DIFX DIVE: Weekly Analysis 1-4 November 2022

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The Federal Open Market Committee (FOMC) meeting happened this week in which Jerome Powell, the chair of Federal Reserve announced that they may hike the interest rates by smaller increments in the next meetings, however, they will continue tightening for a longer period of time and we should expect the terminal rate to increase. This is an overall more aggressive stance from the Fed and we saw bullish gains in the Dollar overnight.

At the moment, we can expect a less volatile session, however, unemployment data and Non-farm Payrolls will be released later today. This is a good indicator of the overall strength of the economy.

Here are the assets we’ll be looking to in this edition of DIFX Dive:

Dollar Index (DXY Index)

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.

A strong Jobs data can push the Dollar to make a bullish move for the resistance level around $113 otherwise, the currency may fall.

  • Market Sentiment: Bullish
  • Next Resistance: $113

Bitcoin/US Dollar (BTC/USD)

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.

  • Market Sentiment: Bullish
  • Next Resistance: $21,000

Gold/US Dollar (XAU/USD)

Gold broke to the downside and touched the support but it was rejected during the Dollar retracement trade.

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.

  • Market Sentiment: Bearish
  • Next Resistance: $1700

Euro/US Dollar (EUR/USD)

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.

  • Market Sentiment: Bearish

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