Weekly Market Analysis: 31 January 2022

　　

This week is the first week of February. There are two major topics to focus on: 

• Interest rate decisions of the three central banks, notably the RBA, BOE, and ECB, and their economic strategies
• Labor data from New Zealand, Canada, and the United States.

The week begins with the RBA’s interest rate decision, which is expected to remain unchanged at 0.10 per cent. Investors will be watching to see if the RBA plans a rate hike in response to rising inflation. The ECB will do the same, leaving interest rates the same but presumably discussing inflation worries. 

To tackle inflation, the Bank of England is likely to hike interest rates by 0.25 per cent to 0.50 per cent. Potential movements include the AUDUSD, GBPUSD, EURUSD, NZDUSD, and GOLD.

Source: Forex Factory | Time: GMT+8

USD INDEX

As previously stated, the USD Index broke through the consolidation zone by breaking over 96.63. This is due to USD hawkishness, which states that while the Federal Reserve kept interest rates constant at 0.25 per cent, Chairman Jerome Powell said rates will be raised to manage growing inflation.

The USD Index is expected to continue increasing this week, but with Non-Farm data, we can see a modest reversal from the USD Index, which is limited at 96.87.

In the smaller Timeframe (H4), the price appears to be restrained by the support that has been created around the levels 96.86-96.90.

GOLD

The movement of Gold is also predicted to remain volatile this week due to the employment data in the US. We will also be seeing several central banks announce their interest rates.

If we look at it technically, Gold reached the support level at 1787-1795, with the possibility to be slightly stuck at 1782. 

For levels below it, the movement to 1761-1767 can be achieved if the USD continues its strengthening.

From the H4 Timeframe, it looks like there is potential for a slight increase towards 1800 before weakening again.