Dollar Mutes Ahead of Powell’s Testimony

* Gold prices are on the brink to hit its all time high ahead of Powell’s testimony on Wednesday.

* Tokyo Core CPI came in line with the market expectation with an increase from the previous reading fuels hope for a rate hike from BoJ.

* TC surged to above the $68000 mark for the first time since November 2021. 

---

Fundamental Overview

As U.S. equity markets enter a period of cautious trading in anticipation of Federal Reserve Chair Jerome Powell’s upcoming testimony before Congress regarding the nation’s monetary policy, Asian stock markets are experiencing downward pressure amid China’s ongoing People’s Congress meeting. Since the beginning of the week, the dollar index (DXY) has seen subdued activity, whereas gold prices have experienced a significant surge of over 3.5% since last Friday’s session, approaching their all-time high of $2146.80. This rally in gold prices is driven by speculation regarding a potential June rate hike by the Federal Reserve and escalating tensions in the Middle East.

On the other hand, after receiving a boost from OPEC+’s announcement to extend its oil supply cuts, oil prices have seen a retracement. Concurrently, the Bitcoin ETF has attracted substantial inflows, pushing BTC prices close to their all-time peak of $68,900. Should the market’s risk appetite continue to expand, BTC prices might aim for the next significant psychological milestone at $70,000.

---

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

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%) 

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The Dollar Index saw a decline last Friday due to a shift in the market’s risk sentiment, influenced by discouraging ISM manufacturing PMI readings. This prompted investors to sell the dollar and turn their attention to riskier assets. In the upcoming week, several Federal Reserve members are scheduled to deliver speeches, offering insights into potential monetary moves and influencing the dollar’s strength.

Despite the decline, the Dollar Index has found support around 103.85, indicating that the bullish trend remains intact. The Relative Strength Index (RSI) is hovering near the 50 levels, and the Moving Average Convergence Divergence (MACD) is positioned between the zero line, providing a neutral signal for the dollar index.

Resistance levels: 104.50, 104.95

Support levels: 103.70, 102.90

---

XAU/USD, H4

Gold prices have witnessed a substantial rally, nearing the historical high at $2146.80. This surge is driven by market speculation regarding the potential for the Federal Reserve’s first rate cut in June. Investors are eagerly awaiting cues from both Wednesday’s testimony by Powell and Friday’s Non-Farm Payrolls report to assess the likelihood of a June rate cut. The precious metal has traditionally been favored during periods of lower interest rates, and current market dynamics are reinforcing its appeal as a safe-haven asset.

Gold prices have surpassed the uptrend channel and are continuing to gain, indicating an extremely strong bullish momentum. The Relative Strength Index (RSI) continues to surge in the overbought zone, while the Moving Average Convergence Divergence (MACD) is moving upward and diverging, suggesting that the bullish momentum is intensifying.

Resistance levels: 2117.90, 2140.00

Support levels: 2088.20, 2068.80

---

CL OIL, H4

In the most recent session, oil prices experienced a decline of over 1.3%, following a surge prompted by OPEC+’s announcement to extend its supply cut measures. The downturn is attributed to profit-taking activities among traders as oil prices neared their highest point since last November. Market participants are closely monitoring the ongoing developments from China’s People’s Congress meeting, with updates from the event anticipated to significantly influence oil price trends.

Oil prices have retreated to their support level of 78.65, indicating a potential rebound level. The Relative Strength Index (RSI) has declined to near the 50 level, while the Moving Average Convergence Divergence (MACD) has crossed from above, suggesting that the bullish momentum is easing.

Resistance levels: 81.20, 84.10

Support levels: 78.65, 75.20

---