Fed Chair Jerome Powell will be testifying before congress today to discuss recent monetary policy

Most asset classes remain muted before Fed Chair Jerome Powell gives his testimony later today. The head of the U.S. central bank is expected to discuss recent monetary policy along with economic data,  giving investors a possible gauge of future market movement. On the other hand, oil prices traded above $80 in light of supply tightness and increasing global demand outlook. Saudi Arabia, one of the world’s largest oil producers, has raised crude oil prices for the second consecutive month on confidence over oil demand. In Oceania, the Reserve Bank of Australia (RBA) is going to announce its rate decision with a market consensus of a 25 bps rate hike; any number higher than this may boost the Aussie dollar to trade higher against the U.S. dollar. 

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Look Out For

Current rate hike bets on 22nd March Fed interest rate decision: 

25 bps (70.1%) VS 50 bps (29.9%)

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Market Overview

Economic Calendar

Market Movements

DXY

The US Dollar weakened against a range of global currencies on Monday as investors braced themselves for two key events that could impact market sentiment. Federal Reserve Chair Jerome Powell’s impending testimony and the impending release of job data later this week have cast a pall of uncertainty over the currency’s prospects. Many analysts believe Powell’s appearance before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday will offer vital insights into the central bank’s thinking regarding the recent data. Some investors eagerly anticipate clues as to whether the Fed will reaccelerate the pace of rate hikes, which could exert upward pressure on the dollar.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 40, suggesting the index might extend its losses after breakout since the RSI stays below the midline.

 Resistance level: 105.35, 106.25

Support level: 104.25, 103.75

XAU/USD

Gold prices held steady on Tuesday ahead of Federal Reserve Chair Jerome Powell’s testimony, which is expected to provide insight into future monetary policy. Powell is set to speak before Congress at 17:00 (GMT+2) and will likely address the path of interest rates in the coming months. However, the market remains uncertain about his tone, given the unexpected rise in inflation in January and other indications of a cooling US economy. Investors will closely monitor Powell’s remarks for any indication of the Fed’s stance on interest rates, as any surprises could trigger volatility in the precious metals market.

Gold prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 57, suggesting the commodity might extend its losses toward support level.  

Resistance level: 1860.00, 1905.00

Support level: 1845.00, 1820.00

EUR/USD 

The euro continues its bullish run bolstered by hawkish comments from ECB policymakers and it is almost certain that the ECB is going to raise another 50 bps rate in March. In the U.S., the dollar poised with a change of a mere 0.22% last night before the chair of the Fed gave his testimony to the Senate Banking Committee. Any Hawkish comment from him in this 2-day event may hammer the euro from its recent bullish run. Besides the testimony, investors may also refer to the NFP data, which will be released on Friday (10th March) to gauge the pair’s future price movement. 

On the technical front, the indicators give a bullish-bias signal with the RSI going to break into the overbought zone signalling a strong buying power, while the MACD has started to move upward from the zero line suggesting the bullish momentum is forming. 

Resistance level: 1.0698, 1.0822

Support level: 1.0613, 1.0540

BTC/USD

Major coins including BTC, ETH, XRP and the rest, continue to stay flat after the fallout of Silvergate Capital. Investors are waiting for the event to be unfold and concerning Silvergate’s viability as the crypto-friendly bank acts as a medium between digital assets and conventional banking. There would be a potential liquidity problem in the crypto market after big players like Coinbase and Paxos stopped accepting payments from Silvergate. The crypto market is expected to remain calm and have low trading volume before everything about Silvergate comes into light. Besides, Jerome Powell is going to give his testimony in front of the Senate Banking Committee which may also be one of the catalysts for the BTC movement. 

On the technical front, it is to expect BTC might pivot from its current trend as the RSI has successfully rebounded before entering into the oversold zone and the MACD line has converged with the signal line giving a reversal signal as well. 

Resistance level: 22816, 23713

Support level: 22183,  21540

USDJPY

The USD/JPY pair is experiencing a second consecutive day of selling pressure on Monday as it moves further away from its recent peak. The US Dollar dropped as investors shifted out their portfolios to prevent market uncertainty in the United States, weighing on the USD/JPY. However, the downside for the currency pair is cushioned by the divergent monetary policy outlook between the Bank of Japan and the Federal Reserve. The incoming Governor of the Bank of Japan, Kazuo Ueda, emphasised the need to maintain the ultra-loose monetary policy to support the fragile Japanese economy. This contrast in policy outlooks could limit the downside for the USD/JPY.

USD/JPY is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 47, suggesting the pair might extend its losses since the RSI stays below the midline. 

Resistance level: 137.20, 139.60

Support level: 134.80, 132.90

GBP/USD 

Pound Sterling has soared in value amidst a backdrop of upbeat economic data, allaying fears that Britain’s economy was sliding into a recession. Markit/CIPS has reported that the UK Construction Purchasing Managers Index (PMI) surged from its previous reading of 48.4 to 54.6, surpassing market expectations of 49.1. This impressive data indicates that British construction activity grew at its fastest pace in nine months in February, following two consecutive months of declines. The robust performance of the construction sector is a positive sign for the UK economy, which is currently navigating a challenging economic landscape.

GBPUSD is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 55, suggesting the pair might extend its gains after it successfully breakout since the RSI stays above the midline. 

Resistance level: 1.2045, 1.2125

Support level: 1.1925, 1.1845

Dow Jones

The Dow struggled to make meaningful headway as market participants remained on edge in anticipation of two major events set to unfold later in the week. The first of these is the eagerly awaited testimony from US Federal Reserve Chair Jerome Powell, which has been a source of significant speculation and anticipation across financial markets in recent weeks. The second is the release of Friday’s jobs report, which is expected to provide further insight into the direction of the US equity market.

Dow Jones is trading higher following the prior rebound from its crucial support level. MACD has illustrated increasing bullish momentum, while RSI is at 55, suggesting the index might extend its gains as the RSI stays above the midline. 

Resistance level: 34310.00, 35640.00

Support level: 32530.00, 30945.00

CL OIL

Crude oil prices surged, recovering from early losses, as top energy executives gathered at a conference in Houston to discuss the tightness of global supply. According to Chevron Corp CEO Mike Wirth, the oil market is currently experiencing supply vulnerabilities and logistical challenges that any unexpected disruptions could further compound. Notably, Russian oil is still making its way to the market, albeit at different costs, contributing to ongoing supply tightness. Oil prices were also buoyed by news that Saudi Arabia, the world’s largest crude oil exporter, had raised prices for the Arab light crude it sells to Asia for a second consecutive month in April. In addition, a weaker dollar provided further support for oil prices.

Oil prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 67, suggesting the commodity might enter the overbought territory.   

Resistance level: 80.55, 82.35

Support level: 78.40, 76.60