The U.S. dollar remains strong above the $105 mark following the Fed Chair’s statement. U.S. long-term Treasury yields have surged, indicating sustained elevated interest rates into the next year.
U.S. equity markets, alongside their Asian counterparts, are grappling with headwinds following a challenging central bank week. The consistent hawkish tone from Fed officials, coupled with warnings of potential future rate hikes if inflation persists, has spurred investors to withdraw funds from the equity market at a rate not seen since December. Consequently, the dollar index has firmly consolidated at levels last witnessed in March, while gold prices remain locked in a struggle around the $1920 mark. In contrast, oil prices have staged a rebound, finding support above $90. Hedge funds have shown renewed bullishness toward WTI, encouraged by OPEC+ supply cuts and a more optimistic outlook for both the U.S. and China.
XAU/USD
Gold prices continue to consolidate within a range, as investors brace for the deluge of crucial economic data emanating from the United States. Investors are poised to direct their attention towards job market statistics and inflation figures as they seek guidance for their trading strategies.
Gold prices are trading lower following the prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 49, suggesting the commodity is experiencing technical correction since the RSI rebounded sharply from oversold territory.
EUR/USD
The euro has endured a 10-week losing streak against the resurgent dollar. A surprise 25 basis points rate hike from the ECB last week did little to halt the euro’s downward spiral, indicating a prevailing bearish sentiment. The dollar, buoyed by the persistent hawkish tone from the Fed, has continued to strengthen against other currencies, maintaining its position above the $105 mark.
EUR/USD is struggling to stay above its near support level at 1.0638; a bearish engulfing earlier and price consolidation at lower regions suggest a bearish signal for the pair. The MACD has been flowing below the zero line while the RSI hovers below the 50 level, suggesting the prevailing bearish momentum.
GBP/USD
The GBP/USD pair continues its decline, primarily driven by the surprise rate pause from the Bank of England (BoE). This pause has weakened the sterling, while the U.S. dollar remains strong, propelled by the hawkish statement from the Federal Reserve and the relatively robust U.S. economy compared to the UK. The Cable saw a decline of more than 1% last week, leaving investors concerned about the state of the UK’s economy. All eyes are now on the economic data scheduled for release on Friday, which will be closely watched to gauge the strength of the sterling.
GBP/USD is trading in a strong bearish momentum and has declined sharply after a bearish engulfing candlestick pattern is formed. The RSI is on the brink of dropping into the oversold zone while the MACD continues to move lower suggesting the bearish momentum is strong.
