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On Wednesday, the US equity market experienced volatility despite the reassurance from Fed chief Jerome Powell that the central bank is not seeking to cause a recession and that no decision has been made on the size of a rate increase in March. Powell’s testimony to American lawmakers increased bets that the Federal Reserve will remain hawkish in the coming months, particularly after the release of another round of hot jobs figures. Powell reiterated that officials are likely to raise rates higher than previously anticipated and could move at a faster pace if necessary. Policymakers will closely scrutinize Friday’s jobs report for three key indicators: payrolls, wage gains, and the unemployment rate.
In terms of performance, the S&P500 and Nasdaq100 edged higher on a daily basis with gains of 0.14% and 0.5%, respectively. Seven out of eleven sectors in the S&P500 stayed positive, with the Real Estate sector performing the best with a daily gain of over 1%. However, the Dow Jones Industrial Average fell 0.2%, and the MSCI world index edged lower by 0.1% for the day.
Main Pairs Movement
On Wednesday, the US dollar remained steady but was down from its three-month highs reached earlier in the day. This followed Federal Reserve Chairman Jerome Powell’s second day of testimony before Congress, which offered no major surprises. Investors are now waiting for Friday’s jobs data. The DXY index traded in a range between 105.4 and 105.8, with a daily low of 105.36 during Powell’s speech.
The GBPUSD edged higher with a 0.13% gain for the day, remaining sideways within a narrow range from 1.8000 to 1.8500. The EURUSD was little changed down as investors also waited for jobs data on Friday.
Gold was little changed up with a 0.02% daily gain, as investors looked for more clues amid concerns about the hawkish Federal Reserve and recession woes. XAUUSD surged above $1820 during the early American trading session but lost bullish momentum and fell back to around the $1814 region.
Technical Analysis
EURUSD (4-Hour Chart)
According to the 4-hour chart analysis, the EUR/USD pair was little changed on Wednesday, recovering slightly from a two-month low and holding onto modest daily gains above the 1.0540 level. The pair is currently trading at 1.0546, posting a 0.02% loss on a daily basis. The market has priced in Powell’s hawkishness from Tuesday, and the pair stayed in positive territory amid renewed US dollar weakness.
The RSI indicator is currently at 35, suggesting that the downside is more favored as it is stable near the oversold territory. However, the price rebounded from the lower Bollinger Band, indicating some upside movements can be expected. If the 1.0531 support line holds, the market is expected to be slightly bullish. However, a steeper decline could be expected on a break below the 1.0531 level.
The resistance levels for the EUR/USD pair are at 1.0631, 1.0685, and 1.0790, while the support levels are at 1.0531 and 1.0467. The European Central Bank is ready for its monetary policy announcement next week, which could also impact the pair’s movements.
Resistance: 1.0631, 1.0685, 1.0790
Support: 1.0531, 1.0467
XAUUSD (4-Hour Chart)
The XAU/USD pair extended its downtrend during Wednesday’s trading session, reaching the lowest since February. The bearish move was not sustained, and the price bounced back slightly to trade around $1814.26 at the time of writing. The daily chart shows a bearish outlook for gold, and the risk remains skewed to the downside.
Looking at the 4-hour chart, the bears remain in control as gold trades below all its moving averages, with the 20 SMA accelerating south between the longer ones. The momentum indicator remains directionless within negative levels, while the RSI indicator resumed its decline after correcting oversold conditions, currently at around 36.
If the bearish pressure continues, the immediate support levels to watch are $1,804, $1,789, and $1,774. On the other hand, a rebound in gold’s price could face resistance at $1,829, $1,841, and $1,858.
In conclusion, the bearish trend in gold remains intact, and a sustained break below the support levels could lead to further downside momentum. However, any rebound in price would face significant resistance levels, and a reversal in the trend would require a significant shift in market sentiment.
