Midweek Market Overview: Fed Chair Powell and BoE Gov Bailey Speak Today

Fed Chair Powell and BoE Gov Bailey Speak Today

The US Dollar:

For the time being, the daily chart of USD is still showing signs of rejection from the 99.00 – 99.50 zone. For those who are wondering in confusion as to why the DXY index did not follow suit as the Federal Reserve increased their interest rate, this is likely because the market had already priced in such expectation. The announcement did not have any surprise factor, causing profit-taking activities to take place instead.

Dropping down to a smaller timeframe, in this case, the 4-hour chart, we can see the price action in a more precise manner. Another bearish confluence is the double top formation paired with a retest – when the price came back up to the 99.00 level, it failed to break above and continued to move downwards.

AUD/USD:

AUD/USD has been moving a strong uptrend since January. Although earlier in March, the price had a major retracement of nearly 280pips from the area of 0.74500, it found its support at the 0.5% Fibonacci level.

Since then, AUD/USD has been moving strongly upwards and has currently surpassed 0.74500 and is likely to head towards 0.7500 soon.

EUR/USD:

Last Wednesday, in our article titled ‘Where Are We Prior to Major Announcements’ (https://www.wikifx.com/en/newsdetail/202203166204682243.html), we highlighted that EUR/USD was trading in the middle of the 1.08 and 1.11 range. A week later, we are still here. Both the support and resistance levels are evident.

Ideally, traders and investors would want to wait for either a break above 1.11 or a break below 1.08 for a trade-worthy position.

GBP/JPY:

Japanese Yen has been weak in the month of March. This gave enough momentum for GBP/JPY to break through its major resistance zone of 157.500 – 158.00, which formed in the 4th quarter of 2021.

After nearly six months of sideways consolidation, it is highly probable that GBP/JPY would be seeing another bullish wave in the near future, as long as that previous resistance holds as a strong support from now on.

GBP/USD:

Similar to that of EUR/USD, the movement of GBP/USD also respected the 1.300 level as mentioned in last weeks market overview. This was a crucial key level because it derived from both the daily and weekly charts.

Adding the Exponential Moving Average (EMA) lines onto the daily chart of GBP/USD, we can see that the price had successfully broken above 2 EMA lines (blue and pink). The nearest target will be the 1.33500 – 1.3400 area.

EUR/JPY:

EUR/JPY has been showing bullish momentum since the past week. The move was impulsive after it bounced back from the 125.00 support level.

Based on the daily chart of EUR/JPY above, we could see that previously, EUR/JPY had dropped dramatically as soon as the price hit the supply zone of 133.500 – 134.00. Whether the price would have a breakthrough like GBP/JPY, for the time being, is still a million-dollar question with no answer.

Realistically, traders could wait for a retest if the price does have a break above 134.00 in order to secure a risk-reward-worthy trade.

GOLD:

Gold has been consolidating in a sideways motion for the past few trading days.

1900 – 1910 serves as a crucial range for the time being. If the price stays above it, we could be seeing a rebound towards 1940, 1980 and even 2000. However, if the price breaks below it, we could be seeing a drop towards the 1880 level and below.

Adding Exponential Moving Average (EMA) lines for confluences, we could see that the price is failing to break above the pink and blue EMA lines. In other words, these 2 EMA lines are now acting as a resistance for gold.

Dropping down to the 4-hour chart, we could see that a downtrend market has occurred with consistent lower high structures being formed.

Pound and USD traders should pay attention tonight. The Governor of Bank of England (Andrew Bailey) and the Chair of the Federal Reserve (Jerome Powell) will be releasing their statements simultaneously tonight. Depending on the topic of their speeches, both GBP and USD may see some level of volatility if there are any prominent announcements.