Dollar Spikes on  Positive CPI, Gold Pressured

* Strong inflation data sparked a sharp rebound in the Dollar Index.

* Gold prices, pressured by the strong US Dollar, received some support from rumours of ongoing central bank purchases.

* Eye on US PPI data, and ECB’s monetary policy decisions.

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Fundamental Overview

The Dollar Index rallied following the release of robust inflation data, defying expectations of an impending rate cut and prompting a reassessment of Federal Reserve policy prospects. US Consumer Price Index (CPI) figures surpassed forecasts for the fourth consecutive month, reaching 3.5% over the 12 months to March. This unexpected inflationary pressure reshaped market sentiment regarding future Fed actions.

Conversely, gold prices faced downward pressure amidst a strengthening US Dollar, diminishing the metal’s appeal as an inflation hedge. Despite this, rumours of sustained gold purchases by major central banks, particularly in Asia and emerging markets, provided some relief amid concerns of an impending economic slowdown.

As market focus shifts, investors eagerly await Thursday’s producer prices report for further insights into March’s inflationary trends.

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

Source: CME Fedwatch Tool

0 bps (97%) VS -25 bps (3%)

Market Overview

Economic Calendar

Market Movements

DOLLAR_INDX, H4

The Dollar Index saw a strong resurgence in response to better-than-expected inflation figures, defying previous expectations of a June rate cut. US CPI data exceeded forecasts for the fourth consecutive month, climbing to 3.5% over the 12 months to March, primarily fueled by increased costs in fuel, housing, dining, and clothing.

Currently, the Dollar Index is trading higher and testing the resistance level. However, caution is advised as the MACD indicates diminishing bullish momentum, and the RSI stands at 71, suggesting the possibility of the index entering overbought territory.

Resistance level: 105.40, 106.00

Support level: 104.95, 104.45

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XAU/USD, H4

Despite showing initial resilience, gold prices came under pressure due to the strengthening US Dollar, which diminished the appeal of the dollar-denominated commodity. However, rumours circulating about continued gold purchases by major central banks, particularly in Asia and emerging markets, provided some support amidst growing concerns of an economic slowdown later in the year.

Currently, gold prices are trading flat and testing the support level. Despite this, there are indications of diminishing bearish momentum in the MACD, while the RSI stands at 49, suggesting the possibility of technical corrections and an upward trend since the RSI rebounded sharply from oversold territory.

Resistance level: 2350.00, 2370.00

Support level: 2335.00, 2320.00

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CL OIL, H4

Rising protracted conflict in the Middle East, crude oil prices continue their upward climb. Geopolitical tensions were exacerbated after an Israeli airstrike killed three sons of a Hamas leader, casting a shadow over fragile ceasefire talks. The potential for a wider conflict involving Iran, a key OPEC member, has stoked fears of supply disruptions, pushing oil prices higher

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 57, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 87.90, 90.80

Support level: 85.35, 83.05

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