Jerome Powell’s hawkish rhetoric triggered a surge in Federal Reserve rate expectations, sparking concerns of a potential recession and causing a sell-off in the riskier segments of the market, resulting in Wall Street experiencing a reality check. During a Senate hearing, Powell suggested that the Fed may accelerate the pace of tightening and raise interest rates if inflation continues to soar. According to the CME FedWatchTool, the market now predicts a potential half-point hike in March and estimates the peak rate to reach around 5.6%. Additionally, the US 2-year yield surpassed the 10-year yield by one percentage point, indicating a curve inversion, which can be a sign of a looming recession.
As a result, the S&P 500 tumbled below 4,000, and all eleven sectors of the S&P500 remained bearish. The Financial and Real Estate sectors were hit the hardest, declining by more than 2% each, while the Nasdaq 100, Dow Jones Industrial Average, and MSCI world index fell by 1.2%, 1.7%, and 1.5%, respectively. The sudden sell-off showed that the stock market was surrounded by bearish traction across the board, with no sector showing positive performance. The current situation in the market has raised concerns among investors, who fear that the economy may be heading toward a recession, especially since curve inversions are often seen as a potential harbinger of a recession.
Main Pairs Movement
The US dollar surged to a three-month high, marking its most significant gains since early October 2022. This unexpected rise was due to Fed Chair Powell’s surprising readiness for more rate hikes and bolstered bets of a 50 bps Fed rate hike in March. These remarks propelled “higher for longer” Fed rate expectations, bolstered US Treasury bond yields, and negatively impacted equities.
In particular, GBPUSD experienced a 1.62% drop as Powell’s hawkish testimony, Brexit concerns, and BoE rate hike worries weighed on Cable bears, causing the pair to fall sharply by almost 0.9% following Powell’s speech. Meanwhile, EURUSD also tumbled by 1.22% on Tuesday.
Additionally, XAUUSD witnessed a 1.82% drop on a daily basis, with gold prices being highly susceptible to the possibility of a firmer 50 bps rate hike from the Federal Reserve. As a result, the price of gold continued to decline throughout the trading session, experiencing almost 1% in losses within an hour.
Technical Analysis
EURUSD (4-Hour Chart)
On Tuesday, the EUR/USD pair plummeted below the 1.0580 level, recording a 0.92% loss for the day. The renewed strength of the US dollar, supported by the recovery of the US 10-year Treasury bond yield, pushed the pair into negative territory after Fed Chair Powell’s hawkish speech. Powell’s remarks about increasing the pace of rate hikes and a higher terminal rate than previously anticipated prompted the market to raise the odds of a 50 basis points rate hike at the March FOMC meeting to 50%. Meanwhile, investors in the Eurozone are anticipating more rate hikes from the ECB amid fears of higher inflation.
From a technical perspective, the RSI indicator and Bollinger Bands suggest a downside trend, with the pair testing the 1.0576 support line and the risk skewing to the downside if it falls below that level.
Resistance: 1.0686, 1.0790
Support: 1.0576, 1.0540, 1.0508
XAUUSD (4-Hour Chart)
Powell’s hawkish remarks have caused the gold price to drop below $1,820, reaching $1,815 at the moment. Market participants viewed Powell’s speech as hawkish, causing the chance of a 50 basis points rate hike to jump to nearly 50%. Gold prices continued to decline despite US yields moving off lows, as a stronger greenback and risk aversion influenced the market.
From a technical perspective, the gold price dropped by about 1.69% on the daily chart and is approaching the bottom of the range. The price is back below a bearish 20 SMA, which is currently converging with the 23.6% retracement of the latest decline at $1,841.05. On the four-hour chart, the gold price is developing below all its moving averages, with the 20 SMA gaining downtrend traction between the longer ones. Additionally, technical indicators are well below their midlines, indicating sustained selling interest.
