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.
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.
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%.
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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