Dollar Remains Positive, Buoyed By Hawkish tone

* China CPI and PPI came short weighing down Chinese equity markets.

* Dollar losing steam while gold prices advanced.

* Oil prices gain with lingering risks in the Middle East.

Fundamental Overview

Post the recent interest rate decision and Nonfarm Payroll release, Federal Reserve officials, led by Jerome Powell, maintain a consistent message emphasising the robustness of the labor market and economic conditions. While signalling a prolonged tightening policy, challenges persist for the dollar index to secure support above the key 104 level.

On the other hand, Lower-than-expected Chinese CPI and PPI readings cast shadows on China’s economic outlook, influencing long-term oil prices. The downbeat inflation data also reverberates in the Chinese equity markets, including Hong Kong, creating a ripple effect across international financial landscapes.

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

Source: CME Fedwatch Tool

0 bps (81%) VS -25 bps (19%)  

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Economic Calendar

(MT4 System Time)

Source: MQL5  

Market Movements

DOLLAR_INDX, H4

The Dollar Index takes a step back from its resistance level as the US market experiences a relatively quiet week. Investors, in the absence of significant catalysts, opt for profit-taking while eagerly anticipating fresh economic data and listening for more nuanced remarks from Federal Reserve policymakers. The overnight commentary from various Fed speakers underscores a measured approach to potential policy easing, adding layers of complexity to the unfolding market dynamics.

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 53, suggesting the index might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 104.60, 105.65

Support level: 103.85, 103.05

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GOLD，H4

Rising geopolitical tensions trigger a shift in sentiment towards the safe-haven asset, gold. Although gold prices initially rebound, they experience retracement as some investors anticipate the Federal Reserve’s potential extension of its tightening monetary policy in the long term. The overall outlook remains unclear, urging investors to closely monitor fresh economic data from the United States, statements from the Federal Reserve, and ongoing geopolitical tensions for nuanced trading signals.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 54, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline.

Resistance level: 2035.00, 2055.00

Support level: 2015.00,  1985.00

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CL Oil, H4:

Crude oil prices witness an extension of gains as hopes for a Gaza ceasefire deal are dashed after Israel’s Prime Minister, Benjamin Netanyahu, rejects the proposal from Hamas. Bloomberg reports Netanyahu’s dismissal, citing Hamas’ “delusional” demands and a perceived lack of commitment to negotiations. The situation raises concerns about the potential broadening of the conflict, heightening the risk of disruptions to crude supplies. The evolving geopolitical landscape becomes a crucial factor influencing oil market dynamics.

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 53, suggesting the commodity might extend its gains since the RSI rebounded sharply from oversold territory. 

Resistance level: 75.20, 78.65

Support level: 71.35, 68.35

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