Dollar, Sterling and Gold in focus

The increasing levels of volatility the Greenback has dished out this month continues to highlight how the currency remains entangled in a fierce tug of war between the Fed hawks and President Trump. Although it may be clear that Trump may want a weaker Dollar to help US exports become competitive on the global markets, the heightened expectations of a proposed expansionary fiscal plan which will be supportive of US growth may uplift the Greenback. While the Trump fuelled uncertainties and fears of protectionism policies impacting US growth may limit gains on the Dollar in the short term, prices may be poised to rally higher in the medium to longer term on the prospects of higher US interest rates. With the Federal Reserve, independent of the government, proposing an expansionary fiscal plan that may bolster US growth should encourage further US rate increases ultimately empowering the Dollar. From a technical standpoint, the Dollar Index has been on standby during Monday's trading session with prices hovering around 100.85 as of writing. Weakness below 100.50 in the short term could encourage bearish investors to send the Dollar Index back towards 100.00.

Currency spotlight – GBPUSD

The heightened political risks around Brexit have ensured Sterling vulnerability remains a key market theme for the first quarter of 2017. While economic data from the UK has on many occasions displayed signs of resilience post-vote to leave the European Union, it is the persistent uncertainty which has effectively dented investor attraction towards the Pound. The live threat of economic fundamentals discarded amid the Brexit developments could punish Sterling further, with investors solely directing their attention towards how the UK economy fares after the Article 50 is invoked in early March. Sterling remains fundamentally bearish and the terrible cocktail of jitters coupled with anxiety should limit upside gains. From a technical standpoint, the Sterling/Dollar remains slightly pressured on the daily charts with weakness below the 1.2400 support opening a path lower towards 1.2200.

Commodity spotlight – Gold

The rising political risks across the globe and overall market uncertainty have boosted Gold's safe haven allure with prices trading around $1235.70 as of writing. This yellow metal is firmly bullish on the daily charts and could receive a further boost to the upside if the Dollar comes under renewed selling pressure. From a technical standpoint, the consistently higher highs and higher lows on the daily chart coupled with prices trading firmly above the 20 simple moving averages have suggested that Gold remains tilted to the upside. A technical breakout and daily close above the $1240 resistance could encourage a further incline higher towards $1250 this week. This bullish daily setup remains valid as long as prices can keep above the previous $1220 higher low.