY a measure of the greenback’s value against a basket of six currencies continues to recover and prints gains for three straight days, finishing Monday’s session with gains of 0.31% amidst risk aversion. At the time of writing, the DXY exchanges hand at 102.242.
EUR/USD seesaws around 1.0850 as bears take a breather after breaking important support. With this, the major currency pair confirms its place on the seller’s radar even if it probes the three-day downtrend with its latest inaction. During Monday’s trading course, the closed price dropped 0.16% on the daily chart.
GBPUSD dropped around 0.3% throughout Monday’s trading, price closed at $1.2350. Cable holds lower grounds after a two-day downtrend, making rounds to 1.2350 during early Tuesday morning in Asia.
XAUUSD’s price lost 0.23% throughout Monday’s trading. The yellow metal has drifted lower for a third day and is testing structure as we head towards key events this week. The bull could emerge ahead of the Feds.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair edged higher on Monday, failing to preserve its upside momentum, and retreated towards the 1.0870 mark as the upbeat sentiment data from the Eurozone helps the Euro stay resilient against its rivals. The pair is now trading at 1.0870, posting a 0.04% gain daily. EUR/USD stays in the positive territory despite a stronger US Dollar across the board, as investors are preparing for the US Federal Reserve Open Market Committee (FOMC) meeting that will begin on Tuesday. The markets have been pricing in a greater chance of a 25 basis points (bps) rate hike amid signs of easing inflationary pressures in the US, which might weigh on the greenback and lend support to the EUR/USD pair. In the Eurozone, the Euro area Economic Sentiment Indicator improves at a stronger pace to 99.9 in January, which acted as a tailwind for the shared currency Euro. Meanwhile, the hopes of stronger rate hikes from the ECB remain amid receding hawkish bias from the Fed.
For the technical aspect, RSI indicator 47 figures as of writing, suggesting that the pair could witness heavy bearish momentum as the RSI is falling sharply below the mid-line. As for the Bollinger Bands, the price declined sharply and dropped below the moving average, therefore the downside traction should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 1.0858 support level. On the upside, the pair could gain bullish momentum once above the 1.0919 resistance.
Resistance: 1.0919, 1.1032
Support: 1.0858, 1.0807, 1.0779
GBPUSD (4-Hour Chart)
GBP/USD struggles to hold above 1.2400. In the second half of Monday, the pair witnessed some bearish traction and fell below 1.224. The market sentiment ahead of key events this week seems to support the US dollar index and therefore exert pressure on its rivals. The pair is now trading at 1.2368, posting a 0.22% loss daily. Meanwhile, the US dollar index holds above 102 level, now at 102.18, and the benchmark 10-year US Treasury bond yield rises 1% to above 3.5%, making it difficult for GBP/USD to gain upside traction.
For the technical aspect, RSI indicator 47 figures as of writing, failing to provide a directional clue as the RSI indicator maintains around mid-line without significant movement. As for the Bollinger Bands, the price is moving up and down around the horizontal moving average, signaling that the pair is lack main traction. In conclusion, we think the market is in consolidation mode until there is a decisive breakthrough to trigger follow-through buying or selling. For the uptrend scenario, the price needs a firm break above resistance at 1.2426 to show bullish impetus. For the downtrend scenario, if the price drop below the support at 1.2341, it may trigger some technical selling and drag the GBP/USD pair further toward the next support at 1.2292.
Resistance: 1.2426, 1.2493, 1.2593
Support: 1.2341, 1.2292, 1.2188
XAUUSD (4-Hour Chart)
The gold price has lost its upside traction and fell toward $1,920 after having advanced above $1,930 in the European trading session. The market sentiment ahead of key events this week seems to support the US dollar index. Meanwhile, the benchmark 10-year US Treasury bond yield rose 1% to above 3.5%, making it difficult for Gold prices to gain upside traction. At the time of writing, the Gold price is trading at $1,923, posting a 0.23% loss daily.
For the technical aspect, RSI indicator 44 figures as of writing, close to mid-line, failing to provide a directional clue as the RSI indicator keeps moving up and down around mid-line for a while. As for the Bollinger Bands, the price keeps edging below the horizontal moving average, signaling that the pair is turning weak from the latest uptrend. In conclusion, we think the market is in modest bearish mode since both indicators show the uncertainty of traction. Besides, we can see the price keeps edging lower and testing support at $1922. For the downtrend scenario, a convincing break below the support at $1922 may trigger some technical selling and drag the Gold price back toward the $1,900 round-figure mark. For the uptrend scenario, the pair should establish itself above the current support at $1922 first. To regather bullish strength, it should also recover the lost territory from the multi-month high around the $1,949 zone, which has become a strong barrier in the near term for bulls.
