Optimistic Expectation On NFP Support Dollar

* The dollar index traded steadily at above the $104 mark ahead of today’s NFP.

* Oil price rally to its highest level since last October as tension escalates in the Middle East.

* BoJ’s Ueda hawkish comment yesterday bolsters the Japanese Yen.

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Fundamental Overview

Gold prices have surged past another milestone, firmly holding above the $2300 mark, driven by growing market sentiment favouring a Federal Reserve interest rate cut later this year. Federal Reserve Chair Jerome Powell’s recent speech reinforced this sentiment, emphasising the need for continued assessment of market conditions before considering any reduction in borrowing costs. Despite recent inflationary indicators, the Fed’s plan for a rate cut in 2024 remains intact. Powell’s dovish tone during the speech prompted a 0.5% decline in the dollar during the last session, thereby bolstering gold prices further.

In contrast, the eurozone’s Consumer Price Index (CPI) readings unveiled yesterday fell short of expectations, indicating that the region is still some distance away from achieving its targeted 2% inflation rate. This has weighed on the euro’s strength, with speculations emerging about a potential early rate cut by the European Central Bank (ECB). Traders are eagerly awaiting the release of the ECB monetary policy meeting minutes later today to glean insights into the euro’s trajectory and any potential policy shifts by the ECB.

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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, a key measure of the greenback’s strength against major currencies, continued its downward trajectory, influenced by a surprising uptick in US Initial Jobless Claims. According to the Department of Labor, Initial Jobless Claims unexpectedly rose from 212K to 221K, falling short of market forecasts. This unexpected development could significantly impact market expectations for forthcoming key economic data releases, including Nonfarm Payrolls and the Unemployment Rate.

Currently, the Dollar Index is trading lower and is approaching the support level. However, despite the bearish momentum, the Moving Average Convergence Divergence (MACD) indicator suggests a decrease in bearish strength, while the Relative Strength Index (RSI) stands at 40, indicating a potential technical correction as the RSI rebounds sharply from oversold territory.

Resistance level: 104.60, 104.95

Support level:104.00, 103.65

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XAU/USD, H4

Despite a marginal slowdown in bullish momentum, gold prices remained near historic highs as global investors exercised caution ahead of pivotal economic data releases. Geopolitical tensions in regions such as the Middle East, ongoing crises in Russia and Ukraine, and recent seismic activity in Taiwan continued to fuel safe-haven demand for gold. Furthermore, the weakening US Dollar provided additional support to gold prices.

Currently, gold prices are trading flat and are testing the resistance level. However, the Moving Average Convergence Divergence (MACD) indicator has shown an increase in bearish momentum, while the Relative Strength Index (RSI) stands at 46, suggesting the possibility of downward movement as the RSI remains below the midline

Resistance level: 2290.00, 2305.00

Support level: 2280.00, 2260.00

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CL OIL, H4

Crude oil prices witnessed a notable surge driven by concerns surrounding diminished supply, as major producers like OPEC+ opted to uphold output cuts. Additionally, growing indications of economic robustness in China contributed to heightened oil demand, highlighting the market’s focus on supply dynamics amid geopolitical tensions and fears of supply disruptions.

Currently, oil prices are trading higher after breaking out above the previous resistance level. The Moving Average Convergence Divergence (MACD) indicator has shown an increase in bullish momentum. However, the Relative Strength Index (RSI) stands at 79, suggesting the possibility of the commodity entering overbought territory

Resistance level: 87.90, 89.10

Support level: 83.75, 83.15