Spreads
Spreads
Spreads
Spreads
Spreads
After rising for three straight trading sessions, EURUSD reversed course on the first trading day of the week. The shared currency fared worse against the U.S. Greenback as demand for the Dollar rose on Monday. Trading for the pair, however, has been rather thin and range-bound ahead of the key FOMC meeting, scheduled for Wednesday’s American trading session. Markets are now fully pricing in at least a 75 basis point interest rate hike by the Fed. Should the Fed deliver a super-sized rate hike of 1 percentage point, the U.S. Dollar could surge as short-term interest rates are likely to soar into the historical territory. On the economic docket, ECB president Lagarde is scheduled to speak on the 21st.
On the technical side, EURUSD has continued to trade below our previously estimated resistance level of near parity. The support level for EURUSD rests at 0.9956. Further down support for EURUSD rests at 0.9902. RSI for the pair sits at 50.31, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.
Resistance: 1.0011, 1.0055
Support: 0.9969, 0.9902
Cable saw thin trading and limited price movement on the first trading day of the week as Britain’s trading hours are limited due to the national funeral of Queen Elizabeth II. Range-bound trading for Cable should be expected before the 21st, which will see both the Fed and BoE announce their latest monetary policy and interest rate decisions. The Fed is expected to hike interest rates by 75 basis points, while the expectation for the BoE is 50 basis points. The interest rate differential between the two countries could thus create an arbitrage opportunity for carrying trades; however, market participants should keep in mind the disappointing recent economic data releases from the U.K.
On the technical side, GBPUSD has rebounded from our previously estimated support level of around 1.1371. Short-term resistance for Cable now forms around a previous support level at 1.1463. A super-sized rate hike from the Fed could send Cable well below 1.13. RSI for the pair sits at 40.59, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.
Resistance: 1.1561, 1.1854
Support: 1.1463
XAUUSD dropped a combined 2.43% over the course of last week’s trading. The non-yielding metal has continued to face heavy selling pressure as global central banks continue to raise interest rates in order to combat inflation. Rising U.S. 10-year treasury yields have not helped the case for Gold bulls as the yellow metal continues to fare worse against the U.S. Greenback. Market participants should be aware of Wednesday’s Fed interest rate decision, as a super-sized rate hike could cause extreme price volatility for the non-yielding metal.
On the technical side, XAUUSD has found support around the $1660 per ounce region. This level is key for the precious metal as $1660 per ounce is near the price level just prior to March 2020 when Gold prices suffered a more than 8% drop in the following week. RSI for the precious metal sits at 40.66, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100, and 200-day SMA.
Resistance: 1740, 1800
Support: 1712, 1695