U.S. equities enjoyed another rally on Friday to close the week on a positive note. The Dow Jones Industrial Average climbed 0.08% to close at 33978.08. The S&P 500 gained 0.25% to close at 4070.56. The tech-heavy Nasdaq Composite rose 0.95% to close at 11621.71. On Friday, Fed’s favorite U.S. inflation gauge, the U.S. PCE price index figure was released coming in at 0.3%, in line with broad market expectations.
Signs of slowing inflationary pressure have once again convinced market participants to bet on a softer Fed FOMC move this week. Markets are now broadly pricing in a more than 80% chance of a 25 basis point interest rate hike at the upcoming FOMC interest rate decision.
The benchmark U.S. 10-year treasury yield edged higher throughout Friday and was last seen trading at 3.509%. The policy-sensitive 2-year treasury yield sits at 4.213%, as of writing.
Mainland China will resume trading after a week-long Lunar New Year break. Market participants around the globe are now looking at China to extend the January rally into February. Over this Lunar New Year break, consumer spending has outpaced the comparable period in 2019, providing a whiff of optimism for the week ahead.
Earnings season continues with Alphabet Inc headlining today’s earnings. Alphabet Inc. will report earnings after the market closes. Wallstreet analysts are predicting an EPS of 1.21.
Main Pairs Movement
The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, gained 0.1% throughout last Friday’s trading. The Dollar moved higher despite the U.S. PCE index showing inflation rising at the slowest rate since October 2021; furthermore, the Core PCE, which excludes the volatile food and energy prices, increased 0.3%, month over month, also in line with market expectations.
EURUSD retreated 0.21% throughout last Friday’s trading. The Euro fared worse against the Dollar as the Greenback gained attraction amid weaker consumer spending and softening price pressure.
GBPUSD lost 0.15% throughout last Friday’s trading. The cable could not hold on to gains from earlier last week and ended the week 0.07% lower as the Dollar regains traction.
XAUUSD lost 0.08% throughout last Friday’s trading. The yellow metal continued to lose ground after a 0.88% decline on the 26th. The haven asset now faces a critical support level at around the $1928 per ounce price region.
Technical Analysis
EURUSD (4-Hour Chart)
EUR/USD slid toward 1.086 on Friday. The US Dollar gathers support from the mostly upbeat US macro data released, which, in turn, exerts pressure on its rivals. On the other hand, expectations for a more hawkish European Central Bank (ECB) seem to provide some support to EUR/USD. The market focus is now shifting to the key central bank event risks next week. The Fed will announce its policy decision on Wednesday. This will be followed by the ECB Interest Rate Decision on Thursday, which will play a key role in determining the next traction for EUR/USD.
For the technical aspect, RSI indicator 46 figures as of writing, sliding to below the mid-line, signaling that the market is losing its upside traction. A downward correction could persist. As for the Bolling Bands, the price is now moving below the moving average. The upward momentum seems weak as the moving average keeps horizontal in the near term. In conclusion, we think EUR/USD is in correction mode since the price is edging lower toward the support at 1.0861. Besides, both the RSI indicator and Bolling Bands signal that the pair is under pressure. For the uptrend scenario, the pair is testing support at 1.0861. The bulls must defend this level first to retain control. For the downtrend scenario, if the price drop below the support at 1.0861, it may trigger some technical selling and drag the EUR/USD pair further toward the next support at 1.0710.
Resistance: 1.0918, 1.1032, 1.1131
Support: 1.0861, 1.0780, 1.0710
GBPUSD (4-Hour Chart)
The GBP/USD pair continues with its struggle to find acceptance above the 1.2400 mark and comes under some selling pressure on the last day of the week and is set to finish Friday with losses of at least 0.20% Though the inflation of the United States continues to wane but remains twice elevated of Fed’s target, the continue grows of this pair, close at 1.2406 at the end of Thursday then dropped toward 1.2370, break the support at 1.2341. The US Federal Reserve (Fed) preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) for December, climbed 4.4% YoY, lower than November’s 4.7%, cementing the Fed’s cause of lower the size of subsequent interest rate increases, throughout the remainder of the year. Headline inflation rose by 5% YoY, well above the Fed’s target of 2%.
For the technical aspect, RSI indicator 56 figures as of writing, above mid-line, but signaling no strong upward momentum. As for the Bollinger Bands, the price holds around the horizontal moving average, indicating that the pair is under consolidation. In conclusion, we think the market is in consolidation mode until there is a decisive breakthrough to trigger follow-through buying or selling. For the uptrend scenario, the price needs a firm break above resistance at 1.2426 to show bullish impetus. For the downtrend scenario, if the price drop below the support at 1.2341, it may trigger some technical selling and drag the GBP/USD pair further toward the next support at 1.2292.
