FOMC Meeting Minutes Have Little Impact On Dollar

* Upbeat Nvidia earnings reports provide fresh momentum for U.S. Stock markets.

* FOMC meeting minutes showed board members stick with the current monetary policy, the dollar standing pat.

*Israel-Hamas tension intensified, oil and gold prices gained.

Fundamental Overview

The Dollar Index displayed limited volatility in the aftermath of the highly anticipated release of the FOMC meeting minutes yesterday. As predicted, board members voiced apprehensions about the potential risks associated with swift rate cuts, emphasising a preference for maintaining elevated interest rates for an extended duration to avert potential harm to the economy. Despite a consensus that interest rates may have reached their peak, uncertainty remains regarding the timing of the first rate cut.

In the commodities market, Israel escalated its attacks on Gaza after unsuccessful ceasefire talks, instigating a more than 1% gain in oil prices in the last session. Concurrently, gold prices held firm above the $2020 level.

Furthermore, market participants are attentively observing economic indicators from the eurozone, including PMI readings and the Consumer Price Index (CPI), to gauge the euro’s strength. The intricate interplay of global geopolitical events, central bank communications, and economic data continues to mould market dynamics across diverse asset classes.

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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 US Dollar maintains a neutral stance as the FOMC meeting minutes unveil a nuanced outlook, with Federal Reserve officials expressing both optimism and caution regarding inflation. The minutes reveal a sense of accomplishment in curbing inflation but underscore the need for a careful assessment of economic data before any rate-cutting decisions. The focus pivots back to US economic performance as the central bank remains deliberate in its approach.

The Dollar Index is currently trading lower, testing the support level. However, technical indicators such as MACD show diminishing bearish momentum, and RSI at 40 suggests the potential for a technical correction, especially as RSI rebounded sharply from oversold territory.

Resistance level: 104.60, 105.70

Support level: 103.80, 103.00

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XAU/USD, H4

In the aftermath of the Federal Reserve’s cautious approach towards hastening interest rate cuts, gold prices witnessed a decline but managed to resiliently hold above the crucial support level of $2025. The prevailing risk-off sentiment in the market, fueled by ongoing uncertainties in Middle East tensions, is reinforcing gold’s safe-haven appeal amid a changing economic landscape. 

Gold prices are currently trading lower following a retracement from the resistance level. The MACD indicates a rise in bearish momentum, while the RSI at 58 suggests the possibility of further losses, especially considering the sharp retreat of RSI from overbought territory.

Resistance level: 2035.00, 2060.00

Support level: 2015.00, 1985.00

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CL OIL, H4

Crude oil prices are on the rise, driven by indications of tightening supplies amid escalating geopolitical tensions in the Middle East. Continued concerns over Houthi attacks on commercial vessels in the Red Sea are prompting a reassessment of short-term supply constraints. However, these gains are tempered by a bearish API inventory report that revealed a higher-than-expected increase in US crude inventories. All eyes are now on the upcoming EIA oil inventory report for further signals in the market.

Oil prices are currently trading higher, testing the resistance level. The MACD indicates a decrease in bearish momentum, while the RSI at 57 suggests the possibility of further gains following the breakout, as the RSI remains above the midline.

Resistance level: 78.65, 81.20

Support level:75.20, 71.35