An air of uncertainty ripples across the financial markets ahead of Tuesday’s heavily anticipated speech from Fed Chair Yellen which may provide some clarity on the number and timings of US interest rate hikes this year. This speech comes at a time when market participants have been left bewildered by the unexpected hawkish bias from Fed officials that contradicted the dovish FOMC statement in March. Although initially the inflated expectations over the possibility of a US interest rate rise in April offered the Dollar bulls a welcome boost, this seems to be wearing off with the Dollar Index displaying signs of exhaustion. Investors should keep in mind that even if Friday’s NFP report exceed expectations, the unstable global environment which has exposed the US economy to downside risks may sabotage the Federal Reserve’s efforts to raising US rates abruptly in April. The Dollar remains under pressure and with the current Fed futures pointing to an 88.5% chance that US rates will be left unchanged in April, bearish investors should exploit this opportunity to attack the Dollar at any given chance.

The Dollar Index is bearish on the daily timeframe as there have been consistently lower low and lower highs while the MACD trades to the downside. Prices are trading below the daily 20 SMA with the current downwards momentum pointing to a potential decline towards 94.00. This correction may encourage bearish investors to act with potential previous support around 96.50 acting as a dynamic resistance which should invite a steep decline towards 94.00.

DXY


Stock markets capped

Stock markets displayed signs of exhaustion during trading on Monday following the decline in oil prices which weighed on sentiment and dampened investor risk appetite. American markets struggled into green territory as expectations of a potential April US interest rate rise and heightened caution ahead of the NFP on Friday encouraged investors to seek safe-haven assets. Although Asia initially showed signs of resilience on Monday, the risk aversion which continues to strengthen the safe-haven Japanese Yen has left the Nikkei depressed consequently pulling Asian equities lower. With oil prices declining and risk aversion rife, Europe may be poised to open lower especially after being infected from Asia’s bearish domino.


Sterling under pressure

The Sterling experienced modest gains against the Dollar during trading on Monday but investors must be under no impression that this has anything to do with an improved sentiment towards the Sterling. Sentiment towards the pound is heavily bearish and concerns over the impacts of a Brexit to the UK economy continue to haunt investor attraction towards the currency. Overall domestic data remains lackluster and with inflation showing little signs of growth, the Bank of England has been provided with yet another reason to keep UK rates unchanged. As the UK’s EU referendum vote looms, volatility may likely intensify in favour of the bears and this should provide sellers an opportunity to send the pound lower moving forward.

The GBPUSD has been bruised by the bears and may receive further punishment as ongoing concerns over the Brexit diminish investor attraction towards the currency. Prices have found some comfort above the 1.41 support, but may be poised to decline later in the week as the bearish pressure mounts. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A breakdown below 1.41 should open a path towards 1.40 and potentially lower.

GBPUSD


Commodity spotlight – Gold

Gold bulls were offered a lifeline in the form of the $1210 support during trading on Monday as renewed risk aversion and Dollar weakness boosted the precious metal’s allure. There is some skepticism about the possibility of US rates being increased in April and this may fuel Gold bulls to send prices back towards $1250. Janet Yellen will be speaking today and if a dovish hint is detected then gold could be provided with the foundation needed to break away from the $1210 support ahead of the NFP on Friday. From a technical standpoint, a breakout above $1223 may open a path back towards $1250 and potentially higher. Bulls remain in control as long as prices can keep above the key $1200 support.

Gold

Disclaimer:This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD consolidates weekly gains above 1.1150

EUR/USD consolidates weekly gains above 1.1150

EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.

EUR/USD News
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains. 

GBP/USD News
Gold extends rally to new record-high above $2,610

Gold extends rally to new record-high above $2,610

Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.

Gold News
Pepe price forecast: Eyes for 30% rally

Pepe price forecast: Eyes for 30% rally

Pepe’s price broke and closed above the descending trendline on Thursday, eyeing for a rally. On-chain data hints at a bullish move as PEPE’s dormant wallets are active, and the long-to-short ratio is above one.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures