Markets Cautious Ahead of Crowded Week

The U.S. dollar is under pressure as markets expect the fed to commit to the slowdown and hike 50 basis points. However, the CPI index will show how efficient Fed policy was for this year despite the expectation of persistent inflation.

U.S. Dollar Index (USDX)

The dollar climbed this morning as data on Friday showed U.S. producer prices had grown more than expected last month, which points to persistent inflationary pressures.

The U.S. producer price index for final demand in November was up 0.3% from the previous month and 7.4% from a year earlier. Data released on Friday showed a slight upside surprise from forecasts of a 0.2% and 7.2% increase, respectively.

The Fed is taking the center stage and is expected to raise interest rates by 50 basis points. The focus will also be on the central bank’s updated economic projections and Fed Chair Jerome Powell’s press conference.

The U.S. dollar index fell 0.27% to 104.53, after slipping 0.3% overnight. The daily chart’s overall trend remains negative and targets the support at 104.40. However, the technical indicators show fluctuations with a heavier selling pressure build-up.

Pivot Point: 104.90

SUPPORT	RESISTANCE
104.75	104.95
104.40	105.10
104.30	105.25

Euro (EURUSD)

The Euro remains solid despite the early decline this morning as the ECB is scheduled to meet this week and deliver a 50-basis points hike. Additionally, the common currency is gaining some steam due to the increase of selling pressure on the greenback.

The pair remains positive and trading at the resistance level of 1.0550 which is not holding up due to the heavy buying pressure. The pair is heading towards 1.0590 but it is expected to find fluctuations on the way. Technical indicators show the hourly chart to be speculative.

The daily chart shows a continuation of the uptrend if the pair broke above 1.0550 and 1.0580. However, the technical indicators provide indecisive readings.

Pivot Point: 1.0540

SUPPORT	RESISTANCE
1.0520	1.0580
1.0495	1.0595
1.0470	1.0620

Spot Gold (XAUUSD)

Gold prices remain below $1,800 per ounce as markets assess the effect of the Fed’s policy and await the CPI data. Bullion prices had reacted somewhat positively to last week’s data that showed U.S. producer price inflation eased further in November. Spot gold fell 0.2% to $1,793.72 an ounce, while gold futures dropped 0.3% to $1,804.95 an ounce this morning.

The 4 hours and the daily chart show a high probability of continuing the uptrend despite the readings of the technical indicators. However, RSI and MACD show a probability of a slight drop to $1,765 per ounce.

Pivot Point: 1,795

SUPPORT	RESISTANCE
1,775	1,800
1,765	1,810
1,750	1,815

West Texas Crude (USOUSD)

Oil prices rose more than 1% on Monday as a key pipeline supplying the United States remained shut while Russian President Vladimir Putin threatened to cut production in retaliation for a Western price cap on its exports. Brent crude futures were up 46 cents, or 0.6%, at $76.56 a barrel while U.S. West Texas Intermediate crude was up 0.8% at $71.59 a barrel.

China, the world’s biggest crude oil importer, continued to loosen its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses stayed shut over the weekend, with residents saying a return to normal was a long way off.

WTI’s overall trend remains negative and is heading toward $66 per barrel on the daily chart. Technical indicators show a continuation of the downtrend. Furthermore, the hourly chart is also negative and there is no support level strong enough to hold against the rising pressure from the longer time frames.