Greenback to Recover
Following last week's correction to the US dollar and itsreaction to the nonfarm payrolls data, the Federal Reserve policy meeting will be the main focus this week. The latest statement will be released along with FOMC issuing its latest economic forecasts and individual interest rates from committee members.
Federal Reserve Chair Janet Yellen will hold a press conference after the statement is released. There is little doubt that the rates will be increased at the meeting. The markets have moved steadily with a 0.25% rate increase and therefore, there should be some forward guidance on the policy outlook.
Inflation and retail sales data will be released in the US tomorrow with inflation increasingly approaching the Federal Reserve's target. The January CPI report confirmed that the prices went up by 0.6 percent. There remains significant uncertainty on how the fiscal policies will be enacted.
Gold has recently been trending higher while bouncing up and price has been rejected at 1211.10 levels. Currently, the pair is making its way towards the channel's support area, which would likely be around the area of interest at 1194.54 levels. Therefore, we start looking for opportunities to go short.
Given that the stochastic is already signaling conditions which are below 50 levels, the pair remains below the 50EMA and 100SMA.
The price has been fluctuating since yesterday and when there is a breach, it is considered to reinforce the positive expectations slowly. Staying below the moving average, the price action continues to suggest that we are looking for another downward movement with the next support area around 1194.54 levels.
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