All Eye On BoJ Interest Rate Decision

Market Summary

The financial markets are bracing for a flurry of events this week, with central banks including the Bank of Japan (BoJ), the Federal Reserve (Fed), and the Bank of England (BoE) all set to announce their monetary policy decisions. All eyes are particularly focused on the BoJ, where there is anticipation for the possibility of the first rate hike in decades. Traders have been adjusting their positions accordingly, leading to the Japanese Yen trading strongly against the dollar over the past three sessions, despite the dollar’s recent strength fueled by robust inflation data released last week.

In the U.S., equity markets have been relatively subdued in the last session as investors await upcoming monetary policy clues from the Federal Open Market Committee (FOMC) statement scheduled for release this Wednesday. Meanwhile, in the commodities market, gold prices have pulled back slightly from their recent bullish run and are currently seeking support above $2150 levels. On the other hand, oil prices continue to demonstrate resilience, edging closer to the $82 mark amid tightening oil supplies and elevated geopolitical risks.

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Current rate hike bets on 20th March Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%)  

Market Overview

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The Dollar index strengthened against major currencies in anticipation of the Federal Open Market Committee’s (FOMC) monetary policy decisions. Last week’s higher-than-expected US producer and consumer price indexes raised hopes for a hawkish stance from the Federal Reserve. All eyes are on the Fed meeting for clues on the central bank’s outlook for rate cuts. 

The Dollar Index is trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 70, suggesting the index might enter overbought territory. 

Resistance level: 103.75, 104.50

Support level:103.05, 102.40

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XAU/USD, H4

Gold prices declined as the US Dollar appreciated and US Treasury yields rose, dampening demand for non-yielding assets like gold. Better-than-expected economic data from the US signalled expectations of more hawkish policies from the Federal Reserve, further weighing on gold demand. Investors are closely monitoring monetary policy decisions for trading signals amid shifting market dynamics.

Gold prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 41, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline.

Resistance level: 2150.00, 2235.00

Support level: 2080.00, 2035.00

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GBP/USD，H4

The GBP/USD pair faced pressure from the strengthening dollar following the release of higher-than-expected PPI figures last week. Expectations are for the pair to experience notable fluctuations this week, with several significant events on the calendar likely to influence its direction. The upcoming FOMC interest rate decision on Wednesday and the BoE interest rate decision on Thursday are both anticipated to be key drivers for the pair’s movement. Traders will closely monitor these events for insights into potential shifts in monetary policy and their implications for the GBP/USD exchange rate.

GBP/USD is trading in a bearish trajectory but is currently supported at the above 1.2710 level. The RSI has been flowing close to the oversold zone, while the MACD has broken below the zero line, suggesting the pair remains trading with bearish momentum. 

Resistance level: 1.2780, 1.2880

Support level: 1.2710, 1.2630

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EUR/USD，H4

The EUR/USD pair experienced a significant decline in the recent session and is currently hovering above the 1.0866 level. Market attention is focused on the Eurozone’s CPI reading, which is scheduled for later today. Projections suggest that the CPI reading may come in lower than the previous figure, signalling a potential easing in inflationary pressures. If the actual CPI reading falls below expectations, it could exert additional downward pressure on the pair.

EUR/USD has found support and consolidation after its significant plunge from the last session. The MACD has broken below the zero line, while the RSI hovers in the lower region, suggesting the pair’s bearish momentum remains intact. 

Resistance level: 1.0960, 1.1040

Support level: 1.0870, 1.0775

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USD/JPY，H4

The Japanese yen experienced significant selling pressure as investors offloaded positions ahead of high volatility events. Despite the sell-off, bullish prospects remain for the Japanese yen, driven by speculation of potential monetary shifts from the Bank of Japan. Tuesday’s BOJ meeting is poised to be consequential, with officials deliberating on ending eight years of negative interest rates in a landmark shift away from its stimulus program. 

USD/JPY is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 69, suggesting the pair might enter overbought territory.

Resistance level: 148.35, 150.80

Support level: 147.50, 146.20

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AUD/USD, H4

The AUD/USD pair faced significant pressure from the robust U.S. dollar and witnessed a sharp decline in the previous session. However, the pair managed to find support ahead of the upcoming RBA interest rate decision scheduled for tomorrow (March 19th). With inflation in Australia remaining elevated, the market anticipates that the RBA will maintain its current interest rate level to mitigate inflationary pressures and prevent economic recession. 

AUD/USD is consolidating at near 0.6560 levels, suggesting a potential trend reversal for the pair. The RSI was supported above the oversold zone while the MACD continued to move lower, suggesting the pair’s bearish momentum remains intact. 

Resistance level: 0.6560, 0.6617

Support level: 0.6540, 0.6485

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CL OIL, H4

Oil prices saw a slight retreat primarily attributed to technical correction. However, the long-term outlook for the oil market remains positive as the International Energy Agency (IEA) and OPEC revised their 2024 oil demand forecasts upwards for the fourth time. Economic growth surpassing expectations is anticipated to bolster oil demand, underpinning the positive trend in the oil market.

Oil prices are trading flat while currently testing the support level. Nonetheless, MACD has illustrated diminishing bullish momentum, while RSI is at 61, suggesting the commodity might extend its losses after breakout since the RSI retreated sharply from overbought territory. 

Resistance level: 82.45, 84.10

Support level: 80.20, 78.00

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