Gold And Dollar Stand Pat Ahead Of CPI

* Gold Prices are sideways at near $2185 levels ahead of the U.S. CPI reading today.

* Japanese 10-year bond yield has climbed to the highest level in 2024, anticipating the first BoJ rate hike in decades.

*BTC surge passes $72000 mark while bullish momentum remains intact.

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Fundamental Overview

The U.S. financial markets are in a state of poised observation as they await the imminent release of the Consumer Price Index (CPI) data later today. This crucial piece of inflationary data is poised to significantly influence market conjecture regarding the Federal Reserve’s potential timeline for adjustments in its monetary policy framework. This speculative environment is further compounded by anticipations surrounding the Bank of Japan (BoJ), with widespread expectations of an impending rate hike—the first of its kind in several decades. This anticipation has propelled Japan’s 10-year bond yield to its peak level in three months, simultaneously strengthening the Japanese Yen in its performance against the dollar.

Stability marks the tone in the oil sector, with prices hovering around the $78 benchmark. Stakeholders in the oil market are keenly awaiting the U.S. CPI figures and the forthcoming monthly discourse from OPEC+. The insights derived from these reports are anticipated to shed light on the evolving dynamics of demand and supply within the crude oil landscape.

In contrast, the cryptocurrency domain, led by Bitcoin (BTC), showcases a vibrant uptick, breaching the $72,000 threshold for the first time. This rally underscores the crypto market’s growing divergence from conventional financial markets, buoyed by substantial capital inflows through BTC exchange-traded funds (ETFs). A notable shift in the market dynamics is attributed to the London Stock Exchange’s recent policy to entertain applications for BTC and ETH ETFs, coupled with Thailand’s securities regulator green-lighting retail investor participation in overseas crypto ETFs. 

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

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%)  

Market Overview

(MT4 System Time)

Source: MQL5 

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The Dollar Index, tracking against a basket of major currencies, exhibited a stable performance with limited market catalysts from the US. Investors’ attention is now laser-focused on the upcoming release of the Consumer Price Index (CPI) data for February. This critical inflation report takes centre stage, carrying substantial weight on the Federal Reserve’s prospective interest rate decisions in 2024, as emphasised by Chair Jerome Powell and other key officials in recent statements.

The Dollar Index is trading flat, while currently testing the resistance level. The Moving Average Convergence Divergence (MACD) has illustrated increasing bullish momentum, while the Relative Strength Index (RSI) is at 38, suggesting the index might extend its gains after the breakout since the RSI rebounded sharply from oversold territory.

Resistance levels: 102.90, 103.70

Support levels: 102.10, 101.35

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XAU/USD, H4

In a day marked by subdued market activity, the gold market exhibited resilience, maintaining a predominantly bullish outlook. The precious metal’s positive trajectory is underpinned by concerns surrounding lackluster economic performance in the US and escalating tensions in the Middle East. With recent economic data falling below expectations, driving Treasury yields lower, gold continues to shine as a safe-haven asset, drawing investors seeking stability.

Gold prices are trading higher following the prior breakout above the previous resistance level. However, the Moving Average Convergence Divergence (MACD) has illustrated diminishing bullish momentum, while the Relative Strength Index (RSI) is at 84, suggesting the commodity might enter overbought territory.

Resistance levels: 2235.00, 2350.00

Support levels: 2150.00, 2080.00

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CL OIL, H4

Crude oil prices experienced a decline as investors opted for a selloff strategy to navigate potential market volatilities. Attention is now turned towards the release of monthly reports from OPEC and the International Energy Agency later in the week. These reports promise an updated perspective on the global crude demand and supply dynamics. Concurrently, a crucial US Consumer Price Index (CPI) inflation report looms large, offering additional cues on the future direction of interest rates. 

Oil prices are trading lower following the prior breakout below the previous support level. However, the Moving Average Convergence Divergence (MACD) has illustrated diminishing bearish momentum, while the Relative Strength Index (RSI) is at 46, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory.

Resistance levels: 78.00, 80.20

Support levels: 75.95, 73.45