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.

Resistance: 1850, 1870, 1900

Support: 1820, 1800

Economic Data

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.

Resistance: 1850, 1870, 1900

Support: 1820, 1800

Economic Data

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US stocks declined lower on Wednesday, witnessing some selling pressure, and dropped for a second straight session after economic data highlighted persistent inflationary pressures and Federal Reserve officials continued to sound hawkish. Data released in the US showed ISM Manufacturing PMI increases to 47.7 in February, which came in below the market expectation of 48.

The PMI report indicated that the economic activity in the US manufacturing sector continued to contract in February, providing some support to the US Dollar. Meanwhile, stock markets witnessed downside pressure as investors are still struggling to ignore fears of more rates from the Federal Reserve. Moreover, hawkish commentaries delivered by Fed policymakers also fueled US Treasury yields as Minneapolis Fed President Neel Kashkari reiterated on Wednesday that inflation in the US is still very high and that their job is to bring it down. The jump in the US Treasury bond yields suggests the market’s fears of inflation and recession, which in turn undermined the stock markets.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Wednesday as the S&P 500 closed the day at its lowest level in nearly six weeks as market sentiment remained fragile after Fed officials stay hawkish. The S&P 500 was down 0.5% daily and the Dow Jones Industrial Average meanwhile was little changed for the day. Eight out of eleven sectors in the S&P 500 stayed in negative territory as the utility sector and the Real Estate sector is the worst performing among all groups, losing 1.72% and 1.49%, respectively. The Nasdaq 100 meanwhile dropped the most with a 0.9% loss on Wednesday and the MSCI World index was down 0.3% for the day.

Main Pairs Movement

DXY was lower across the board after the release of China’s manufacturing PMI last month, the highest in over a decade. Price fell 0.45% to 104.40 in late trading  New York session on Wednesday. The ISM Manufacturing Index edged up to 47.7 last month, the first increase in six months, but remains in contractionary territory. At the time of writing, the price traded at 104.385.

WTI bulls are in the market amid signs of stronger demand in Asia and Europe. Fundamentally, US commercial crude oil inventories gained less than expected last week, rising only 1,166kbbl. However, US exports of crude hit a record high of 5,629kbbl last week (+22.4% w/w). At the time of writing, the price traded at 77.764.

The Dow Jones Industrial Average rose 5.14 points, or 0.02%, to 32,661.84, the S&P 500 lost 18.76 points, or 0.47%, to 3,951.39 and the Nasdaq Composite dropped 76.06 points, or 0.66%, to 11,379.48.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD trimmed gains but held above the critical short-term support level following the release of the ISM Manufacturing PMI, which boosted the US Dollar across the board. Data released in the US showed activity in the Manufacturing sector contracted again in February with the ISM PMI rising from 47.4 to 47.7 (below 50 marks contraction), against a market consensus of 48. The inflation indicators of the ISM report pushed Treasury yields to the upside. The US 10-year bond yield reached 4% for the first time since November. In the Eurozone, the preliminary estimate of the German Harmonized Index of Consumer Prices (HICP) rose at an annualized pace of  9.3% in February, hotter than the previous 9.2% and the 9% anticipated by market players. The news pushed the Euro further up, meaning the ECB could take an even more aggressive stance.

From a technical perspective, the four-hour RSI indicator rallied dramatically to 60 figures as of writing, suggesting that the pair was surrounded by strong bullish momentum. As for the Bollinger Bands, the pair was pricing around the upper band and the size between the upper and lower bands get larger, showing the pair was amid strong positive traction and more favored to the upside path.

Resistance: 1.0788, 1.0929

Support: 1.0508, 1.0400

XAUUSD (4-Hour Chart)

The XAUUSD extended its rally on Wednesday and tried to challenge the $1840 mark in the American trading session despite tepid US macroeconomic figures helping the greenback. Market participants have been moving away from the US Dollar these days amid positive news affecting its major rivals as well as some tepid data. Earlier, the US released the February ISM Manufacturing PMI, which resulted at 47.7, barely improving from the previous 47.4 and missing the expected 48. The survey further showed that “new order rates remain sluggish due to buyer and supplier disagreements regarding price levels and delivery lead times,” indicating persistent price pressures. The report triggered a run to safety, which benefited the safe-haven greenback, however, not for long. Apart from this, the 10-year Treasury note is currently at around 4.0%, and the 2-year note yield hovering near a 16-year high of 4.904%.

