Dollar Stimulates By Upbeat PMIs

* Dollar index (DXY) rose to its highest level since last November, bolstered by upbeat economic data.

* Australian dollar hammered by dovish March meeting minutes.

* Gold bullish trend hindered by strong dollar while oil prices continue to edge higher.

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Fundamental Overview

The Dollar Index (DXY) experienced a notable increase of nearly 0.5% in the latest session, driven by the robust ISM PMI data which eclipsed the pivotal 50-point mark, indicating ongoing economic expansion in the U.S. Federal Reserve Chair Jerome Powell’s somewhat dovish comments last Friday, after the PCE data met expectations, have heightened anticipation for a possible rate increase in June. Meanwhile, the recently disclosed minutes from the RBA’s meeting indicated that the Reserve Bank of Australia had not considered a rate hike in its last gathering. Market analysts view this as an indication that the RBA might have ended its cycle of rate increases, casting a shadow over the Australian dollar, especially during the opening of the Asia market session.

In the realm of commodities, gold prices experienced sideways movement, influenced by the dollar’s strengthening, and remained near their all-time high levels. On the other hand, oil prices saw a continued rise, fueled by expectations of tighter supply and escalating geopolitical tensions in Europe and the Middle East.

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Current rate hike bets on 1st May Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (85.5%) VS -25 bps (14.5%)  

Market Overview

(MT4 System Time)

Source: MQL5 

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The Dollar Index continued its upward trajectory against major currencies, driven by better-than-expected US economic indicators, which dampened expectations for imminent rate cuts from the Federal Reserve. Surging US Treasury yields further strengthened demand for the US Dollar, indicating market confidence in the economy’s resilience. Robust readings from the ISM Manufacturing Prices and PMI also contributed to the greenback’s strength, leading to a decrease in the probabilities of rate cuts, as shown by the CME FedWatch Tool.

Currently, the Dollar Index is trading higher and testing the resistance level. The MACD indicator shows increasing bullish momentum. However, the RSI stands at 71, suggesting the potential for the index to enter overbought territory.

Resistance level: 104.95, 105.40

Support level:104.60, 104.00

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XAU/USD, H4

Gold prices experienced a slight retreat as investors engaged in profit-taking activities amidst a stronger US Dollar. Optimistic economic data from the US bolstered the country’s positive economic outlook, prompting investors to shift focus towards the Dollar. However, lingering geopolitical tensions in the Middle East and upcoming US elections may introduce market uncertainties, potentially limiting gold’s losses in the long term.

Currently, gold prices are trading flat and testing the resistance level. The MACD indicator shows diminishing bearish momentum, while the RSI stands at 57, suggesting the potential for the commodity to extend its gains after breakout, as the RSI remains above the midline.

Resistance level: 2250.00, 2280.00

Support level: 2215.00, 2185.00

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CL OIL, H4

Oil prices climbed higher on reports of heightened geopolitical tensions in the Middle East, with Israel striking an Iranian consulate in Syria. These developments sparked concerns over tighter global supplies, boosting oil prices ahead of the upcoming OPEC+ meeting. Investors eagerly anticipate the gathering, where discussions on supply and demand dynamics, as well as adherence to output cuts, are expected to influence market sentiment.

Currently, oil prices are trading higher after breaking out above the previous resistance level. However, the MACD indicator shows diminishing bullish momentum, while the RSI stands at 74, suggesting the potential for a technical correction as the RSI has entered overbought territory.

Resistance level: 85.45, 89.10

Support level: 83.15, 80.20