With the signs of a falling inflation rate, the market is expecting a less aggressive rate hike for December, a 50 basis points hike compared to the initial 75 basis points. This week, we’re waiting for Jerome Powell, the chair of the Federal Reserve, to give a speech to see whether the central bank is planning to slow down its hawkish stance.
In today’s DIFX Analytics, you may see many Fibonacci Retracement Levels. These levels are horizontal lines where support and resistance are likely to occur. They are defined as a percentage and are displayed as follows on the charts.
Bitcoin whales are watching the Fed
Bitcoin has recently seen some bullish gains as the dollar selloff injected some positivity into risk-on assets. The Fibonacci line is near the $30,000 level which has not seen any action since mid-June.
Crypto whales will be watching the Fed to see if they sense any signs of a slowdown in rate hikes. If that happens, we may see bulls take over the crypto market.
The Dollar is consolidating
The dollar index has risen a massive 20% to a high of $114.7 since the Fed began hiking rates in February. The selloff last week lead to the index touching below the Fib level at 23.6% before rejection to the upside.
The entire market will be impacted by a bearish slide in the Dollar Index. If the Fed does decide to pivot then we may see cash flow from the safe haven into other markets including stocks, commodities, crypto, and other currencies.
Otherwise, We can expect the Index to continue on its bullish rampage back to $114 if the market forecasts no sign of a slowdown.
Gold is waiting for the Dollar
Gold may begin to look fairly attractive once the Dollar begins to give back some of its gains. The market will keep an eye on the precious metal as the dollar strength has been the major contributing factor causing the bearish sentiment in the asset.
If the Fed projects any signs of a pivot then we may see price action move into the key range around $1722 – $1788, otherwise, we could see the asset price range move below $1600.
Euro sees slight reversal
EUR/USD has already hit the first Fibonacci line during the reversal last week and set a monthly high near $1.009. It closed above $1.00 but the next daily candle closed beneath parity as it met some resistance.
A less hawkish stance from the Fed can cause price action to break well above $1 and become bullish with upside movement to $1.02 and then $1.05. Otherwise, we may see the trend continue to the downside toward $0.975
This is all dependent on Jerome Powell’s tone during the press conference on Wednesday.
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