Traders are now pricing in a 75% chance that the Fed will not hike rates at this Wednesday’s interest-rate decision. The Fed has been heavily data-dependent so we can expect this projection to shift when the US CPI data comes out on Tuesday.
German CPI data is coming out this week which will give an indication of how the EU is going to move forward in navigating the high inflation throughout Europe.
The FOMC Press Conference will be highly anticipated. One thing to keep in mind is that even if the Fed kept rates unchanged, Powell may allude to hawkish policy or potentially a rate hike at the next month’s meeting.
The BoJ has an Interest Rate Decision on Friday. It is highly expected they will keep rates ultra-low. Governor Ueda has maintained the dovish stance of his predecessor and even if we see inflation tick higher, it’s unlikely he will react with an interest rate hike.
In today’s DIFX Analytics, we’re going to look into the following assets:
❖ Swiss Franc
❖ Gold
❖ Euro
Swiss Franc
USD/CHF broke to the downside of the bullish trend during last week’s trading session. We then saw price action retrace upward and coincidentally touched the previous trend line.
The pair seems to be creating a new trend and this week’s heavy data will play a massive role in that. Hawkish comments out of the Fed will be bullish for the Dollar even if they decide not to hike rates at tomorrow’s interest rate decision.
Gold
Looking at Gold, we can see price action trading between the support at $1937 and the resistance at $1980. RSI is gaining momentum with higher lows and price action is setting lower highs. This is a bullish divergence.
This is a bullish indicator and we could see the price break above the resistance and tap into the $2000 region. This bullish breakout could be brought about by a lower-than-expected CPI reading later today with a forecast of 4.1%.
Euro
EUR/USD is seeing an ascending trend since the beginning of 2023. Traders can look out for the lower resistance trend line to go long and vice versa they can go short at the upper resistance trend.
The FX pair is bound to see some volatility with CPI data out later today as well as with the FOMC meeting tomorrow.
If CPI data comes out hotter than expected, this will be bullish for the dollar as it implies they may need to hike at Wednesday’s meeting and we could see EUR/USD fall toward the lower trend line.
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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.
