February 23, 2024

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The US dollar is on guard ahead of the release of the US CPI;  Gold, USD/JPY and GBP/USD settings

The US dollar is on guard ahead of the release of the US CPI; Gold, USD/JPY and GBP/USD settings

Market Forecast – Gold Prices, USD/JPY, GBP/USD

  • the American dollar Moves without directional conviction on Monday ahead of US Consumer price index Data
  • The US January inflation report will attract market attention on Tuesday
  • This article focuses on the technical forecast for gold prices, USD/JPY And GBP/USD

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The US dollar, as measured by the DXY index, traded nervously at the start of the new week, moving up and down around the flat line without making much progress in either direction amid mixed US Treasury yields.

Monday's weak moves in the forex market, combined with lower volatility, can be attributed to cautious positioning ahead of a major event impacting the US economic calendar on Tuesday morning: the release of January CPI statistics.

The next report is expected to show that the annual headline inflation rate fell to 2.9% last month from 3.4% previously, a welcome development by the US central bank. Core CPI is also expected to slow, but in a more gradual manner, falling to 3.7% from 3.9% in December.

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To gauge the likely market response to data on key financial assets, traders should consider how official results compare to consensus forecasts, paying particular attention to the trend in underlying metrics.

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If progress in combating inflation hits a roadblock, and CPI numbers surprise to the upside, yields and the US dollar are likely to continue their recent rebound, weighing on gold prices. This is because stable inflation may delay the timing of the first interest rate cut by the FOMC and reduce the prospects for strong easing in 2024.

On the other hand, if CPI numbers come in lower than expected, a backlash could occur, especially if the shortfall is large. Under these conditions, bond yields and the dollar could correct sharply in the near term, boosting precious metals in the process.

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Gold price forecast – technical analysis

Gold (XAU/USD) fell on Monday, but losses were limited, with the precious metal lacking strong directional conviction – a sign of market indecision. In order to develop more attractive trading setups, you should make room for resistance at $2,065 or support at $2,005.

If resistance is broken, a rally towards $2,085 could quickly follow. With continued strength, focus will soon shift to the all-time high near $2,150. Conversely, if the support is broken, interest will shift to $1,990, followed by $1,975. Below this area, the next major technical floor is at $1,965.

Gold price technical chart

Gold price chart created using TradingView

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USD/JPY forecast – technical analysis

The USD/JPY pair rose modestly on Monday, consolidating above technical support at 148.90. If prices continue to rise in the coming days, resistance will appear around the psychological level of 150.00. The bulls may have difficulty clearing this barrier, but in the event of a bullish breakout, a retest of the 152.00 area is likely.

Conversely, if the pair takes a downtrend and breaks the support at 148.90, selling momentum may accelerate, paving the way for a pullback towards 147.40. Further losses from this point on could draw attention to the 146.00 handle, followed by 145.50, which is the 50-day simple moving average.

USD/JPY technical chart

USD/JPY chart created using TradingView

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GBP/USD forecast – technical analysis

The GBP/USD pair saw a moderate comeback after the sell-off earlier in the month, reclaiming its 200-day simple moving average and consolidating above the 1.2600 level. If the cable recovery extends over the next few trading sessions, resistance looms at 1.2675 (50-day SMA), followed by 1.2740.

On the other hand, if GBP/USD resumes its bearish reversal and falls below 1.2600, trend line support and the 200-day simple moving average will appear at 1.2565. The Bulls will need to defend this technical area tooth and nail; Failure to do so could result in a move towards the 1.2500 level.

GBP/USD technical chart

GBP/USD chart created using TradingView