The market is shifting towards a hawkish stance, favoring the US dollar and potentially impacting other currency pairs. Important central bank meetings this week could provide further direction.

Fed Rate Cut Expectations Decline:

• Market expectations for a rate cut in March have dropped significantly, reflecting hawkish statements by FOMC members.
• This suggests the Fed may hold rates for longer than previously anticipated.
• This favors the US dollar, which could strengthen further.
• The upcoming US GDP and PCE data releases could influence Fed policy decisions.

USD Gains Favor:

• The hawkish shift favors the US dollar, with EUR/USD and GBP/USD facing potential declines.
• EUR/USD is trading within a bearish trend channel and could fall further if it breaks below support at 1.0850.
• GBP/USD may also decline, though it’s currently in a horizontal trend with high demand.

GBP Turbulence:

• The UK economy faces headwinds despite signs of a soft landing.
• Retail sales declined significantly, raising concerns about a potential recession.
• However, the Bank of England is expected to remain dovish compared to the Fed, potentially supporting GBP/USD.
• Expect downside pressure on GBP/USD in the near term.

EUR/USD Stalled:

• The euro is also awaiting the ECB meeting on Thursday, where the bank is expected to maintain its current monetary policy stance.
• This could lead to a sideways movement for EUR/USD.
• A break above 1.0930 could signal a rally, while a drop below 1.0850 suggests further declines.

USD/JPY Eyes Bank of Japan:

• The Bank of Japan meeting on Tuesday is unlikely to result in any policy changes, despite inflation remaining above its target.
• This could further strengthen USD/JPY, breaking above 148.80 and potentially pushing it towards the 150.00 level.

Gold Consolidates:

• Gold is currently trading above its 21 SMA and 200 EMA, but consolidating below the 5/8 Murray zone.
• A breakout above 2,029 could lead to further gains, while a decline below 2,020 could trigger a bearish move declining towards 2,000 or even 1,992.