Gold Price Rebounds Ahead of FOMC Meeting

• All eyes are on BoJ and RBA, as their interest rate decision is due today.
• Gold prices edge higher as traders position themselves ahead of multiple central bank monetary policy decisions. 
• BTC remains trading with a descending trajectory as BTC ETFs' inflow is easing. 

Market Summary

In the lead-up to pivotal interest rate decisions by the Bank of Japan (BoJ) and the Reserve Bank of Australia (RBA), global financial markets are exhibiting signs of stability. The U.S. Dollar Index (DXY) is maintaining its position above the 103.50 threshold, bolstered by last week's Producer Price Index (PPI) figures that have steered market sentiment towards expectations of a more hawkish Federal Reserve policy stance in Q2 2024.

Amid this climate of anticipation, gold prices have seen a modest uptick, as investors position themselves strategically ahead of this week’s central bank decisions. This surge reflects the market's hedge against potential currency volatility in the aftermath of the upcoming policy announcements.

Concurrently, crude oil prices are on an ascending trajectory, stimulated by a recent Ukrainian drone strike on Russian refineries which has resulted in a temporary disruption of oil production. This event has heightened concerns over supply constraints and geopolitical uncertainties, propelling oil prices upward.

In the cryptocurrency domain, Bitcoin (BTC) is encountering a period of stagnation, unable to breach the $70,000 psychological threshold. Despite this, significant buying activity by Bitcoin 'whales' have been reported, with large volumes of BTC being acquired at an average price of $56,000 predominantly through Spot ETFs. This buying pattern is perceived as establishing a robust support level for the cryptocurrency.

Current rate hike bets on 20th March Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%)  

Market Movements 

DOLLAR_INDX, H4

The Dollar Index edges higher against major currencies as market anticipation mounts ahead of a series of central bank meetings. Rising volatility in global markets prompts a flight to safety, bolstering demand for the US Dollar. With inflation persisting and recent high CPI and PPI readings, expectations for Fed rate cuts in 2024 have diminished, contributing to the Dollar's bullish trend. Eyes are on Wednesday's Fed meeting for potential shifts in economic projections and rate cut expectations.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 70, suggesting the index might enter overbought territory. 

Resistance level: 103.75, 104.45

Support level:103.05, 102.55

XAU/USD, H4

Gold prices remain near key support levels amid anticipation of a pivotal FOMC meeting. While uncertainties loom over central bank policy decisions, some investors maintain a cautious stance and hedge their portfolios with safe-haven assets like gold. Market participants await further monetary statements from major central banks, including the Fed, Bank of Japan, Bank of England, and Reserve Bank of Australia, for trading cues.

Gold prices are trading lower while currently testing the support level. MACD has illustrated diminishing bullish momentum, while RSI is at 69, suggesting the commodity might enter overbought territory. 

Resistance level: 2235.00, 2350.00

Support level: 2150.00, 2080.00

 GBP/USD，H4

The GBP/USD pair has been exhibiting a subdued and downward trend as the market braces for several critical monetary policy decisions from central banks this week, which are anticipated to significantly impact the pair's price movements. Although both the Bank of England and the Federal Reserve are expected to keep interest rates steady, the accompanying monetary policy statements released alongside these decisions are poised to be the critical factors influencing the pair's direction. Market participants are closely scrutinising these announcements for insights into future monetary policy paths, which will be instrumental in determining the near-term trajectory of the GBP/USD pair.

GBP/USD is trading flat, lacking momentum for a rebound. The RSI has slid to the lower region, while the MACD continues to move lower, below the zero line, suggesting bearish momentum is prevailing. 

Resistance level: 1.2780, 1.2880

Support level: 1.2710, 1.2630

 EUR/USD，H4

The EUR/USD pair remains under pressure, grappling to sustain its support level at 1.0866. Yesterday's Eurozone Consumer Price Index (CPI) release, which met market expectations but registered a decline from the previous reading, underscores a diminishing inflationary outlook in the region. This development has weighed on the euro's strength, contributing to the pair's ongoing downward trajectory.

EUR/USD remains trading in a descending trajectory but is currently supported at above 1.0866 levels. The MACD continues to slide below the zero line, while the RSI hovers near the oversold zone, suggesting that the bearish momentum is overwhelmed. 

Resistance level: 1.0960, 1.1040

Support level: 1.0870, 1.0775

 USD/JPY，H4

The Japanese yen exhibits minimal movement amidst investor reluctance to engage in yen markets amid expected volatility following the Bank of Japan's monetary policy decisions. Stronger-than-expected economic data and increasing speculation of an end to eight years of negative interest rates by the Bank of Japan could bolster demand for the yen. However, uncertainties persist until further confirmation of interest rate decisions is received.

USD/JPY is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 70, suggesting the pair might enter overbought territory.

Resistance level: 149.35, 150.80

Support level: 147.50, 146.20

 USD/CHF, H4

The USD/CHF pair has surged past its significant resistance point at 0.8872, reaching its zenith since last November. This upturn is set against expectations that the Federal Open Market Committee (FOMC) will hold interest rates steady, a forecast reinforced by last week's U.S. Producer Price Index (PPI) data surpassing market anticipations. Attention is now shifting towards the Swiss National Bank (SNB) and its forthcoming interest rate decision this Thursday. A dovish tilt from the SNB could further erode the Franc's strength, influencing the trajectory of the USD/CHF pair.

The USD/CHF pair broke its highest level in 2024, suggesting a solid bullish signal for the pair. The MACD continues to move upward while the RSI breaks into the overbought zone, suggesting that the bullish momentum is strong with the pair. 

Resistance level: 0.8940, 0.9005

Support level: 0.8825, 0.8780 

CL OIL, H4

Crude oil prices extend gains, hovering near four-month highs driven by multiple factors. Increased US refinery activity improved Chinese demand, and ongoing disruptions in the Middle East contribute to a tight outlook for the oil market. Iraq's announcement of cutting crude exports to offset higher production further reinforces bullish sentiment in the oil market.

Oil prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 70, suggesting the commodity might enter overbought territory.

Resistance level: 82.45, 84.10

Support level: 80.20, 78.00