The economic calendar is quite bare this week, so volatility will likely be generated by Geopolitical tensions, Q4 earnings results and Fed speakers. Following last week’s hawkish shift by the Fed and hotter-than-expected US economic data, market participants may pay extra attention to speeches by several Fed officials this week, as they try to estimate when they are planning to begin the first rate cut.
Key economic indicators this week include US ISM services PMI and Chinese inflation data in addition to comments from several Fed officials that could set the tone in the markets. We also have a RBA meeting on Tuesday, but we don’t expect any material change in policy this time around.
On the earnings front, the companies scheduled to release their last quarter financial results this week will be Palantir, Walt Disney, PayPal, Ford, Palantir, Spotify, Roblox, Pinterest, Snap and McDonald.
Gold price reversed from the fresh 3-week highs and ended with notable losses on Friday after the US employment data blew away expectations. However, the bulls tried hard to stay above the $2030 support area so that the bearish pressure would not increase and then the pair would face stronger sellouts. This week, gold traders and investors largely focused on the FED policymaker's comments for insights into the central bank's rate hike path. It seems safe to assume that movement in the precious metals will remain highly volatile.
On the technical side, the short-term momentum is neutral now as the metal reversed from the 3-week highs. On the upper side, the insignificant resistance lies near the $2065/68 (previous week's highs). On the flip side, any further pullback now seems to find some support near the $2028/26 zones. If the metal settles below $2028/26, the slump will quickly extend toward the $2020 and $2016 mark.
The US dollar, also often seen as the ultimate safe-haven currency, ended last on a positive note. The currency pair regained strong momentum on Friday following the release of stronger-than-expected US jobs report. The steller number decreased the expectations of Fed rate cuts in March and May, indicating a positive economic outlook. Moving ahead, this week USD traders and investors should closely monitor the release of the US ISM services PMI and weekly jobless claims numbers along with US Federal Reserve policymaker's speeches.
According to the performance on the daily chart above, the general trend of the DXY is still upward. While considering the strong bullish momentum the index may find strong resistance above 104.40 this week. On the downside, the move of the bears towards the support levels of 103.30/103 is important for the general trend to turn bearish.
The euro continues to consolidate losses against the US Dollar. The currency pair hit a fresh 7-week low of 1.0770 early Monday. The general trend of the euro against the dollar remains bearish. It could be a choppy week for the euro. However, German industrial production and factory order figures will likely have more significance. Even so, the currency pair may remain in a state of anticipation until the announcement of German inflation numbers by the end of the week, which will have a strong reaction on the future of European Central Bank policy.
Technically the current price action signals suggest that a medium-term bearish trend remains intact. On the downside, the decline is more extensive, and it will be hard to rule out a run towards 1.0750/30 if the bearish sentiment continues. On the flip side, a recovery move requires a break of 1.0840. This opens the door toward 1.0910 and a further price advance makes 1.0970 available.
Dow Jones and other major indices started the week with a somewhat negative tone after the Fed Chair Powell repeated his expectation that the March meeting is likely too soon to have confidence to start rate cuts. As we advance, after the solid US jobs data and GDP numbers investors will shift focus towards the several Fed speakers who are expected to make the rounds this week on media appearances and conferences. At the same time, look out for earnings this week from major companies including Palantir (Monday), Ford (Tuesday) and Walt Disney (Wednesday).
Technically, the medium-term trend is very supportive, however, the upward momentum is not strong as Friday's candle ended with an Indecisive action with no clear direction. The price actions appear to be part of a consolidation phase. So, it will be hard to rule out a short-term retracement back to 38,300 and then 38,100 if the bulls fail to hold above 38,600. On the flip side, the first immediate resistance remains at 38,680, then the stronger resistance is at 38,800.
Trading is risky and your entire investment may be at risk. Please ensure that you fully understand the risks involved.