Markets are now pricing in the probability of the Federal Reserve hiking rates by a quarter point in May to 61%, up from 48% on Friday.
Additionally, the Personal Consumption Expenditures (PCE) price index in the US rose 5.0% in February from a year earlier, which is lower than January’s 5.3% increase. US consumer sentiment decreased for the first time in four months in February, reflecting concerns over a possible recession.
In today’s DIFX Analytics, we’re going to look into the following assets:
❖ US Dollar/Japanese Yen (USD/JPY)
Bitcoin is experiencing a clear bearish RSI divergence as technicals weaken on the daily chart.
Traders can expect a slip in price toward the support level at $25,400.
The ease off of fears from the banking crisis may contribute to this retracement.
The Dollar Index (DXY)
The Dollar Index seems to have found a range between $101.871 – $105.6.
We saw PCE data slightly cool off last week, however, inflation still remains high.
According to FEDWATCH on Reuters, the markets are pricing in a 68% probability of a 25 bp rate hike in May.
Ether traded lower at the start of the week with another rejection near the $1827 area.
RSI failed to set a new high and is trending lower.
In the near term, we can expect the price to touch $1700 as a pullback seems the most likely.
Price has been consolidating for the past 2 weeks which indicates momentum to the upside is slowing down.
Gold/US Dollar (XAU/USD)
Gold has broken below the bullish trend, signaling a reversal in the metal.
With a declining RSI and price action, we can forecast bearish momentum with the initial target being $1928 as the first key support.
As contagion fears cool off and a May rate hike is priced in, the attraction for non-yielding bullion should simmer.
US Dollar/Japanese Yen (USD/JPY)
USD/JPY may see some gains, with traders taking profits from the Yen safe haven trade.
The dollar has begun the week on a strong foot and RSI has pushed above the 50 region.
If price action breaks above the 200-day EMA, we can expect further bullish moves toward $136.63 in the asset.
Euro/US Dollar (EUR/USD)
Dollar Index fell to a recent low of $101.8.
The Dollar is trading below the 200-day EMA, signaling a bearish trend.
RSI is sitting under 50 which further indicates bears in the market.
Major currencies have gained against the Dollar since the crisis.
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