We have seen the Dollar strengthen after the FOMC meeting with a hawkish Fed, shutting down all hopes of a pivot from a “very hawkish” towards a “less hawkish” route.
The key factor from Jerome Powell’s press conference was the fact that they have not yet finalized the ultimate rate and it is expected to increase. This means that we can expect to stay in a high-interest rate environment for longer than previously projected
Yesterday, during US trading hours, the market began to price in this realization as we saw bullish gains in the Dollar in major FX pairs, Gold fell to a major support level, and stocks slid as well. During Asian hours, we saw the market give back some of those Dollar gains with a retracement in the market.
At the moment, we can expect a less volatile session, however, Jobs Data which includes unemployment data and Non-farm Payrolls will be released later today. This is a good indicator of the overall strength of the economy
A better-than-expected Jobs Data release can be considered a negative sign from the Fed as it means that tightening is not yet effective and we should expect the Dollar to be bullish.
On the other hand, weaker-than-expected data can be assumed as a good sign from the Fed as it means that the effects of rate hikes are being noticed as fewer jobs are being created and companies are not hiring as rapidly. In this case, we can expect the Dollar to be bearish.
In today’s DIFX Analytics, we’re going to look into the following assets:
Dollar may see a slight pullback
The Dollar saw some gains as we projected in yesterday’s analytics.
We can see that the Index has rebounded off the trend line on the chart. There has been a retracement trade occurring as investors are taking profits from their FOMC positions.
The sentiment is bullish for the Dollar but we are expecting a slight pullback today as the market settles.
Jobs data today will have an impact on the markets and if the data comes out strong, we can expect the Dollar to make a bullish move for the resistance level around $113 otherwise, the dollar may fall.
Bitcoin is trading strong
As the Dollar experienced some retracement during Asian trading hours, we saw some bullish action in Bitcoin.
The key support stood strong during the Fed meeting and was unable to break. This is a testament to how strong the asset is as there was major volatility and sell-offs across the market yet Bitcoin and crypto hardly budged to the downside.
This indicates that either it may be breaking off from the correlation with tech stocks or there is just an increasing amount of bulls entering the market.
We can expect to see bullish gains toward the first resistance as RSI has broken the downside trend.
Gold is consolidating
As forecasted yesterday, Gold broke to the downside and touched the support level indicated on the chart. It was then rejected during the Dollar retracement trade and is now trading at $1646.
We may see the precious metal consolidate around this area as markets rebalance after the choppy price action we have seen this week.
We can expect the asset to trade between $1640 – $1660 before the jobs data release.
Euro may retrace
EUR/USD did as we expected and touched $0.975.
We have seen some consolidation around this level and we may expect a retracement before a break below this resistance level.
Any moves below this range will cause major sell-offs in the currency pair and we believe that over the next week, we could see the asset trade to a new swing low.
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