Upbeat Economic Data Boosts Dollar

* The dollar index (DXY) surged on the latest upbeat U.S. economic data.

* Japanese Yen once again comes to the 2022 Japanese authority intervention level.

* Cocoa futures contract skyrocketing, surpassing the $10,000 mark.

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Fundamental Overview

The dollar index (DXY) advanced yesterday on the back of encouraging economic indicators, bolstering confidence in the resilience of the U.S. economy. Of particular note, February’s Durable Goods Orders surged from a decline of 6.9% to a growth of 1.4%, signalling sustained momentum in consumption activity and potentially exacerbating inflationary pressures. This shift in economic sentiment has prompted a reassessment of market expectations regarding future Federal Reserve interest rate adjustments, contributing to a downturn in U.S. equity markets as investors await the release of the PCE index data later this week.

Concurrently, the Japanese Yen has remained subdued amidst the dollar’s resurgence, nearing levels that may prompt intervention by Japanese authorities to stabilise the currency.

Turning to commodities, cocoa futures experienced a notable rally, reaching an unprecedented high exceeding $10,000 per contract in the latest session. This surge reflects the challenges faced by the global cocoa market, grappling with its most significant supply deficit in more than sixty years. Analysts caution that the situation may worsen, underscoring the likelihood of continued upward pressure on cocoa prices as the market grapples with these unprecedented supply constraints.

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

Source: CME Fedwatch Tool

0 bps (90%) VS -25 bps (10%)  

Market Overview

(MT4 System Time)

Source: MQL5 

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The Dollar Index, which tracks against a basket of major currencies, remained strong amidst a cautious sentiment among investors. With anticipation building for the release of the PCE Price Index data scheduled for Good Friday, crucial for assessing inflation, market movement is expected to be subdued. Despite the holiday, top Federal Reserve officials, including Chair Jerome Powell and Mary Daly, are scheduled to provide insights, potentially setting the stage for market shifts. Traders are advised to stay vigilant and strategize as economic data released over the weekend could lead to heightened volatility on Monday.

Currently, the Dollar Index is trading higher and testing the resistance level. The MACD indicator shows diminishing bearish momentum, while the RSI stands at 63, suggesting the potential for further gains as the RSI remains above the midline

Resistance level: 104.45, 104.95

Support level:104.00, 103.65

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XAU/USD, H4

Gold prices experienced a modest rebound, finding support near key resistance levels amid lacklustre economic data from the US. The Conference Board’s consumer confidence index fell below expectations, indicating ongoing concerns about economic activity. With volatility looming due to major events and data releases on the horizon, gold’s safe-haven appeal is expected to remain strong, potentially supporting prices in the coming days.

Currently, gold prices are trading higher and testing the resistance level. However, the MACD indicator shows diminishing bullish momentum, while the RSI stands at 50, suggesting the possibility of a technical correction as the RSI retreated sharply from overbought territory

Resistance level: 2185.00, 2230.00

Support level: 2145.00, 2110.00

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CL OIL, H4

Crude oil prices retreated from significant resistance levels as market sentiment remained cautious ahead of key events. Investors opted to reduce exposure to high-risk commodities amid ongoing uncertainties. However, losses were mitigated by concerns over potential supply disruptions, particularly after Russia’s directive to companies to reduce output in line with OPEC+ commitments. With US crude inventories experiencing a notable increase, attention now turns to the upcoming EIA Oil Inventories release and broader economic performance for important trading signals.

Currently, oil prices are trading lower after retracing from the resistance level. The MACD indicator shows increasing bearish momentum, while the RSI stands at 43, suggesting the possibility of further losses towards the support level as the RSI remains below the midline.

Resistance level: 82.85, 84.10

Support level: 80.20, 78.00