- Last week, the USD saw some movement as it reversed Thursday’s decline to weekly lows and regained the area north of the 103.00 barrier. The index maintained its choppy trading this week and further sidelined trading is likely in the short term. However, the recent price action leaves the door open to the continuation of the consolidative phase for now. Despite the rebound, the outlook for the index remains negative while it stays below the 200-day SMA at 106.45.
- Powell also touched upon the topic of inflation, stating that the Fed expects inflation to rise in the near term, but that it will be temporary and largely driven by supply chain disruptions and reopening of the economy. He emphasized that the Fed will be patient and flexible in addressing inflationary pressures and will not be premature in adjusting monetary policy.
- Gold price extended its losses in the session, down by 0.22%. Gold Price Forecast: Daily close below the 50-EMA could expose Gold to further selling pressure. Gold price remains firm at around $1860 after hitting a week-to-date new low of $1852.45 on Friday due to speculations that the US Federal Reserve would raise rates by 25 bps in the next couple of meetings, as money market futures showed. A bid in the US Dollar and US Treasury bond yields reaching fresh 5-week highs capped Gold’s advancement.
- Hawkish commentary by Fed officials, headwinds for XAU. Meanwhile, US Treasury bond yields continued to underpin the US Dollar (USD). The 10-year benchmark note rate is up six bps, at around weekly highs of 3.728%, a headwind for XAU’s prices. The US Dollar Index (DXY), which tracks the buck’s value vs. a basket of peers, advances 0.37% daily, up at 103.57. The University of Michigan’s Consumer Sentiment improved, while inflation expectations jumped for 2023. This, along with the hawkish comments by Fed officials, has put pressure on gold prices and contributed to its recent dip.
EURUSD: Threat of Further Decline:
- EUR/USD resumes downward trend after recent uptick.
- Deeper decline could see retest of February low near 1.0670.
- Constructive view remains unchanged above 200-day SMA, currently at 1.0321.
USDJPY: USD/JPY pressured by rumors of a new Bank of Japan Governor appointment.
- Downward bias remains, but buyers reclaiming 20-day EMA could play psychological 131.00 level.
- Intraday chart shows downward bias, invalidation of bullish continuation pattern.
- To resume upward bias, USD/JPY must clear day’s high at 131.87, followed by weekly high at 132.90.
GBP/USD: GBP/USD Stumbles amid Improved US Consumer Sentiment and Weak UK GDP Data:
- US Consumer Sentiment improved as reported by the University of Michigan.
- UK GDP stood at 0% in Q4 2022, avoiding a recession but with a weak forward outlook for the British Pound.
- GBP/USD drops as it tests the 50-day Exponential Moving Average (EMA) at 1.2126.
- GBP/USD next support is at the 100-day EMA at 1.2032 with the potential to test the YTD low of 1.1841 if broken.
AUD/USD: AUD/USD Falls amid Broad-Based USD Strength, Risk-Off Mood:
- AUD/USD comes under pressure due to follow-through USD buying
- Hawkish Fed expectations and rising US bond yields boost USD
- Looming recession risks weigh on risk-sensitive Aussie and benefit safe-haven USD
- RBA’s hawkish outlook cushions downside for AUD/USD, but US data and Fed speech in focus
USD/CHF: Reclaims 20-DMA, Eyes 50-DMA:
- The USD/CHF jumps from weekly lows and forms a hammer at around the 0.9200 area
- The USD/CHF is upward biased in the near-term and might test the 0.9300 figure
- The USD/CHF remains neutral-to-downward biased in the long-term but could test the 50-day EMA at 0.9294
- The USD/CHF 4-hour chart is bottoming with a bullish RSI and RoC, with key resistance areas at the 200-EMA and 0.9300 figure.
GOLD: The gold price is under pressure as the Fed raises interest rates and US Treasury yields rise:
- Gold price extends losses in the session, down by 0.22%
- University of Michigan’s Consumer Sentiment improves, inflation expectations jump for 2023
- Daily close below the 50-EMA could expose Gold to further selling pressure
- Hawkish commentary by Fed officials and rising US Treasury bond yields put headwinds on XAU/USD prices
SILVER: Silver Price Trends Bearish Despite Corrective Bounce:
- Silver price (XAG/USD) shows a corrective bounce near 10-week low
- Clear break of weekly trading range and trading below 200-HMA favors sellers
- Buyers should remain cautious until renewing monthly high
- Silver price remains bearish with key support levels at $21.85 and $20.58.
OIL: Crude Oil Futures Reversal with Decreasing Open Interest and Volume:
- Advanced prints from CME Group showed decrease in open interest by 2.5K contracts.
- Volume also declined for the second consecutive session.
- WTI reversed a three-session positive streak with the downside.
- Decline in open interest and volume leaves room for the continuation of upside momentum in the short term, with immediate hurdle at the 2023 peak of $82.60 (January 23).
Watch Out This Week
- On 15th February, the GBP yearly inflation report will come out. A figure that is higher than anticipated should be viewed as positive (bullish) for the USD, while a figure that is lower than anticipated should be viewed as unfavorable (bearish).
- On February 16th, Continuous Initial Jobless Claims report has a significant impact on USD, bond and stock markets. A higher than expected figure should be seen as negative (bearish) for the USD while a lower than expected figure should be seen as positive (bullish) for the USD.
- It is important to pay attention to the report on USD Retail Sales on 15th Feb, as it may have significant impacts on major currencies. A higher than expected figure should be seen as positive (bullish) for the USD while a lower than expected figure should be seen as negative (bearish) for the USD.