The US stock market struggled to make gains due to concerns that a recent surge in prices may be overblown, given ongoing economic risks. The fate of the 2023 stock market recovery hinges on four major events before the Federal Reserve’s March 22 meeting, which will determine if the market will rebound after its February slump or experience a setback. Prior to the influential jobs report on Friday, Fed Chair Powell’s two-day appearance before Congress will set expectations for the next policy meeting. While Powell may highlight the economy’s resilience and the challenges of reaching inflation targets, experts predict he will not be overly hawkish or suggest a 50 basis-point hike.
On Monday, the S&P 500 briefly rose almost 1% before losing momentum. Most sectors remained relatively unchanged, with four staying in positive territory by the end of the day. Information technology performed best with a daily gain of 0.53%, while the materials sector suffered the most, falling 1.65%. Additionally, the Nasdaq 100 remained relatively stable, the Dow Jones Industrial Average rose 0.1%, and the MSCI world index gained 0.3% for the day.
Main Pairs Movement
On Monday, the US dollar experienced a 0.23% decrease in value. The Euro and CHF saw gains as Eurozone bond yields rose following hawkish comments from ECB officials. Investors are anxiously waiting for the key testimony from Federal Reserve Chairman Jerome Powell, especially given the challenges for the Fed’s hawkish monetary policy in light of recently mixed US data and Fed talks.
The EUR/USD pair reached weekly highs near 1.0700 but trimmed its gains, as it struggled to reclaim the round-level resistance of 1.0700 at the end of Monday. Eurozone Retail Sales data showed an annual contraction of -2.3%, which underscores the European Central Bank’s need for increased retail demand to achieve price stability.
Gold experienced a 0.52% decrease in value and remains under pressure after reversing from a three-week high. The upcoming speech from Federal Reserve Chairman Jerome Powell this week may have a negative impact on the price of gold, and the rebound of US Treasury bond yields has extended the downward pressure on the metal. Gold’s first support level is at the confluence of $1846.00, and if it breaks through, the price is expected to fall toward the March 3 daily low of $1835.51.
Technical Analysis
EUR/USD (4-Hour Chart)
On Monday, the EUR/USD pair gained bullish momentum, climbing to a daily high around the 1.0690 mark due to a positive shift in risk sentiment. Currently, the pair is trading at 1.0672, with a daily gain of 0.36%. The EUR/USD is staying in positive territory, mainly due to the weaker US Dollar against its major rivals and the risk-on impulse in the financial markets as reflected by US equities. Investors are also preparing for the US Federal Reserve (Fed) Chairman Jerome Powell’s speech at the US Congress on March 7 and 8, where he is expected to reiterate the Fed’s commitment to curb inflation and emphasize the need to maintain higher rates for longer periods.
Despite lower-than-expected economic data in the Eurozone, the Euro is outperforming on Monday. The Sentiment Investor Confidence index dropped in March to -11.1, and Retail Sales rose only 0.3% in February, below the 1% increase expected by the market consensus.
Regarding technical analysis, the RSI indicator is at 60, suggesting that the pair may witness some short-term corrections as the RSI is falling toward 60. The Bollinger Bands indicate that the price failed to maintain its upside traction and retreated from the upper band, indicating some downside movements. In conclusion, we believe that the market will be bearish as long as the 1.0710 resistance line holds. On the upside, bulls could have better chances if the EUR/USD regains the aforementioned 1.0710 level.
Resistance: 1.0710, 1.0790
Support: 1.0624, 1.0580, 1.0540
XAUUSD (4-Hour Chart)
The price of gold has fallen below $1,850 due to elevated US bond yields. At the time of writing, XAUUSD is trading at a daily low of $1,846.195, which represents a 0.5% or $13.085 drop from Monday’s trading session close. The US stock market is reflecting a risk-on impulse in the financial markets.
