The Japanese Yen took center stage as it rallied ahead of the Bank of Japan‘s (BoJ) interest rate decision. The market widely believes that the Japanese central bank is likely to maintain its current interest rate policy, but anticipates a potential shift from its ultra-loose policy very soon. At the same time, the Australian dollar is finding support from the recently released Reserve Bank of Australia (RBA) meeting minutes.
Although the RBA had previously left interest rates unchanged, the minutes indicated that the Australian authorities remain focused on fighting inflation while keeping the door open for further rate hikes. Furthermore, oil prices continue to be supported by the attacks on ships in the Red Sea, which are disrupting oil supplies and contributing to the ongoing market momentum.
Dollar Index, H4
The US dollar held its ground in the absence of any major catalysts, leaving the overall trend flat. Investors are eagerly awaiting the upcoming release of the Core PCE Index, which is expected to provide crucial insight. While market speculation is swirling around potential Fed rate cuts in March and throughout the year, the Fed’s dovish sentiment may have been fully absorbed. Traders are advised to be patient and wait for future economic data and Fed statements to provide a clearer picture of the Dollar’s likely trajectory.
The Dollar Index is trading higher and is currently testing resistance. The MACD is showing increasing bullish momentum, while the RSI is at 42, indicating that the index may extend its gains after the breakout, as the RSI has rebounded sharply from the oversold territory.
Resistance level: 102.60, 103.50.
Support: 101.80, 101.30.
GBP/USD, H4
The GBP/USD pair is struggling to gain momentum for a potential turnaround as the US dollar continues to show strength. The dollar was supported by a hawkish statement from the Federal Reserve, with the Cleveland Fed President tempering the market’s optimism regarding potential interest rate cuts. Looking ahead to tomorrow, the British Consumer Price Index (CPI) is expected to have an impact on the Cable’s (GBP/USD) movement.
The GBP/USD is supported near the 1.2630 level, while the bullish momentum is waning dramatically. The RSI is dropping from the overbought zone to the 50 level, while the MACD has crossed the upper border and is approaching the zero line, indicating that the bullish momentum has disappeared.
Resistance level: 1.2729, 1.2815.
Support: 1.2630, 1.2528.
EUR/USD, H4
The Euro has experienced a technical retracement from its recent bullish run, but has maintained an overall bullish trend. Currently, the market is anticipating and waiting for the Euro’s Consumer Price Index (CPI) data to act as a catalyst for the pair to make a clear directional move. The pair appears to be trading sideways as traders await important economic data that could influence the strength of the Euro and guide future price movements.
The bearish momentum is easing and the pair is moving higher, indicating a possible trend reversal for the pair. The MACD is falling and approaching the zero line, while the RSI is floating above the 50 line, indicating that the bullish momentum is weakening.
