In the realm of currency markets, the past week has seen a relative calm in the USD compared to the preceding week’s turbulence sparked by FOMC and Non-Farm Payrolls. Looking ahead, the focal point remains the upcoming US CPI report scheduled for next week, likely to be the key driver alongside Fed commentary.
USD Analysis:
This week saw the USD holding the crucial 105.00 handle, despite a brief dip below on NFP Friday, suggesting resilience in the face of uncertainty. With eyes on the CPI report, anticipation for a potential bounce in the early part of next week remains. While the USD exhibited strength, its moderate gain reflects the influence of the pivotal 105.00 support level.
Bullish Scenario
Bearish Scenario
EUR/USD Insight:
EUR/USD encountered its 200-day moving average last week, with this week characterized by a doji pattern. Although there was bullish momentum around the 1.0725 resistance level, the inability to breach 1.0800 led to a pullback. The trend’s performance, crucial for USD dynamics given its 57.6% allocation into DXY, showcases a pattern of higher-lows, yet resistance remains a challenge.
GBP/USD Trends:
The recent Bank of England rate decision echoed dovish sentiments, contributing to a hammer formation on the daily chart around the 1.2450 support level. Despite initial resistance near the Fibonacci retracement levels, bullish strength pushed the pair back above the psychological level of 1.2500. However, the daily chart remains volatile, lacking clear near-term trends.
USD/JPY Outlook:
USD/JPY witnessed a strong rebound this week, potentially indicating a breakout. Last week’s bearish outside bar triggered by Japanese policymakers’ interventions reversed following the NFP report, with bulls testing 151.95. While geopolitical factors play a role, the pair’s bullish scenarios hinge on USD strength, with potential interventions by Japanese authorities influencing market dynamics.
Gold (XAU/USD) Analysis:
Gold experienced significant movement this week, raising questions about the completion of its pullback. The falling wedge formation and subsequent breakout above key resistance zones suggest a bullish bias. The upcoming CPI report could further impact gold prices, with a below-expectations outcome fueling hopes for FOMC rate cuts and potentially driving gold prices higher.
Conclusion:
As markets brace for the US CPI report, volatility is expected across major currency pairs and gold. Understanding the interplay between economic data, central bank policies, and geopolitical events is crucial for navigating the evolving landscape of global markets.
By staying informed and monitoring key levels and patterns, traders can position themselves to capitalize on opportunities arising from shifting market dynamics.
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