From the technical perspective, the four-hour scale RSI indicator edged higher further, showing the upside traction surrounding gold is still strong. As for the Bollinger Bands, the pair was continuing trading along with the upper band and the gap between the upper and lower bands get larger, indicating that the pair’s upside momentum would persist in the near term.

Resistance: 1850, 1870, 1900

Support: 1820, 1800

Economic Data

The Dow fell Tuesday, wrapping up February with a monthly loss as surging rates battered stocks after a string of data pointing to underlying strength in the economy forced investors to price in higher for longer Federal Reserve interest rates.

The Dow Jones Industrial Average fell 0.65%, or 214 points, taking losses for February to about 4%. The S&P 500 fell 0.29%, and the Nasdaq Composite was down 0.10%.

Tech, which is down about 5% from its peak earlier this month, pared earlier gains despite a jump in Meta. On the economic front, meanwhile, consumer confidence in February fell to its lowest reading since November, pointing to signs strong consumer spending, which has underpinned strong growth so far this year, may be starting to slow.

The yield on the benchmark 10-year Treasury note was last lower by 1 basis point at 3.912%. Earlier, it touched a high of 3.983%, its highest level since Nov. 10. Meanwhile, the yield on the 30-year Treasury bond rose less than 1 basis point to 3.922%. Tuesday marks the final day of trading in February. The 10-year Treasury yield has advanced more than 50 basis points for the month, and the 2-year yield has gained more than 70 basis points. Those gains come as traders increasingly bet on Federal Reserve rates staying higher for longer, as recent data points to persistent inflation. The core personal consumption expenditures price index rose 4.7% in January from the year-earlier period, beating expectations. The overall PCE index advanced 5.4% year over year, also more than expected.

Main Pairs Movement

DXY bulls flirt with the 105.00 hurdles during Wednesday’s sluggish Asian session, following a stellar rebound marked a few hours ago. In doing so, the US Dollar’s gauge versus the six major currencies portrays the market’s cautious mood as traders brace for the key data/events lined up during the all-important March month, comprising Federal Reserve Chairman Jerome Powell’s speech and Fed’s monetary policy meeting. At the time of writing, the price traded at 105.042.

West Texas Intermediate futures on NYMEX, have corrected firmly after facing firmer barricades above $77.50 in the late New York session. The oil price has dropped $76.60 and is expected to remain on the tenterhooks as investors are awaiting the release of the Caixin Manufacturing PMI data for fresh impetus. At the time of writing, the price is trading at 76.65.

The AUD/USD pair has slipped sharply to near 0.6700 as the Australian Bureau of Statistics has reported mixed Gross Domestic Product (GDP) (Q4) data. The GDP data landed at 0.5% in Q4, lower than the consensus of 0.8% and the Q3 figure of 0.6%. At the time of trading, the price traded at  0.6700.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD lost bullish momentum and retreated below the 1.0600 level in the US trading session after touching a daily high of around 1.0650 level. The US Consumer Confidence Survey declined to 6.3% in February from 6.7% in January, however, failing to provide a robust boost for the pair. Now, the effects of rate hikes have not yet shown up because of the usual lags in their impact. This will change and price pressures will then ease noticeably as the year progresses. If this does not happen, and the Fed has not cooled demand sufficiently, then we can expect there will be more rate hikes than previously the market anticipated. In Eurozone, Spanish, and French inflation figures came in above market expectations in February, according to preliminary estimates. At the time being, speculative interest pricing in rate hikes will continue until early 2024, while the ECB’s terminal rate is currently seen at 4%.

From a technical perspective, the four-hour scale RSI indicator slid below the midline, suggesting that bearish momentum triggered by US data failed to sustain in the middle of the US trading hour and also showed that the pair currently have no clear moving path. As for the Bollinger Bands, the pair was capped by the upper band around the 1.0640 level and trading in the upper area, indicating the pair was more favored to hover in a range from 1.0580 to 1.0650.

