- The USD index is currently near 102.00 and maintaining a bullish outlook.
- The index has been supported near 101.50 and has advanced for the second session in a row.
- The improvement in the dollar is in part due to positive results from the US economy, as demonstrated by recent GDP figures.
- The US data space, specifically inflation figures tracked by the PCE, will be a key focus in the near future.
- The Federal Reserve’s potential pivot in policy and the prospect of additional rate hikes vs speculation of a recession are ongoing issues that may affect the value of the USD.
EURUSD: EUR/USD Price Analysis Ahead of Fed and ECB’s Decisions:
- The US core PCE, the Fed’s preferred gauge for inflation, edges down, sparking speculations for a Fed pivot.
- Consumer Sentiment improved, while inflation expectations ticked lower.
- The EUR/USD got rejected from the 1.0900 psychological barrier for two consecutive days and on Friday slipped to the 1.0860 region after data from the United States (US) cemented the case for a 25 bps rate hike by the Fed.
USDJPY: USD/JPY Bears Face Major Support Ahead of Key US Data:
- USD/JPY bulls need to commit at the daily support structure near a 61.8% ratio of the recent bullish impulse.
- Should the US Dollar break higher into the 102s DXY, then the 132.00 area and beyond will be eyed.
- The bears need to get below current support at 129.70, with 129.50 being a likely area of firmer support for the day ahead.
GBP/USD: GBP/USD Retreats as Inflation Data Justifies Lower Rate Hikes by Fed:
- GBP/USD slips to 1.2370s after facing resistance at 1.2400
- US inflation continues to wane but remains twice elevated of Fed’s target
- GBP/USD is expected to remain sideways ahead of the Fed and BoE monetary policy decisions.
AUD/USD: AUD/USD flat-lines around 0.7100, just below multi-month top ahead of US PCE:
- AUD/USD struggles to gain any meaningful traction and remains confined in a range.
- A combination of factors revives the USD demand and acts as a headwind for the pair.
- Bets for additional RBA rate hikes lend support ahead of the key US PCE Price Index.
USD/CHF: USD/CHF Price Analysis: Recovery Attempts Above 0.9200:
- The USD/CHF is upward biased but faces resistance at the confluence of a downward slope trendline and the 20-day Exponential Moving Average (EMA) around the 0.9235/40 area.
- Bulls remain hopeful for higher prices as long as the USD/CHF stays above the January 26 daily low at 0.9158.
- Potential resistance levels include the January 24 daily high at 0.9279 and the January 12 high at 0.9360, while a break below 0.9158 could lead to a dip towards the YTD low at 0.9085.
GOLD: Gold Price Forecast Slips Below $1930 After US PCE and UoM Consumer Sentiment:
- US Core PCE, the Fed’s gauge for inflation, cooled down, leading to speculation that the Fed may raise rates by 25 bps at their upcoming meeting.
- The University of Michigan Consumer Sentiment survey showed that inflation expectations for a one-year horizon are estimated at 3.9%, and for a 5-year horizon at 2.9%.
- US Treasury bond yields continue to be headwinds for gold, with the US 10-year Treasury bond yield edging higher and the US Dollar Index advancing 0.22%.
SILVER: Silver Price Remains Under Pressure on Friday.
- Silver extends the previous day’s retracement slide and remains under selling pressure on Friday
- The lower end of a four-day-old ascending trend channel, which coincides with the 100-hour SMA, acts as a pivotal point for short-term traders
- A sustained move beyond the $24.50-$24.55 area will negate the negative bias and allow the XAG/USD to reclaim the $25.00 psychological mark for the first time since April 2022.
OIL: WTI Crude Oil Prices Cling to Mild Gains on Cautious Optimism and US Dollar Weakness:
- WTI crude oil prices print mild gains as market shows cautious optimism about future energy demand
- US Dollar weakness and China’s reopening underpin bullish bias, but mixed details of US GDP and hawkish concerns from central banks probe buyers
- Traders will pay close attention to the Fed’s preferred inflation gauge, Core Personal Consumption Expenditures, for clear direction on future price movements.
Watch Out This Week
- On Feb 01, the EUR PMI report will come out. A figure that is higher than anticipated should be viewed as positive (bullish) for the EUR, while a figure that is lower than anticipated should be viewed as unfavorable (bearish).
- On February 03, Nonfarm payrolls report, released on first Friday of each month, has significant impact on USD, bond and stock markets. Higher than expected figures seen as positive for USD, lower than expected figures seen as negative for USD.
- It is important to pay attention to the report on continuous Jobless Claims on 2nd Feb, as it may have significant impacts on major currencies. The financial markets are greatly impacted by first-time jobless claims, as they indicate new and emerging unemployment, unlike continuous claims data, which tracks the number of individuals receiving unemployment benefits. An above average figure is considered negative for the USD, while a below average figure is considered positive for the currency.