XAUUSD SHORT TERM FORECAST
FUNDAMENTAL OUTLOOK:
The dollar remains broadly bid after Friday's release of US PCE inflation data argued that the Fed needed to push rates higher and for longer. 25bp Fed hikes are now priced for March, May and June. Expect the dollar to hold gains this week, although China's February PMIs (Wednesday) and the US ISM Services (Friday) may prove a challenge.
Friday's release of US core PCE inflation data for January completed what has been a very bond bearish/dollar bullish set of US data this month. We have learned that US inflation is proving much stickier and US activity firmer than we were led to believe in December and January. Understandably, investors are now taking the Federal Reserve hawks more seriously and have priced three more 25bp rate hikes from the Fed in March, May, and June.This hawkish run of data also questions what the new set of Fed Dot Plots will look like when they are released on 22 March. The Fed's current median expectation sees Fed Funds at 5.00-5.25% by the end of 2023 and 4.00-4.25% by end-24. Both of these projections could be revised higher.
TECHNICAL OUTLOOK:
XAUUSD is currently ranging below $1822 Which is above the previous week fib retracement level 0.38 and level 0.5 which creates a potential selling points at the resistance zone on the 4hours chart.
Moving lower to the 1hour chart within the 4hours resistance zone is an order block waiting to be filled.
The dollar remains broadly bid after Friday's release of US PCE inflation data argued that the Fed needed to push rates higher and for longer. 25bp Fed hikes are now priced for March, May and June. Expect the dollar to hold gains this week, although China's February PMIs (Wednesday) and the US ISM Services (Friday) may prove a challenge.
Friday's release of US core PCE inflation data for January completed what has been a very bond bearish/dollar bullish set of US data this month. We have learned that US inflation is proving much stickier and US activity firmer than we were led to believe in December and January. Understandably, investors are now taking the Federal Reserve hawks more seriously and have priced three more 25bp rate hikes from the Fed in March, May, and June.This hawkish run of data also questions what the new set of Fed Dot Plots will look like when they are released on 22 March. The Fed's current median expectation sees Fed Funds at 5.00-5.25% by the end of 2023 and 4.00-4.25% by end-24. Both of these projections could be revised higher.
TECHNICAL OUTLOOK:
XAUUSD is currently ranging below $1822 Which is above the previous week fib retracement level 0.38 and level 0.5 which creates a potential selling points at the resistance zone on the 4hours chart.
Moving lower to the 1hour chart within the 4hours resistance zone is an order block waiting to be filled.
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