Resistance: 1.0788, 1.0929

Support: 1.0508, 1.0400

XAUUSD (4-Hour Chart)

The XAUUSD recovered further on Tuesday and was trading around the $1830 mark as of writing, as the US Dollar turned south during the American trading hour. The greenback was hit by the Conference Board Consumer Confidence Index as it fell for a second consecutive month in February, printing at 102.9 against the 108.5 anticipated by market players. Moreover, the Expectations Index fell further to 69.7 from a downwardly revised 76.0 in January. A reading below 80 often signals a recession within the next year, according to the official report. Meanwhile, the US equity market was trading with a mixed tone, the Nasdaq held on to modest intraday gains, while the Dow Jones Industrial Average witnessed heavy selling transactions for a second consecutive day. Meanwhile, US government bond yields ticked north. Early news indicating increased inflationary pressures in Spain and France spurred speculation the European Central Bank (ECB) will maintain its monetary tightening policy until early 2024, while the terminal rate is now seen at 4%.

From a technical perspective, the four-hour scale RSI indicator surged to 58 figures, suggesting that the pair were surrounded by strong bearish traction. As for the Bollinger Bands, the pair was capped by the upper band at the moment of writing, if the price could break through the upper band, the bull could target the next resistance of the $1850 mark.

Resistance: 1850, 1870, 1900

Support: 1820, 1800

Economic Data

Stocks rose Monday as traders tried to recover some ground following the worst week of the year on Wall Street. Investors also looked ahead to another big week in retail earnings. The Dow closed higher Monday, as dip buying in beaten-down growth stocks helped the broader market recover following its worst week of the year.

The Dow Jones Industrial Average gained 72.17 points, or 0.22%, to close at 32,889.09.

The S&P 500 was up 0.31% at 3,982.24, and the Nasdaq Composite rose 0.63% to 11,466.98.

The moves came as Treasury yields eased, following a jump on Friday after a hotter-than-expected reading from the Federal Reserve’s favorite inflation metric.

Last week, some data frightened investors, and the US bond yield climbed again. People have become a bit numb to rate hikes and understand that the terminal rate may be higher than expected, and the market is not concerned about inflation data for the next month, but for the next 6, 9, or even 12 months.

Main Pairs Movement

USD Index eyes the first monthly gain in five despite week-start retreat from the multi-day top

US Dollar Index holds lower grounds near $104.60 during the mid-Asian session on Tuesday, after posting the biggest daily loss in five. It’s worth noting that the greenback’s previous losses could be linked to mixed US data and a retreat in the US Treasury bond yields. At the time of writing, the price traded at $104.639.

The cable is flat in Asia as markets consolidate the opening range and the US Dollar softness that kicked in at the start of the week. Meanwhile, the Bank of England is seen increasing Bank Rate by a further 25 bps to 4.25% in March. At the time of writing, the price is trading at $1.20666 and has stuck to a $1.2042/67 range so far.

WTI advances towards $76.00 as investors look optimist for Caixin Manufacturing PMI.

WTI futures on NYMEX, have extended their recovery above the immediate resistance of $75.80 in the early Asian session. The oil price is exposed to the critical resistance of $76.00 as investors are optimistic about the release of the Caixin Manufacturing PMI data, which is scheduled for Wednesday.

At the time of writing, the price traded at $75.561.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD is having so far the best day since February 1 on Monday, boosted by a weaker US Dollar across the board on the back of an improvement in risk sentiment and a retreat in Treasury yields. The pair was currently trading at the 1.0590 level and facing some headwinds around the psychological resistance at the 1.0600 level. On the data side, US data showed a larger-than-expected decline in Durable Goods Orders. The headline dropped by 4.5%, against expectations of a 4% slide. Most details of the report were positive. A different report showed Pending Home Sales surged 8.1% in January, surprising market participants that expected an increase of 1%. Compared to a year ago, sales were down 24.1%. The US Dollar further weakened after the economic figures, helping EURUSD move further north.

From the technical perspective, the four-hour scale RSI indicator climbed back to the neutral area, showing the heavy selling pressure has weakened. As for the Bollinger Bands, the pair was trading around a 20-period moving average and the gap between upper and lower bands became smaller, suggesting the market is waiting for more clues for the future path. In our view, Investors should be aware of the downside tendency has not vanished, the pair is still more favored to the south path despite a strong corrective rebound on Monday.

