Dollar Steadies as the Market Await for FOMC Minutes

• The dollar index and equity market remain calm ahead of Wednesday's CPI and FOMC Minutes.
• The Euro faces strong downside pressure on French political uncertainty.
• Oil prices continue to gain on U.S. crude stockpile replenishment speculation. 

Market Summary

The dollar index is poised at its recent high level, while U.S. equity markets eked out marginal gains as the market awaits Wednesday’s crucial CPI reading and the FOMC meeting minutes. Although the market widely believes that the Fed will keep the rate on hold, there is less certainty about the officials’ rate projections.

In contrast, the euro continues to slide, currently supported at the 1.0730 level against the dollar. French President Emmanuel Macron's call for a legislative vote after his defeat in the European Parliament election has cast a shadow on the country’s governance.

Meanwhile, the market is speculating that the Bank of Japan (BoJ) may trim its bond-buying operations further, hoping to support its lacklustre yen. There is also hope that the Japanese central bank will lay the groundwork for future rate hikes at the end of Friday’s policy meeting.

In the commodity market, gold remains subdued due to a lack of catalysts. Oil prices, on the other hand, edged higher ahead of tomorrow’s OPEC monthly report. The oil market is also trading on speculation that the U.S. may be replenishing the Strategic Petroleum Reserve amid softened oil prices.

Current rate hike bets on 12nd June Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (99.4%) VS -25 bps (0.6%) 

Market Movements

DOLLAR_INDX, H4

Following a week of significant market turbulence and high volatility, the Dollar Index has stabilized, retreating from strong resistance levels as investors engage in profit-taking. Market participants are now focusing on upcoming US economic data to glean further trading signals. This week, multiple crucial economic reports and events are on the horizon, including the Federal Reserve's interest rate decision. Despite recent pessimistic US economic data, the much better-than-expected Nonfarm Payrolls report has complicated the market outlook. Investors will closely watch the US CPI data to gauge the likely movement of the US Dollar.

The Dollar Index is trading flat while currently testing the support level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 67, suggesting the index might experience technical correction since the RSI retreated sharply from overbought territory. 

Resistance level: 105.65, 106.35

Support level: 105.10, 104.45

XAU/USD, H4

Gold prices have rebounded, driven primarily by dip buying and technical correction. However, the longer-term outlook for gold remains uncertain, especially with several crucial US economic data releases and events slated for later this week. Until this data is released, gold prices are expected to consolidate within a range. Investors are advised to await a breakout for clearer directional cues on the commodity's trend.

Gold prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 40, suggesting the commodity might extend its gains toward resistance level since the RSI rebounded sharply from oversold territory. 

Resistance level: 2320.00, 2350.00

Support level: 2290.00, 2260.00 

GBP/USD，H4

The GBP/USD pair recorded a technical rebound, with a doji candlestick at the recent low, suggesting a potential trend reversal for the pair. The Pound Sterling remains one of the strongest currencies, bolstered by the UK's persistently high inflation, which has resulted in a hawkish stance from the Bank of England (BoE) and fueled Sterling's strength. UK job data, due later today, is expected to provide further insight into upcoming BoE monetary policy moves and their implications for the Sterling.

The GBP/USD pair is supported at the crucial support level at 1.2700, suggesting the pair remains trading in its bullish trajectory. The RSI remains flowing below the 50 level, while the MACD has a sign to cross below the zero line, suggesting the bearish momentum is easing. 

Resistance level: 1.2760, 1.2850

Support level:1.2660, 1.2540 

EUR/USD，H4

The EUR/USD pair continues to trade with strong bearish momentum as uncertainty over French governance remains unclear following President Emmanuel Macron's call for a snap legislative vote at the end of June. Additionally, the recent monetary policy pivot by the European Central Bank (ECB) has hindered the euro’s strength, further contributing to the pair's downward trend. 

EUR/USD found support at the above 1.0730 level, and the bearish momentum has signs of easing. The RSI has gotten out from the oversold zone, while the MACD has signs of crossing below the zero line, suggesting the bearish momentum is softening. 

Resistance level: 1.0805, 1.0864

Support level: 1.0730, 1.0630 

Nasdaq，H4

The Nasdaq closed at fresh record highs, driven by bullish momentum from the ongoing hype around artificial intelligence. Apple recently announced plans to enhance its Siri voice assistant and operating systems with OpenAI’s ChatGPT, aiming to catch up in the AI race. Updates to iPhone and Mac operating systems will allow access to ChatGPT through a partnership with OpenAI, with a test version available in the autumn. Despite the gains, uncertainties ahead of the CPI report and the Federal Reserve's monetary policy decisions have limited further upward movement in the Nasdaq.

Nasdaq is trading higher while currently testing the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 65, suggesting the index might enter overbought territory. 

Resistance level: 19690.00, 20000.00

Support level: 18920.00, 18330.00 

USD/JPY, H4

The Japanese yen has once again traded into its critical zone, above 157.00 against the dollar, ahead of Friday's Bank of Japan (BoJ) monetary policy statement. The strengthened U.S. dollar, bolstered by last Friday's robust Nonfarm Payroll (NFP) data, continues to put pressure on the yen. Meanwhile, market speculation is growing that Japanese authorities may further cut their bond-buying operations in an effort to provide support for the yen. Traders are closely watching these developments, as any shifts in BoJ policy could significantly impact the JPY/USD pair.

USD/JPY is trading toward its recent high level, suggesting a bullish bias for the pair. The RSI is climbing toward the overbought zone, while the MACD has crossed above the zero line and is diverging, suggesting that bullish momentum is gaining. 

Resistance level: 158.45, 159.40

Support level: 156.15, 155.20

CL OIL, H4

Oil prices surged aggressively, buoyed by hopes of rising demand this summer despite a stronger US Dollar. Dip buying and potential production cuts from OPEC+ have also supported oil prices. However, the overall trend for oil remains uncertain amid mixed sentiments. While OPEC+ has indicated production cuts, rising oil inventories have sparked concerns about the effectiveness of these measures in stabilising prices. Multiple key events later this week will provide further trading signals, and investors should closely monitor these developments.

Oil prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 69, suggesting the commodity might enter overbought territory. 

Resistance level: 79.80, 83.95

Support level: 76.15, 72.90