Dollar Ease On Profit-Taking Sentiment

* U.S. Retail Sales and PPI are in focus after strong CPI. 

* Australian Job data came short, pressuring the Aussie dollar.

*Japanese GDP failed to meet expectations, softening Japanese Yen sparking BoJ intervention speculation.

Fundamental Overview

The Dollar Index (DXY) initially gained momentum driven by positive Consumer Price Index (CPI) figures, but experienced a subsequent moderation as profit-taking sentiments took hold in the market. Despite this, the steadfastly hawkish stance maintained by Federal Reserve officials suggests the potential for the dollar to sustain its robust bullish trajectory, quelling expectations of a rate cut in May. Investors are closely watching key economic indicators, particularly today’s U.S. Retail Sales data and tomorrow’s Producer Price Index (PPI) reading, which are deemed pivotal events shaping the future trajectory of the Dollar Index.

In a parallel development, Japan’s recently released Gross Domestic Product (GDP) figures exceeded the previous reading at -0.1%, providing support for the weakening Japanese Yen. Speculation in the market revolves around the possibility of Japanese authorities intervening as the USD/JPY pair approaches the critical 150 mark.

Conversely, oil prices faced further downward pressure, influenced by the strengthened U.S. dollar. The U.S. crude stockpile data revealed a significant increase, surpassing market consensus and breaching the 12 million barrel mark, amplifying challenges for oil prices in the market.

---

Current rate hike bets on 20th March Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (92%) VS -25 bps (8%)  

---

Economic Calendar

(MT4 System Time)

Source: MQL5  

Market Movements

DOLLAR_INDX, H4

The Dollar Index has experienced a retreat from its three-month high on the back of the robust Consumer Price Index (CPI) reading released on Tuesday. Market participants are currently in a state of anticipation, awaiting additional evidence, particularly the upcoming Retail Sales figures. This cautious approach stems from the notion that speculation about a potential rate cut from the Federal Reserve might be delayed further. The prevailing upbeat economic performance has contributed to sticky inflation, prompting traders to seek more concrete data before adjusting their expectations regarding the Fed’s monetary policy stance.

The Dollar Index is trading in a higher price pattern and is approaching its next hurdle at the 105 mark. Despite dropping out of the overbought zone, the RSI remains flowing at the higher region while the MACD rebounded above the zero line, suggesting the bullish momentum remains strong.

Resistance level: 105.70, 107.05

Support level: 104.60, 103.80

---

XAU/USD, H4

Gold prices experienced a significant tumble due to the strengthening US Dollar in the last session but has found support at near 1993 levels. On the other hand, the geopolitical uncertainty in the Middle East region is escalating with the latest development that the Israeli Prime Minister halted the ceasefire talk between Hamas. Such development may boost the demand for safe-haven gold. 

Gold prices are approaching their crucial support level at near $1993 levels with strong bearish momentum. The RSI has dropped into the oversold zone while the MACD is on the brink of crossing each other, suggesting the bearish momentum is easing. 

Resistance level: 2020.00, 2050.00

Support level: 1968.00, 1933.00

---

CL OIL, H4

Oil prices have faced headwinds, impacted by the strength of the U.S. dollar, particularly at a robust resistance level close to the $78 mark. The situation has been exacerbated by the latest U.S. stockpile reading, which revealed a significant increase, surpassing 12 million barrels. This unexpected surge in stockpiles has intensified the downward pressure on oil prices, contributing to a challenging environment for the commodity. 

Oil prices traded with strong bearish momentum and are approaching their key liquidity zone at near 75,50 levels. The RSI dropped drastically while the MACD crossed above the zero line, suggesting the bearish momentum is increasingly strong. 

Resistance level: 78.65,  81.20

Support level:75.20, 71.35