Resistance: 1.2426, 1.2493, 1.2593
Support: 1.2341, 1.2292, 1.2188
XAUUSD (4-Hour Chart)
Gold price struggles to gain upside traction on Friday. The US Dollar gathers support from the mostly upbeat US macro data released, which, in turn, exerts pressure on the dollar-denominated gold. Meanwhile, The benchmark 10-year US Treasury bond yield rise to above 3.5% ahead of the weekend, not allowing Gold to gain traction. At the time of writing, the gold price is trading at 1929.51, trying to defend the 1930 area. As for the economic calendar, the market focus is shifting to the key central bank event risks next week. The Fed will announce its policy decision on Wednesday. This will be followed by the ECB Interest Rate Decision on Thursday, which will play a key role in determining the next traction for Gold price.
For the technical aspect, RSI indicator 49 figures as of writing, close to mid-line, signaling the uncertainty of direction and the lack of main traction as the RSI indicator keeps moving up and down around mid-line for a while. As for the Bollinger Bands, the price is now moving below the moving average. The traction seems weak as the moving average keeps horizontal in the near term. In conclusion, we think the market is in modest bearish mode since both indicators show the uncertainty of traction and the price keeps edging lower. For the downtrend scenario, if the price drop below the support at $1922, it may trigger some technical selling and drag the Gold price further toward the next support at $1898.
The US jobs data and rate statements from the Bank of England (BoE) and the European Central Bank (ECB) are currently the focus of attention for many market participants. These announcements have the potential to significantly impact global financial markets, as they provide insights into the health of the respective economies and monetary policy decisions.
With traders, investors, and economists eagerly awaiting these updates, the release of these data points is sure to cause market volatility.
Here are the key events for the week ahead:
Canada Gross Domestic Product m/m (31 January)
Canada’s economy grew 0.1% in October 2022, surpassing the earlier estimate of no growth. This marks a slowdown from the previous month’s 0.2% growth.
Experts predict no change in Canada’s economy in December 2022, forecasting 0% growth from November.
US ADP Non-Farm Employment Change (1 February)
The US private sector added 235,000 jobs in December 2022, surpassing November’s figure of 182,000. However, January is predicted to see a decline with only an additional 131,000 new jobs.
US ISM Manufacturing PMI (1 February)
The US ISM Manufacturing PMI declined to 48.4 in December 2022, marking the second consecutive month of contraction. This shift in spending from goods to services caused the decline.
For January, analysts predict a PMI of 48.
FOMC Meeting and Rate Decision (1 February)
During the final Federal Open Market Committee (FOMC) meeting in December 2022, the US Fed increased the fed funds rate by 50bps to 4.25%-4.5%. Analysts predict a similar increase of 50bps this month.
BoE Monetary Policy Report (2 February)
At its December 2022 meeting, the BoE raised interest rates by 50bps to 3.5% with a 6-3 vote. This decision was made to control inflation and counteract concerns of an impending recession. Analysts anticipate the BoE will make another 50bps increase in this meeting.
ECB Monetary Policy Statement (2 February)
The ECB plans to raise interest rates by 50bps in February and March, with additional increases to follow. Analysts predict another 50bps increase this month.
US Non-Farm Employment Change (3 February)
In December 2022, the US economy experienced job growth of 223,000, the lowest since December 2020. The unemployment rate decreased to 3.5%.
For January, analysts anticipate job growth of 175,000 and a slightly higher unemployment rate of 3.6%.
US ISM Services PMI (3 February)
In December 2022, the US ISM Services PMI dropped from 56.5 in November to 49.6. Analysts expect the PMI to remain in the 49-50 range this month.
U.S. equities marched higher over the course of Thursday’s trading. The Dow Jones Industrial Average rose 0.61% to close at 33949.41. The S&P 500 climbed 1.1% to close at 4060.43. The tech-heavy Nasdaq Composite gained 1.76% to close at 11512.41. Market participants turned a blind eye to the mixed U.S. GDP report, which showed that, despite aggressive rate hikes from the Fed, the U.S. GDP expanded at a faster-than-estimated pace into the end of 2022. Consumer spending, accounting for 68% of GDP, increased 2.1%, down slightly from 2.3% in the previous period but still positive. Weekly jobless claims fell by 6000, down to 186000 for the lowest reading since April 2022.
U.S. Treasury yields ticked higher amid a strong rally across equity markets. The benchmark U.S. 10-year treasury yield edged above 3.5% and was last seen trading at 3.503%. The policy-sensitive 2-year treasury yield currently sits at 4.187%.
Intel failed to deliver on earnings for the fourth quarter of 2022; furthermore, the chip maker gave one of the gloomiest quarterly forecasts in its history. The company is predicting a surprise loss in the current period and a sales miss by billions of dollars. Intel Corp. reported an EPS of 0.1, missing Wall Street estimates by more than 50%. Q4 revenue came in at 14.04 Billion, 3.1% lower than general consensus. Intel shares traded nearly 10% lower in after-hours trading.
