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The US central bank turned the market upside down. It signaled that higher inflation is a concern and that it’s considering tapering policy. The USD soared versus other major currencies, while gold headed for the biggest weekly loss in 15 months. Let’s see what new moves await us this week!
The outlook for the USD is now strong, so levels below 1.20 may be more appropriate for EUR/USD. Traders will continue monitoring comments from the ECB and the Fed that are expected on Monday and Tuesday, Wednesday, and Thursday respectively. Overall, it won’t be easy for EUR/USD to recover.
The British pound will be in the center of the market’s attention not only versus the US dollar, but also against the euro, the yen, and other currencies as everything will depend on the Bank of England’s policy statement that will be out on Thursday. If the UK central bank follows the path of the Federal Reserve and acknowledges economic recovery and inflation, the GBP will recover. Otherwise it will fall.
The yellow metal dropped below $1800, as the Fed’s talk about policy normalization makes gold less attractive to investors. XAU/USD will remain under pressure as long as the price is staying below $1855. Market players will likely keep selling gold on recoveries.
At the start of last week, Brent rose to the highest levels since 2018 above $73 a barrel. Then there was a correction down on the Fed’s press conference. Still, global economic recovery and rising demand are going to keep the price supported, so the idea is to keep looking for buy opportunities.
Risk warning
The following information is not investment advice. Remember that trading is risky. Manage your funds carefully and remember that you can use Take Profit and Stop Loss orders to maximize your gains and limit your losses.
The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
Happy Wednesday, traders! We went through the Internet and found the best news for you, take a look!
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
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