EURUSD
The EURUSD pair experienced selling pressure during early Asian trading hours, hovering above the mid-1.0700s on Monday. The primary driver for this movement was the uptick in the US Dollar Index (DXY), gaining momentum as Federal Reserve Chair Jerome Powell pushed back on the possibility of rate cuts in March. Powell expressed reservations, citing the belief that inflation is not on a sustainable path to reach 2%.
As of the latest data, the EURUSD is trading around 1.0772, marking a 0.19% decline for the day. Traders are now monitoring the Federal Reserve's stance on interest rates, as Powell's comments hint at a cautious approach, delaying potential rate cuts. This hesitation from the Fed may keep the USD firm, putting additional downward pressure on the EURUSD pair.
Entry Suggestion
Given the current scenario, traders might consider short positions on the EURUSD. A break below the psychological level of 1.0750 could signal further downside, with a target around 1.0700. However, it's crucial to stay updated on Federal Reserve communications and be prepared for potential volatility.
WTI
WTI prices found stability in early Asian trading on Monday after witnessing significant declines in the previous week. The ongoing efforts to establish a ceasefire in the Israel-Palestinian conflict played a role in the stabilization, despite the U.S. planning new strikes on Iran-backed groups.
Brent crude futures saw a marginal increase of 8 cents, reaching $77.41 a barrel, while U.S. West Texas Intermediate (WTI) futures remained flat at $72.28 a barrel as of 0131 GMT. Both benchmarks suffered a 7% decline last week, with an additional 2% drop on Friday fueled by robust U.S. jobs data, suggesting a potential delay in expected interest rate cuts.
Entry Suggestion
Considering the current geopolitical tensions and the impact of economic data on oil prices, traders might explore long positions if WTI breaks above key resistance at $73.00. A successful breach could open the door for a move towards $75.00. However, given the sensitivity of oil markets to geopolitical developments, it's essential to closely monitor global events for potential volatility.
XAUUSD
XAUUSD and silver are anticipated to experience upward momentum in 2024, driven by expectations of interest rate cuts by the U.S. Federal Reserve. UBS forecasts a bullish trend, anticipating gold prices to climb to $2,200 per ounce by the year-end. The bank's precious metals strategist, Joni Teves, attributes this projected surge to a combination of Fed easing and a weaker dollar, highlighting the inverse relationship between gold prices and interest rates.
Entry Suggestion
With the bullish outlook for gold, traders may consider long positions on XAUUSD. A break above the psychological resistance level of $1,800 could signal further upside, with a target around $1,850. However, it's essential to remain vigilant about any shifts in the Fed's stance on interest rates and closely monitor economic indicators influencing the U.S. dollar.
Overall Market Sentiment
The current market sentiment suggests a cautious stance in the forex market due to the Fed's reluctance to signal imminent rate cuts. Geopolitical tensions in the Middle East continue to impact oil prices, with a potential for upward movement if conflicts escalate. XAUUSD appears poised for a bullish trend in the backdrop of anticipated interest rate cuts, making it an attractive option for investors seeking a safe-haven asset.
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