XAUUSD is likely to remain volatile as market participants prepare for US Federal Reserve Chairman Jerome Powell’s speech at the US Congress on March 7 and 8. Additionally, the market is focused on US employment data. In the prior month’s US Nonfarm Payrolls report, which crushed estimates of 200K, over 500K jobs were created in the economy. Positive data would send the price of gold further down, as further tightening in the labor market would warrant higher rates in the US economy to curb inflation.
On the technical side, from a daily chart perspective, the price is neutral to upward-biased once it conquers the 20 and 50-day EMAs. However, as US treasury bond yields trend upwards, gold is feeling the pressure, falling back to the $1,850 area. Moreover, the RSI exceeded 50 before turning bearish. Therefore, in the short term, the path of least resistance is downwards. The first support would be the 20 and 50-day EMAs at $1,846, followed by the previous low of $1835.51, the 100-day EMAs at $1,822.15, and the 200-day EMAs at $1805.16.
Major central banks are setting the stage for global markets this week, as key economies such as Japan and Australia will announce changes to their benchmark interest rates. The markets will also closely observe the US and Canada Employment Change. Monitoring these key metrics worldwide can help traders make better trading decisions.
Here are key events to watch out for:
Consumer Price Index (CPI) | Switzerland (March 6)
In January 2023, the CPI in Switzerland rose by 0.6% from the previous month. The figure for February is projected to be 0.4%.
Reserve Bank of Australia (RBA) Rate Statement | Australia (March 7)
The RBA increased the cash rate by 25bps to 3.35% in February, the ninth increase since May 2022.
Analysts expect the RBA to raise interest rates by another 25bps to 3.6%.
ADP Non-Farm Employment Change | US (March 8)
US private businesses generated 106,000 jobs in January 2023, substantially lower than the 253,000 jobs created in December 2022.
Analysts anticipate the US to add 168,000 jobs for February.
Bank of Canada (BOC) Rate Statement | Canada (March 8)
In its first meeting of 2023, the BOC increased its overnight rate by 25bps to 4.5% and suggested that it would conclude its aggressive tightening cycle if economic developments conformed to the central bank’s outlook.
For this month, analysts project that the BOC will keep the rates unchanged.
Bank of Japan (BOJ) Rate Statement | Japan (March 10)
During its January meeting, the BOJ unanimously decided to retain its key short-term interest rate at -0.1%, and maintain the 10-year bond yields at approximately 0%.
For this month, analysts predict that the BOJ will keep the rates unchanged.
Gross Domestic Product (MoM) | UK (March 10)
For the first time in three months, the British economy shrank 0.5% month-on-month in December 2022.
Analysts predict the UK GDP to be 0.0% in January 2023.
Employment Change | US and Canada (March 10)
In January 2023, the US economy added an unexpected 517,000 jobs, marking the most jobs created since July 2022, while the unemployment rate fell to 3.4%, the lowest since May 1969. During the same period, Canada added 150,000 jobs, the highest since February last year, and maintained an unemployment rate of 5%.
For February 2023, analysts anticipate the US to add 200,000 jobs, resulting in an unemployment rate of 3.6%. In Canada, employment is expected to increase by 20,000, with an unemployment rate of 5.2%.
US stocks managed to snap a three-week losing streak following Friday’s rally. Market sentiment remained upbeat despite a report showing resilience in the service sector, as more investors wagered the impact of the Fed’s hikes on the economy would be delayed. Bond yields rose for the week though Treasuries rallied on Friday, with the 10-year yield hovering around 3.96%. A dollar benchmark had its worst week since mid-January, ending four consecutive weeks of gains.
All eyes will be on the non-farm payrolls report next week for clues on whether the economy can handle more rate hikes. Data this week showed continued labor-market resilience in the US, supporting the case for the Fed to stick to its tightening policy. This theme had pushed almost every major asset into the red in February. In the benchmark, the Nasdaq 100 scored its best day since early February and all sectors of the S&P500 stayed in positive territory on Friday. Especially for the Information technology, Consumer Discretion, and Communication Services, sectors recorded more than 2% gains on a daily basis. Apart from this, the Dow Jones Industrial Average rose 1.2%, the Nasdaq 100 rallied by 2%, and the MSCI world index edged higher by 0.4% on Friday.
