All eyes on US CPI reading

The U.S. Dollar is holding firm above the $103.50 level, buoyed by the positive momentum gained from upbeat U.S. job data released last Friday. Market focus is now trained on the impending U.S. Consumer Price Index (CPI) reading, anticipated to influence the dollar's trajectory. Concurrently, U.S. equity markets are witnessing a rally in anticipation of the inflation gauge data, with market expectations leaning towards the Federal Reserve maintaining rates. In Japan, the Japanese Yen experienced its most significant drop in months as the strengthening dollar exerted pressure, leading to a weakening of the Yen. This trend coincided with Japan's producer prices decelerating to their slowest pace in nearly three years. Meanwhile, in the cryptocurrency realm, Bitcoin unexpectedly slid by over 6% at the beginning of the week, resulting in the liquidation of more than $119 million worth of long positions.

Market overview

Prices as of 03:00 EET 

Economic calendar

(MT4 System Time)

Source: MQL5 

Market movements

US Dollar Index, H4

The US Dollar sees marginal gains, yet a prevailing sense of caution lingers ahead of pivotal market-moving events scheduled for this week. Investors are on high alert for the release of inflation data and the Federal Reserve's upcoming monetary policy announcement, anticipating significant implications for dollar-related assets, notably gold. Despite market consensus leaning toward the Federal Reserve concluding its interest rate hike cycle, the recent robust jobs report has injected uncertainties into the economic outlook.

The Dollar Index is trading higher while currently near the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 58, suggesting the index might experience technical correction since the RSI retreated sharply from overbought territory.

Resistance level: 104.45, 105.60.

Support level: 103.55, 102.65.

XAU/USD, H4

Gold experiences a sharp decline, breaching the psychologically significant level of $2,000, propelled by an unexpectedly positive jobs report from the United States. With the spotlight on today's Consumer Price Index (CPI) data and upcoming economic events, including the Producer Price Index (PPI) and the Federal Reserve's final interest rate decision of the year, investors brace for heightened volatility in the precious metal market.

Gold prices are trading lower following the prior breakout below the support level. However, MACD has illustrated diminishing bearish momentum, while RSi is at 32, suggesting the commodity might enter oversold territory.

Resistance level: 2010.00, 2030.00.

Support level: 1980.00, 1935.00.

GBP/USD, H4

The GBP/USD pair has shown a departure from its recent bearish trend and is currently trading sideways, eagerly anticipating a catalyst for the next directional move. While the dollar gained strength last Friday, buoyed by positive job data, its impact on the Cable has been somewhat tempered. Investor attention is currently fixed on the upcoming U.S. Consumer Price Index (CPI) release scheduled for later today. Simultaneously, the Sterling is gathering bullish momentum in anticipation of Thursday's Bank of England (BoE) interest rate decision.

GBP/USD has eased from its downtrend pattern and is supported at near 1,2530 level. The RSI is flowing below 50-level while the MACD has crossed below the zero line, suggesting a neutral signal for the pair.

Resistance level: 1.2630, 1.2730.

Support level: 1.2530, 1.2435.

EUR/USD, H4

The EUR/USD pair witnessed a decline exceeding 1% in the previous week, but the bearish trend appears to be easing in the current week. Market focus is now directed towards the upcoming U.S. CPI release scheduled for later today, with expectations of potential fluctuations in the pair. Simultaneously, traders closely monitor interest rate decisions from both central banks later this week. However, recent economic indicators from Europe present a mixed picture. The European CPI fell short of expectations, and a decline in Retail Sales implies that the European Central Bank (ECB) might opt to maintain its current interest rate levels.

EUR/USD has found support at near 1.0745 from its downtrend pattern. The RSI has rebounded from the oversold zone while the MACD has crossed below zero, which suggests a potential trend reversal for the pair.

Resistance level: 1.0866, 1.0955.

Support level: 1.0700, 1.0630.

USD/JPY, H4

The Japanese Yen experienced its most significant decline in a month, as the U.S. dollar gained strength on the heels of positive job data. This trend coincided with a less-than-optimistic Japan Producer Price Index (PPI) reading. However, Yen's upward momentum eased, remaining below the crucial pivotal level of 147.00. Adding to the softening of the Japanese Yen, the Bank of Japan (BoJ) indicated that they have not yet observed sufficient evidence of wage growth supporting sustainable inflation. This stance suggests that the central bank is not ready to abandon its negative interest rate policy.

The USD/JPY experienced a technical rebound but is still kept below its critical, pivotal level at 146.75, suggesting the long-term bearish trend remained. The RSI has rebounded strongly while the MACD has crossed and is approaching the zero line from below, suggesting the bearish trend is drastically diminished.

Resistance level: 146.75, 148.65.

Support level: 143.80, 141.65.

BTC/USD, H4

Bitcoin (BTC) experienced a significant drop of over 6% in the last trading session, resulting in the liquidation of more than $100 million worth of long positions since yesterday. The decline in BTC prices is attributed to a combination of technical correction and profit-taking sentiment prevailing in the market. Additionally, this downward movement aligns with microeconomic factors, notably the U.S. job market report surpassing market expectations. The stronger-than-expected U.S. job market data has fueled speculation about a potential rate hike by the Federal Reserve, contributing to a broader market sentiment shift.

BTC prices have slid for more than 6%, triggering a trend reversal signal. The MACD has broken below the zero line while the RSI has declined to the oversold zone, suggesting that the bearish momentum is gaining.

Resistance level: 42210, 44370.

Support level: 40460, 37820.

Dow Jones, H4

The US equity market continues its upward trajectory, closing at new highs for the year as investors anticipate potential shifts in monetary policy. CME's FedWatch Tool indicates widespread expectations for the central bank to maintain rates at Wednesday's announcement. However, questions linger regarding the timing of the first rate cut, with March and May emerging as focal points for potential adjustments. The prospect of concluding the tightening monetary policy cycle signals optimism, further boosting confidence in the equity market.

The Dow is trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum. However, RSI is at 77, suggesting the index might enter overbought territory.

Resistance level: 36490.00, 36955.00.

Support level: 35930.00, 35465.00.

CL Oil, H4

Crude oil prices experience a modest rebound, settling slightly higher on Monday in anticipation of major events unfolding this week. With several central banks poised for monetary policy meetings, economists predict a potential shift from tightening to expansionary cycles. The expectation of dovish statements and rate cut considerations looms large. A collective move toward less aggressive tightening by central banks could amplify market optimism, propelling oil demand higher.

Oil prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 50, suggesting the commodity might extend its gains since the RSI rebounded sharply from oversold territory.

Resistance level: 72.15, 74.85.

Support level: 68.90, 66.65.