Resistance: 1.0788, 1.0929

Support: 1.0508, 1.0401

XAUUSD (4-Hour Chart)

The XAUUSD regain positive strength and rebound to above the $1815 mark at the moment of writing, as the US dollar lost its upside momentum since the European trading session. This week, a bunch of mid-tier US macroeconomic releases could help shape how much more room gold price can have to the downside ahead of the crucial March 22 Federal Reserve (Fed) meeting. The US Durable Goods Orders data released earlier today came out mixed. The headline figure was worse than expected, showing a bigger decline (-4.5%) than what the consensus had forecast (-4.0%). Gold price reacted modest-but-positively to this release as the US Dollar witnessed heavy selling transactions.

From the technical perspective, the four-hour scale RSI indicator returned to the 45 figures, suggesting the pair were still surrounded by slight bearish traction. As for the Bollinger Bands, the pair was supported by the lower band and capped by the 20-period moving average, showing the pair continued to move in the downside pattern.

Resistance: 1850, 1870, 1900

Support: 1820, 1800

Economic Data

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US stocks suffered from daily losses last Friday, witnessing heavy selling pressure, and extended their weekly rout following data that showed the core PCE rose at the highest rate in six months. The annual Core PCE Price Index, which is also the Federal Reserve’s preferred gauge of inflation, edged higher to 4.7% and came in higher than the market expectation of 4.3%.

Therefore, the hotter-than-estimated inflation data suggested growing bets the Federal Reserve has a long way to go in its aggressive tightening crusade, making the odds of a soft landing look slimmer. Investors dumped US equities after a higher-than-anticipated jump in consumer spending in January fueled the risk of more policy tightening by Fed chair Jerome Powell in March. On top of that, the Federal Reserve (Fed) officials were also hawkish and backed the US Dollar bulls, as well as weighing on the equity markets. As per the latest reading of the FEDWATCH tool, market players price a year-end effective fed funds rate at 5.3%, versus 5.1% signaled by the US central bank in its December meeting.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower last Friday as the S&P 500 experienced the worst slide in 2023 after hot PCE inflation data provided a boost to the US Treasury bond yields. The S&P 500 was down 1.1% daily and the Dow Jones Industrial Average meanwhile dropped lower with a 1.0% loss for the day. Nine out of eleven sectors in the S&P 500 stayed in negative territory as the Real Estate sector and the Information Technology sector are the worst performing among all groups, losing 1.82% and 1.77%, respectively. The Nasdaq 100 meanwhile dropped the most with a 1.7% loss last Friday and the MSCI World index was down 1.2% for the day.

Main Pairs Movement

The US dollar advanced higher last Friday, marking a four-week uptrend by the end of the day, and ground near the highest levels in seven weeks amid strong United States data. The hawkish Federal Reserve concerns have provided strong support to the safe-haven greenback, as hawkish Federal Reserve (Fed) talks underpin markets bets of higher Fed rates. Cleveland Fed President Loretta Mester told CNBC on Friday that his funds’ rate was above the median in December and still thinks they need to be somewhat above 5%.

GBP/USD dropped lower last Friday with a 0.57% loss after the cable extended its intraday slide and touched a daily low near the 1.1930 mark in the late US session amid a stronger US Dollar and higher US yields. On the UK front, bets for additional rate hikes by the BoE might limit the downside for the currency. Meanwhile, EUR/USD also witnessed some selling interest and touched a daily low below the 1.0540 mark. The pair was down almost 0.45% for the day.

Gold suffered from daily losses with a 0.62% loss for the day after dropping to the lowest levels in two months below the $1810 level during the US trading session, as the strong US data underpinned hawkish Federal Reserve concerns and weighed on the yellow metal. Meanwhile, WTI Oil rebounded sharply with a 1.23% gain for the day.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD further declined to its lowest level since early January below 1.0550 as of writing following the surprisingly high US core PCE inflation, rising to 4.7% in January, compared to market expectation of 4.3%, which provided a boost to the US Dollar. More detailed data saw Personal Income expand by 0.6% MoM also in January and Personal Spending increased by 1.8% compared to the previous month. However, it’s also worth noting that markets are already fully pricing in two more 25 basis points for Fed rate hikes in March and May. Currently, speculation the Fed will do a 50 basis points rate hike is mounting based on the stronger-than-expected growth in monthly core PCE inflation, and the CME FedWatch Tool showed the probability of a 50 bps rate hike rose to 32.9%.

