Global market sentiment improved last week lifted by several factors crude oil prices rally, the successful IPO of Arm Holdings (ARM) and on hopes that the Federal Reserve may decide to pause interest rate hikes in the September meeting.
This week the Fed meeting will be crucial and essential in terms of further educating markets in terms of direction, with their discussion on policy likely to influence market volatility. The Bank of England will be another major central bank to update policy with a 25 basis points (bps) hike being pencilled by the market participants. After the BOE rate decision on Thursday, the Bank of Japan (BOJ) will make its rate decision on Friday.
On the earnings front, the companies scheduled to release their last quarter financial results this week will be FedEx, AutoZone, KB Home and General Mills.
Gold price bounced back to $1930 as the Fed seems done hiking interest rates. Fed’s benchmark overnight interest rate was factoring in a 98% chance that the central bank would leave rates unchanged at its Sept. 19-20 meeting, according to CME Group’s FedWatch Tool. This week, we can expect some increased volatility in the metals due to an eventful economic calendar. Starting from Tuesday, the US housing data, then the key FED decision as well as the latest US manufacturing figures could affect the valuation in gold.
From a technical perspective, The $1900 area of confluence has recently been held as a firm support, failure to defend the mentioned support levels has the potential to drag the metal further towards the $1892/84 support zones. On the upper side, in case the metal manages to settle above $1935, it will regain strong upside momentum and head towards the next resistance level at $1945/60.
The US dollar bulls started to lose momentum ahead of the FED meeting after hitting a new 6-month high on Thursday. The dollar traders and investors wait to hear from the Federal Reserve on its latest interest rate decision. However, the robust US economic data bolstered bets that the Federal Reserve will keep its monetary policy restrictive for some time. This week, the dollar price forecasts indicate that the impact of the Fed Chair’s statement may prove to be an overwhelming factor in deciding where the index goes.
From a technical perspective, DXY maintains a bullish bias according to the weekly chart. But Friday's dollar index ended with an Indecisive action with no clear direction. On the downside, If the king dollar fails to extend the upside momentum and presses back above below 105 then it will head towards the next support level which is located near 104.30/20. On the flip side, the first immediate resistance remains at 105.40, then the stronger resistance is 105.80.
EURUSD fell sharply last week as the European Central Bank seems to have implemented its last 25 basis point rate hike in the current tightening cycle. The European Central Bank hiked interest rates to a record level on Thursday. Its 10th consecutive rate hike bumped the bank's deposit rate by 25 basis points up to 4%. While ECB President Christine Lagarde refrained from affirming that the European Union has hit its interest rate cycle’s peak. Moving ahead, It will be a relatively quiet but significant week for the euro, starting on Tuesday with a release of Eurozone inflation data and Friday will bring the release of manufacturing and services PMI data from across Europe.
For this week, the immediate support prevails at 1.0630 then 1.0600, further breakout of 1.0600 can lead the currency pair towards 1.0570. On the flip side, a recovery of the bullish move requires a break of 1.0720. This opens the door toward 1.0770 then 1.0810. A further price advance makes 1.0880 available.
Dow Jones and major U.S. stock indexes retreated from the weekly highs on Friday due to massive options expirations on the third triple-witching day of 2023. The Dow Jones jumped in early trading last week supported by better-than-expected US macroeconomic data and the shares of UK chip designer Arm Holdings experienced a significant surge, rising by almost 25% in their stock market debut. This week the FED meeting outcome and conference are arguably the biggest focus for the Dow traders after the release of stronger-than-expected US CPI and PPI numbers.
This week, the key resistance for Dow near 35,100 breaks this and closes above this resistance level then expects the market to zoom up to 35,500. On the downside, key support seems to have formed in the 34,300 area. A four-hour close below that area could be seen as a strong bearish shift and open the floor to an extended slide toward 34,000 and 33,800.
Trading is risky and your entire investment may be at risk. Please ensure that you fully understand the risks involved.