Central Banks are Imposing Their Say on the Markets This Week

Market News Summary

The dollar stabilized on Monday and moved away from its lowest level in eight months while awaiting the Federal Reserve meeting to decide interest rates next Wednesday.

The euro caught a breath in today’s trading after its price fell at the end of last Friday. There is some optimism about raising interest rates by 50 basis points by the European Central Bank in its meeting on Thursday.

On the other hand, the gold price rebounded today from its lowest level at the end of last week’s trading. The price is trading around 1930 levels, with anticipation of the meetings of the central banks.

U.S. Dollar Index (USDX)

The dollar stabilized in trading today and moved away from its lowest level in eight months before the Federal Reserve meeting this week, with dealers focusing on guiding the path of interest rates, but the dollar index is still on its way to record a fourth consecutive monthly loss of 1.5% affected by expectations of slowing the pace of rate hikes. interest from the Fed.

Last Friday, the monthly personal consumption expenditures price index data showed some increase, reaching 0.3% after it was 0.2%, and the personal income index reached 0.2%, getting down from 0.3%, which could lead the Fed to go on with the hawkish policy. No action was taken to stop interest rate hikes, and the market was priced based on the fact that the Fed will raise 25 basis points at its next meeting on Wednesday.

Pivot Point: 101.40

Euro (EURUSD)

The euro-dollar pair caught its breath in today’s trading after its price fell at the end of last Friday’s trading, as the markets are still in a critical condition before the meetings of the main central banks this week. There are fears of slowing growth in Germany and the European Union, which increases the market’s hesitation.

European Central Bank President Christian Lagarde pledged earlier this month that the bank’s policy would be more stringent when facing the inflation, which reached a peak of 40 years. She also promised that the bank would raise interest by 50 basis points in the February and March meetings, respectively, which could push the euro pair to higher levels.  

The price is consolidating above 1.0800 levels with a sideways movement, awaiting the decisions of the central banks this week, so we may witness some fluctuation in the price, and the relative strength indicators with MACD show some neutrality, and the 100-day and 200-day moving average convergence on the one-hour time frame. The continuation of the bullish trend depends on the breach of 1.0930 levels, while the downside breach of 1.0830 is a warning for more decline.

Pivot Point: 1.0850

Spot Gold (XAUUSD)

The price of gold has rebounded from its lowest level during the trading session on Friday and it may appear that the gold bulls are running out of momentum. The precious metal rose in the past six weeks before losing upward momentum due to recent slow price movements as the market hesitated while awaiting for the week’s central bank meetings with the non-farm payrolls report due this coming Friday.

The mixed concerns surrounding inflation and growth in the United States of America are challenging the Federal Reserve, which keeps traders optimistic about the rising gold prices. On the other hand, the downward breach of 1920 levels seem necessary to turn the direction of gold prices and encourage the entry of sellers.

Moreover, the MACD indicator is gradually losing its positive momentum with the relative strength index holding above 50 levels, which may spark high volatility in the coming period, until the direction that the price will take is clarified.

Pivot Point: 1,940

WTI Futures (CL-OIL)

Oil prices jumped at the beginning of Asian trading today, supported by tensions in the Middle East in the wake of the drone attack in Iran and Beijing’s pledge to boost consumption, which will support demand for fuel. It is unlikely that the Organization of the Petroleum Exporting Countries and Russia known as (OPEC +) will amend their current oil production policy at their scheduled meeting on the first of next February.

The rise in crude exports from Russia’s ports in the Baltic countries at the end of last week caused oil prices to incur the first weekly loss after a rise that continued during the first three weeks of this month. Moreover, the US crude price is trading around $79 per barrel, going down about 3.50% from its highest level during the month.

Pivot Point: 80.40