From the technical perspective, the four-hour scale RSI indicator fell below the critical overselling level, suggesting that the pair were surrounded by strong bearish momentum, but investors should be aware of the corrective pullback. As the Bollinger bands, the pair continued to move along with the lower band, showing the pair was more favored to the downside path.

Resistance: 1.0788, 1.0929

Support: 1.0508, 1.0401

XAUUSD (4-Hour Chart)

Gold price remained under bearish pressure and priced at its lowest level since late December near the $1810 mark. On the back of stronger-than-expected PCE inflation data for January, the benchmark 10-year US Treasury bond yield is up more than 1% on the day near 3.95%, weighing on XAUUSD. The recent series of strong United States economic data and hawkish Federal Reserve (Fed) commentary has heightened expectations for three rate hikes this year – 25 basis points (bps) each in the March, May, and June meetings. Earlier in the US session, the US headline PCE rose 5.4% in the year to January from 5.3% and the core PCE rallied to 4.7% from a year earlier, both prints surpassing initial estimates. Markets now price the Federal Reserve terminal rate at 5.347% in July, remaining above 5% through the year.

From the technical perspective, the four-hour scale RSI indicator dropped below overselling level, suggesting that the pair was under heavy bearish pressure, but market participants should be cautious about a corrective pullback. As for the Bollinger Bands, the gold was priced below the lower band and the size between upper and lower bands gets larger, showing the downside tendency would persist shortly.

Resistance: 1850, 1870, 1900

Support: 1820, 1800

Economic Data

This week, the markets will be watching closely as two of the most influential economic indicators – US ISM Manufacturing and Services PMI figures – are released. With these reports being used to measure the overall health of the US economy, the results could have a dramatic effect on financial markets worldwide. This makes them an essential area for market participants to keep tabs on.

Here are key events to watch out for:

Gross Domestic Product | Canada (28 February)

The Canadian economy continued its upward trend in Q3 2022, growing by 0.7%, marking the fifth consecutive quarter of growth. 

Analysts predict that the economy will continue to grow and expand by 0.4% in Q4 2022.

CB Consumer Confidence (28 February)

The Consumer Confidence Index fell from 109 in December to 107.1 in January 2023, according to the Conference Board. 

However, analysts anticipate a possible recovery in the index, with a projected increase to 109 in February.

Consumer Price Index (CPI) | Australia (1 March)

The Consumer Price Index in Australia increased to a new high of 8.4% in December 2022, up from 7.3% in November. 

Analysts predict that the Australian CPI will continue to rise, with an 8.6% increase projected for January 2023.

ISM Manufacturing Purchasing Managers’ Index | US (1 March)

The US ISM Manufacturing PMI fell to 47.4 in January 2023, the lowest level since May 2020. 

Analysts predict a slight rebound in the PMI for February, with a reading of 47.9.

ISM Services Purchasing Managers’ Index | US (3 March)

The ISM Services PMI for the United States unexpectedly rose to 55.2 in January 2023, up from a 2-1/2-year low of 49.2 in December. 

Analysts predict that the PMI will fall slightly in February 2023 at 54.6.

US stocks advanced higher on Thursday, regaining upside momentum, and rose in a jittery session after US indexes trimmed part of their losses ahead of the close. The impressive rebound witnessed in huge companies like Microsoft Corp. and Apple Inc has underpinned the Nasdaq 100 despite the hawkish FOMC Meeting Minutes and mixed United States figures.

On Thursday, the US Q4 GDP report showed that the annualized pace of growth in the country was downwardly revised to 2.7% from 2.9% in the last quarter of 2022. Meanwhile, the Personal Consumption Expenditure Prices rose by 3.7% QoQ, which indicated that inflationary pressures in the same period were higher than previously estimated.