Main Pairs Movement
On Friday, the US dollar fell 0.48% against a basket of major currencies as investors increasingly bet that the Fed would hold off on raising interest rates, despite a report showing resilience in the service sector. The DXY index remained bearish throughout the day, closing below the key level of 104.530, even with the strong-than-expected labor report.
In contrast, the GBPUSD saw strong upward momentum, surging above the 1.2040 level, buoyed by the weaker US dollar. The pair closed the day with a 0.75% gain. The EURUSD also recovered, rising 0.36% on Friday, supported by the falling US dollar.
Meanwhile, gold rallied dramatically with a 1.12% gain on Friday, marking its first weekly gain in five weeks as buyers cheered the softer US dollar. The XAUUSD was surrounded by strong bullish momentum, closing above the $1855 mark on the last day of the week.
Technical Analysis
EURUSD (4-Hour Chart)
On Friday, the EURUSD saw a rally above the 1.0600 level in the middle of the American trading session. The US ISM Non-Manufacturing PMI for February was 55.1, which was slightly lower than the previous month’s 55.2, but it exceeded market expectations of 54.5, indicating that business activity is still strong. However, the Prices Paid Index subcomponent, which is looked at by investors for inflationary pressures, increased to 65.6, above estimates of 64.5, acting as a tailwind for the US Dollar. In the Eurozone, ECB Vice-President De Guindos suggested that headline inflation should fall below 6% at some point in mid-year. He also reiterated that decisions on future rate hikes will remain data-dependent and that the economy of the region is doing better than expected.
From a technical perspective, the four-hour scale RSI indicator rallied to the neutral region at 51 figures, suggesting that the pair currently has no obvious tendency. As for the Bollinger Bands, the pair was pricing around the 20-period moving average, showing that the pair now needs some fuel to help decide the direction.
Resistance: 1.0788, 1.0929
Support: 1.0508, 1.0400
XAUUSD (4-Hour Chart)
Despite the ISM Services PMI strengthening the US Dollar, gold prices rebounded toward the $1850 level on Friday. Additionally, the benchmark 10-year US Treasury bond yield remaining below 1.4% at the time of writing further supported the XAUUSD’s upward movement. The latest round of Federal Reserve (Fed) talks has renewed speculation about a policy pivot and combined with mixed US data, put downside pressure on the US Dollar and Treasury bond yields. However, cautious sentiment ahead of top-tier data/events and concerns about the Sino-American tussle over China’s ties to Russia is limiting XAU/USD’s immediate upside potential. Investors should focus on next week’s Fed Chairman Jerome Powell’s testimony and the monthly US jobs report for February.
From a technical standpoint, the four-hour RSI indicator has risen into the overbought zone at 72, indicating strong bullish momentum for the pair, and investors should be cautious of potential corrective pullbacks. Regarding the Bollinger Bands, the pair continues to price along the upper band, but the distance between the upper and lower bands has decreased, indicating that the upward trend may not be sustainable for an extended period.
US stocks rebounded on Thursday, ending a two-day losing streak, following Federal Reserve Bank of Atlanta President Raphael Bostic’s announcement that the central bank may pause rate hikes this summer. US Treasury bond yields had earlier risen to multi-month highs amid inflation fears, supporting the US dollar. However, other central bank officials have reiterated hawkish rhetoric, with Boston Fed President Susan Collins stating that more rate hikes are needed to control inflation, and economic data indicates a more restrictive monetary policy. Initial Jobless Claims declined to 190K, and Unit Labor Cost for Q4 was revised higher from 1.6% to 3.2%.
