Markets Look To A Busy Week For Next Rate Hike Expectations

The U.S. dollar closed on Friday at a two-week high after data showed that the Fed’s preferred gauge of inflation, the PCE price index rose 2.1% in February for the first time since March 2012. With a busy week ahead, traders will be looking to a wide rate of economic reports which has the potential to shape the interest rate expectations ahead.

Starting the week, the BoJ’s quarterly survey of Tankan manufacturing and the non-manufacturing index was mixed but showed a broad improvement from the previous quarter.

Looking ahead, traders will be focusing on the PMI numbers from the Eurozone and the UK, while the U.S. ISM manufacturing index will be coming out later during the North American trading session.

EUR/USD intra-day analysis

EUR/USD 4 Hour Chart

EUR/USD (1.0679) is looking to retrace the declines from last week as theprice has bounced higher. Technical resistance at 1.0700 will be the immediate price level that will need to be cleared for any signs of further upside.

However, above 1.0700, expect further gains to continue that could push the common currency towards 1.0800 where resistance can be established alongside price filling the unfilled gap. The overall bias remains to the downside, however, and in the event that 1.0700 resistance is not cleared, EUR/USD could be resuming its declines down to 1.0600.

USD/JPY intra-day analysis

USD/JPY 4 Hour Chart

USD/JPY (111.36) is seen pushing lower back to the 111.50 – 111.00 support level after prices posted a reversal off 112.00 resistance level last week. There is scope for theprice to form a support at the current level which could signal a near-term upside in prices.

However, the dollar will need to jump above the 112.00 resistance levelin order to extend the gains towards 113.80 – 114.00 price level where resistance can be formed. In the event that USD/JPY fails to break out above 112.00, theprice could remain range bound in the near term. The current bearish bias could strengthen further is the support at 110.76 – 110.70 is breached.

XAU/USD intra-day analysis

XAU/USD 4 Hour Chart

XAU/USD (1248.26) prices opened the week again at 1250 handle, but the recent retracement to this resistance level could be seeing a decline in the near term. Price action is trading within the rising wedge pattern which signals immediate downside in gold towards the 1200 handle.

A breakdown below 1200.00 will signal further declines toward 1150 support. However, expect to see some volatility in gold prices as the busy week will see lot of data coming out from the U.S. which could potentially shape the expectations for the next interest rates.

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