Last week was typically the most volatile week for traders across the globe. Global stocks and commodities tumbled after the major central banks including the US Federal Reserve and Swiss National Bank have turned extremely hawkish. The FED increased interest rates by 75 basis points (bps) in the last meeting on Wednesday, followed by the SNB’s largely unexpected decision to hike rates by an aggressive 50 bp.
This week inventors anxiously awaiting the FED chair Powell's Testimony. Powell will deliver his testimony on the economy to the Senate Banking Committee on Wednesday morning, and then again to the House Financial Services Committee on Thursday.
The precious metal remained under pressure amid a strong dollar and the US FED signalled a much more aggressive path to fight 40-year-high inflation. The king dollar has firmly put gold in the danger zone and a break of the $1,800 level could lead to further technical selling.
For this week, the metal-supported at 1830 level, any break below this level will open the doors to 1814 and 1808. On the upper side, if the price break and close above 1860, the next upside levels are to watch 1872 and then 1880.
The U.S. Dollar Currency Index, which tracks the greenback against six major currencies, ended slightly lower on Friday while the overall momentum remains bullish after the aggressive stance of the US central bank has triggered the fear of recession. The index reached its highest level since November 2002 to 105.80 last week.
For DXY this week, the first nearest support level is located at 103.40. If it breaks below this level, it will head towards the next support level, which is near 102.80 then 102.20. On the upper side, 105 will act as an immediate resistance, and a break above this level could open up a buying trend until 105.80/106.
The EURUSD rebounded back to above 1.0550 after the currency pair found strong buyers near the key support area of 1.0350. While the currency pair retreats back to below 1.0500 on Friday after the buyers failed to hold the upside momentum above 1.0600. Moving ahead, no important economic events are expected from the Eurozone this week, so the US dollar movement will continue to play a vital role in the Euro's future direction.
This week, the first resistance is located around 1.0540, a break above this level will confirm a possible move to 1.0630/80. On the downside, if the pair loses the 1.0400 handles, we expect a move toward 1.0350 and then 1.0300. In the long term, watch for weekly closing above 1.0640 or below 1.0400 area, which will give a larger confirmation of direction in the long term.
The Dow Jones plunged below 30,000 last week as investors continued to bet on further Federal Reserve tightening to bring decades-high inflation under control. However, we can expect some recovery by this week, the key events to watch are US home sales data and Powell's testimony.
Technically the overall momentum remains bearish. For this week, the first nearest support level is located at 29,500. If it breaks below this level, it will head towards the next support level, which is near 29,300/200. On the flip side, the first resistance at 30,250 any break above this level will open 31,000 minimum.
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