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.
Categories: ARFX News

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