Main Pairs Movement
The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, advanced 0.17% over the course of yesterday’s trading. The Dollar was buoyed by surging demand for U.S. treasuries ahead of Friday’s U.S. PCE data release. Markets are now pricing in a 25 basis point increase by the Fed at the next FOMC meeting.
EURUSD lost 0.22% over the course of Thursday’s trading. The Euro fared worse against the Dollar as market participants bid up the Greenback. The strong U.S. job report also acted as a tailwind for the Dollar.
GBPUSD edged 0.07% higher over the course of yesterday’s trading. Cable continued to advance after a 0.51% gain on Wednesday. U.K. PMI, which was released on the 24th, indicated a drop in prices.
XAUUSD dropped 0.88% over the course of Thursday’s trading. The Dollar denominated Gold fared worse against the Dollar as market participants demanded U.S. treasuries and bidding up the Greenback.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair declined lower on Thursday, remaining under pressure and declined below 1.0900 level after the release of the United States Gross Domestic Product (GDP) data. The pair is now trading at 1.0866, posting a 0.34% loss on a daily basis. EUR/USD stays in the negative territory amid renewed US Dollar strength, as the greenback is volatile on Thursday following US economic reports and ahead of next week’s FOMC meeting. The US GDP report showed that the US economy expanded at an annualized rate of 2.9% in the fourth quarter, which came in slightly better than the market expectation for an expansion of 2.6% and strengthened the US Dollar that hit fresh daily highs across the board. In the Eurozone, the inflationary pressures are softening in Eurozone as supply chain bottlenecks are easing. But European Central Bank policymakers are still not satisfied with the scale of the interest rate and are reiterating more interest rate hikes ahead.
For technical aspect, RSI indicator 46 figures as of writing, suggesting that the pair could witnessed heavy bearish momentum as the RSI is falling sharply below the mid-line. As for the Bollinger Bands, the price declined sharply and dropped below the moving average, therefore the downside traction should persist. In conclusion, we think market will be bearish as the pair is now testing the 1.0861 support level. On the downside, the intraday sellers should seek entry below the aforementioned support level.
Resistance: 1.0918, 1.1032, 1.1131
Support: 1.0861, 1.0780, 1.0710
GBPUSD (4-Hour Chart)
The GBP/USD pair declined lower on Thursday, coming under bearish pressure and refreshed its daily low around 1.2350 mark after the release of the release of US economic data. At the time of writing, the cable stays in negative territory with a 0.18% loss for the day. The strong US growth data bolstered the US Dollar during the US trading session and acted as a headwind for the GBP/USD pair. At the same time, Durable Good Orders for December rose 5.6% MoM and Initial Jobless Claims for the week ending January 21 fell to 186K. Therefore, the odds for a smaller interest rate hike by the Federal Reserve are soaring and investors will look for clues about the future path from next week’s FOMC meeting. For the British pound, the dismal retail sales reported in the United Kingdom weighed heavily on the nation’s currency, as the data slumped over the last month at the fastest rate since April 2022.
For technical aspect, RSI indicator 52 figures as of writing, suggesting the bearish bias for the pair as the RSI is retreating from positive levels. As for the Bollinger Bands, the price preserved its downside momentum and dropped towards the moving average, therefore a continuation of the downside trend can be expected. In conclusion, we think market will be bearish as long as the 1.2426 resistance line holds. On the downside, a clear break of the 1.2341 hurdle becomes necessary for the GBP/USD sellers.
Resistance: 1.2426, 1.2493, 1.2593
Support: 1.2341, 1.2292, 1.2188
XAUUSD (4-Hour Chart)
Following the release of the Gross Domestic Product (GDP) preliminary reading in the United States on Thursday, the pair XAU/USD dropped sharply and retreated from a nine-month high above $1949 mark amid upbeat US economic data. XAU/USD is trading at 1926.44 at the time of writing, losing 1.03% on a daily basis. The US Dollar Index (DXY) is staging a comeback after being battered throughout the week and exerted bearish pressure to the dollar-denominated gold. Meanwhile, the recent release of downbeat US Retail Sales and PMI data has revived concerns over the health of the US economy, boosting expectations of smaller rate hikes from the US Federal Reserve in the upcoming policy meetings. As for now, the focus will shift to the US Core PCE Price Index due on Friday, which will play a key role in influencing the Fed’s rate-hike path.
For technical aspect, RSI indicator 46 figures as of writing, suggesting that the downside is more favored as the RSI stays below the mid-line. As for the Bollinger Bands, the price witnessed fresh selling and retreated towards the lower band, therefore the downside trend should persist. In conclusion, we think market will be bearish as the pair is heading to test the $1,922 support level. On the downside, if sellers extend their control below the abovementioned keysupport, an downside move toward the $1,898 level cannot be ruled out.
Insights 
VT 