The economic data further fueled speculation the US Federal Reserve will continue to hike rates in the upcoming meetings. Market players are now waiting for the US January Personal Consumption Expenditures Price Index, which is the Fed’s preferred price gauge, is expected to show acceleration.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced higher on Thursday as the S&P 500 came back up after erasing a rally of almost 1% with a series of twists and turns on Wall Street. The S&P 500 was up 0.5% daily and the Dow Jones Industrial Average meanwhile climbed higher with a 0.3% gain for the day. Seven out of eleven sectors in the S&P 500 stayed in positive territory as the Information Technology sector and the Energy sector are the best performing among all groups, rising 1.63% and 1.27%, respectively. The Nasdaq 100 meanwhile rose the most with a 0.9% gain on Thursday and the MSCI World index was up 0.3% for the day.

Main Pairs Movement

The US dollar edged higher on Thursday, preserving its upside strength but then retreated slightly back from a daily high above 104.70 level during the US trading session amid hawkish Fed bets. The Fed is expected to continue its policy tightening to achieve price stability as the upbeat labor market in the United States could underpin the Consumer Price Index (CPI) sooner. The USD Index is likely to remain volatile ahead of the release of the United States Core Personal Consumption Expenditure (PCE) Price Index data.

GBP/USD dropped lower on Thursday with a 0.27% loss after the cable extended its intraday slide and touched a daily low below the 1.2000 mark in the late US session ahead of US PCE Inflation. On the UK front, the BoE policymaker is worried about the extended persistence of inflation and sees the need for more tightening. Meanwhile, EUR/USD also witnessed some selling interest and touched a daily low around the 1.0580 mark. The pair was down almost 0.10% for the day.

Gold suffered from daily losses with a 0.17% loss for the day after witnessing further downside move and printed a fresh seven-week low below the $1820 level during the US trading session, as the US data fueled market concerns and weighed on the yellow metal. Meanwhile, WTI Oil rebounded sharply with a 1.95% gain for the day.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD extended its bearish tendency and was trading below the 1.0600 level as of writing, under pressure since the day started. The US Dollar continued to strengthen on the back of hawkish US Federal Reserve (Fed) prospects. The Federal Open Market Committee (FOMC) Meeting Minutes released on Wednesday is more hawkish than anticipated, which showed that a few members would have preferred a 50 bps hike and that participants believe the continued tight job market would contribute upward pressure to inflation. The news boosted demand for the US Dollar as stock markets turned south. In Eurozone, the final estimate of the January Harmonized Index of Consumer Price (HICP), was confirmed at 8.6% YoY. However, the core reading was upwardly revised to 5.3% from a preliminary estimate of 5.2%.

From the technical perspective, the four-hour scale RSI indicator hovered just above the oversold zone, suggesting the pair was pressured by heavy bearish traction. As for the Bollinger Bands, the pair was moving along with the lower, trying to find support in the lower band, but the size between the upper and lower bands get larger, showing the downside tendency has a high chance to persist shortly.

Resistance: 1.0788, 1.0929

Support: 1.0508, 1.0401

XAUUSD (4-Hour Chart)

Gold price maintains under bearish pressure on Thursday as risk aversion continued underpinning the US Dollar. Gold price keeps edging lower in the course of trading and hit the lowest $1,817.58 in the US session, while the US dollar advanced on the back of hawkish FOMC Meeting Minutes. On the other hand, inflationary pressures in the same period were higher than previously estimated. Personal Consumption Expenditure Prices rose by 3.7% QoQ, higher than the 3.2% expected, while the core reading came in at 4.3% higher than the 3.9% from the third quarter of 2022. The figures fueled speculation that the US Federal Reserve will hike rates further in the upcoming meetings.

For the technical aspect, RSI indicator 36 figures as of writing, maintaining in sell region as Gold price is still under a bearish trend. As for the Bollinger Bands, the price is moving down along with the lower band. This and the downward moving average signal some bearish potential. A continued downtrend could be expected. In conclusion, we think the market is in bearish mode as both indicators show bearish potential. We believe the downtrend would persist. For the downtrend scenario, the price is holding at $1,820. If the price close below the level, it may head to test the crucial support at the round-figure mark of $1,800.

Resistance: 1850, 1870, 1900

Support: 1820, 1800

Economic Data