Daily Forex Market Preview, 21/03/2018
The U.S. dollar was seen pushing higher on the day reversing the gains from Monday’s declines. Investors were seen bracing for the Fed meeting due later in the day. Although the markets have fully discounted a 25 basis point rate hike, the Fed’s dot plot and economic projections will play a key role in shaping the sentiment in the USD going forward. For the moment, the markets are expecting Fed officials to play it safe with three rate hikes this year.
Ahead of the Fed meeting, the UK’s jobs data will be on the line. The three month average earnings index is forecast to rise 2.6%, slightly accelerating from 2.5% seen before. The UK’s unemployment rate is expected to remain unchanged at 4.4%.
Economic data from Tuesday included the annual inflation data from the UK. According to official reports, the UK’s headline inflation rate was seen slowing to a pace of 2.7% which was more than expected and inflation was seen easing from January’s print of 3.0%. Core inflation rate also slipped to rise just 2.4% down from 2.7% previously. The data builds up to this Thursday’s BoE meeting where the odds of a hawkish signal from the Bank of England have increased.
XAUUSD 21-03-2018 Intra-day analysis
XAUUSD (1313.49): Gold price was bearish yesterday as price fell to 1307.48 level as noted in Tuesday’s morning commentary. The support level is expected to hold in the near term but depending on the Fed’s outcome there is a potential for gold prices to breakout below this level. The price action touching down to the support level of 1307.48 also marks a descending triangle technical pattern. If validated, we expect gold prices to fall toward 1288.90 and potentially ease lower to the 1282 – 1274 level of support that is pending a retest. To the upside, gold prices could maintain the range within the 1307.48 level and 1328.07 level of resistance.