Both the S&P 500 and Dow Jones Industrial Average rebounded higher on Thursday, with the S&P 500 jumping the most in over two weeks and rising by 0.8%, while the Dow Jones Industrial Average rose by 1.1%. Nine out of eleven sectors in the S&P 500 stayed in positive territory, with the Utilities and Information Technology sectors being the best performers, rising 1.82% and 1.26%, respectively. Meanwhile, the Nasdaq 100 climbed higher with a 0.9% gain, and the MSCI World index remained little changed for the day.
Main Pairs Movement
The US dollar advanced higher on Thursday, erasing its recent losses and extending the intraday rally to a daily high above the 105.10 mark on the back of US economic data and higher US yields. The escalating fears of inflation and higher rates from major central banks allowed the US Dollar to post the biggest daily jump since early February. However, late Thursday’s comments from Bostic joined the cautious mood and let the greenback hold onto its gains.
GBP/USD dropped lower on Thursday with a 0.69% loss after the cable extended its intraday slide and touched a daily low near the 1.1930 mark in the late US session after US economic data warranted further tightening by the US Federal Reserve. On the UK front, investors are anticipating a pause or a deceleration in the pace of interest rate hiking by the Bank of England, which is expected to dump the Cable. Meanwhile, EUR/USD also witnessed selling momentum and touched a daily low below the 1.0580 mark, down almost 0.67% for the day.
Gold retreated slightly with a 0.05% loss for the day after halting its recent surge and falling from the weekly high above the $1842 level during the US trading session, as US Treasury bond yields gathered strength and exerted bearish pressure on the yellow metal. Meanwhile, WTI Oil climbed higher with a 0.60% daily gain.
Technical Analysis
EURUSD (4-Hour Chart)
On Thursday, the EURUSD faced bearish pressure and dropped below the 1.0600 level in the early American trading session. This was due to the Unit Labor Costs in the US increasing at a more robust pace than expected in Q4, causing the US Dollar to gain more strength. While the US Federal Reserve and European Central Bank officials maintained their hawkish rhetoric, ECB President Christine Lagarde noted in a TV interview that bringing inflation down will take time. She repeated that the possibility of a 50 basis points rate hike this month is still on the table since inflation remains high. However, the Eurozone Harmonised Index of Consumer Prices (HICP) rose 8.5% YoY in February compared to January’s 8.6%, missing the market’s expectation of 8.2%. Additionally, the core annual reading printed at 5.6%, higher than the previous 5.3%, and above the market expectations.
In technical terms, the four-hour scale RSI indicator retreated to a neutral area of 46 figures, suggesting that the pair is currently moving sideways. As for the Bollinger Bands, the pair was falling below the 20-period moving average, and the size between the upper and lower bands has changed little, indicating that the pair has not made a directive move.
Resistance: 1.0788, 1.0929
Support: 1.0508, 1.0400
XAUUSD (4-Hour Chart)
On Thursday, XAUUSD declined as the US Dollar gained momentum due to concerning news. Financial markets are preoccupied with worries about inflation and how central banks will react to persistent price pressures. In February, the Eurozone Harmonised Index of Consumer Prices (HICP) rose 8.5% YoY, a slight improvement from January’s 8.6%. However, it missed market expectations of 8.2%. Furthermore, the core annual reading came in at 5.6%, higher than both the previous and expected 5.3%. These troubling figures align with ECB President Lagarde’s statement that inflation’s decline is still unstable and remains too high. Meanwhile, the US Fed is also delivering hawkish messages, suggesting that the central bank may raise rates by more than 25 bps in upcoming meetings.
From a technical perspective, the RSI indicator on the four-hour scale was stable above the midline and measured 60 at the time of writing. This suggests that the pair had strong positive momentum. The Bollinger Bands showed that the pair was trading firmly in the upper area, indicating that gold retained its bullish momentum and was more likely to continue on an upward trajectory shortly.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
If you’d like more information, please don’t hesitate to contact [email protected]
Pandangan 
VT 
