Central Bank Speakers in the Limelight and a Softer Dollar Props up Gold

(AI Video Summary)

Representatives from the Bank of England recently went before a parliamentary committee to talk about their outlook for the economy and inflation. They were divided on whether to raise, hold, or cut interest rates, with the majority of the committee overwhelmingly voting to hold rates where they are. The committee wants to wait for improved inflation data and wage growth before making a decision. However, Governor Andrew Bailey did say mention the possibility of a rate cut before inflation hits 2%. The response from the currency market has been muted, with the pound not moving much. There could be some downside potential for the pound based on the weekly chart.

Now let’s take a look at the FTSE, which is a stock index in the UK. It has been doing well lately and continued its positive momentum from last week. The index has been trading in a range for a while now, with levels around 7700 and 7710 being important. Currently, it’s testing around 7764. If it doesn’t break above 7780, there could be a move to the downside. There might be some hesitation around recent swing highs, similar to what happened in January and February.

In the currency market, the EURUSD pair has climbed higher unexpectedly, despite lower wage data for the Eurozone. This could mean that the European Central Bank might cut rates soon. The Eurozone’s economy has been struggling, especially in Germany. However, sentiment for the euro still seems positive, even with the challenges it’s facing. It might be difficult for the euro to keep rising as it gets closer to the 200-day simple moving average.

The US dollar index has been going down lately, reversing its earlier gains. This could bring EURUSD closer to its 200-day simple moving average as well. Gold has been able to recover as the dollar has weakened. It broke down to trade below the prior triangle pattern until reaching resistance level where it subsequently traded higher.

As for the US stock market, it’s expected to open slightly lower after a holiday break. However, this doesn’t mean it’s time to sell. Previous pullbacks have been small and actually provided opportunities to reenter the trend. So, one approach to US stocks is to keep looking for opportunities to trade the trend, unless the technical indicators or fundamentals say otherwise.