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.
US dollar rallies up after Fed
- The US dollar has surged to levels unseen since April after the Fed's decision back on Wednesday. The central bank hinted about two rate hikes in 2023 and also started a discussion on cutting bond buys.
- Gold has reversed up from the local dips. Still, this week was the worst for gold in more than a year. Crude oil is recovering as well.
- AUD/USD is sharply falling despite strong Australian labor figures released on Thursday. It has just hit the lowest level unseen since December.
- GBP/USD has broken below 1.39 amid the strong USD and a jump in virus cases to levels unseen since mid-February. Besides, UK Retail Sales dropped by 1.4% in May and added to the headwinds.
- Bitcoin is on the back foot once again. It has just dropped below $38,000.
EUR/USD has dropped out of the lower trend line to the support level of 1.1900. The RSI indicator has touched the 30.0 level indicating the pair is oversold. Thus, the pair should reverse up from the current levels. The move above the 1.1950 resistance level will lead the pair to the 200-day moving average of 1.2000. If the current bearish momentum remains, EUR/USD may fall to the low of March 8 at 1.1840.
Gold has bounced off the 61.8% Fibonacci retracement level of $1770. The yellow metal is edging higher to the 50% Fibo level of $1800. It’s unlikely to cross this level on the first try as it has failed to do so in late April – early May. Support levels are $1170 and $1735.
XBR/USD (Brent crude oil) is moving inside the ascending channel. The breakout above mid-June of $74.00 will push oil to the next round number of $75.00. Support levels are $72.00 and $ 71.00.
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.
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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.