Navigating Market Volatility: Anticipation of US CPI Data and Its Impact on Forex and Gold Trading (2024)

• Zahari Rangelov
• March 11, 2024

The forex market remains a focal point for traders this week as key economic events are likely to instigate heightened volatility across various currency pairs, including JPYUSD, AUDUSD, EURUSD, and XAUUSD. The anticipation surrounding US inflation data is palpable, given its potential to influence Federal Reserve policy decisions.

Economic Events and Their Potential Impact:

Monday:

• Japan’s Final GDP q/q: This report may impact the JPYUSD pair. Japan’s economic health can affect the yen’s valuation with better than expected figures likely leading to yen strength.

Tuesday:

• Britain’s Claimant Count Change: Influential on GBPUSD, an increase in claimants signifies potential labor market weaknesses, potentially weakening the pound.
• China’s New Loans report: Given Australia’s economic ties to China, this might have implications for AUDUSD.
• US Core CPI and CPI: These are critical indicators of inflation in the United States, directly associated with the USD’s strength. A higher-than-expected inflation rate may prompt a hawkish stance from the Fed, leading to USD gaining ground.

Wednesday:

• GBP 30-y Bond Auction: The outcome may affect investor sentiment towards the GBP, impacting GBP pairs indirectly.

Thursday:

• USA Core PPI, Retail Sales, Unemployment Claims: These data points are essential indicators of economic health and consumer spending in the US. Strong numbers could bolster USD against other currencies.

Friday:

• USA Manufacturing and Consumer Sentiment Indices: Positive data here may enhance the appeal of the USD as it signals economic optimism.

Currency Pair Analysis and Market Recommendations:

EURUSD

The EUR/USD pair has recently shown promising signs of an uptrend, catching the attention of forex traders. With a buy recommendation at an entry pivot of 1.0690, the currency pair targets significant gains, aiming for take profit levels at 1.1015 and 1.1150. This bullish outlook is supported by the Relative Strength Index (RSI), indicating a strong upside momentum.

The potential for a 30-50 pip increase underscores a positive sentiment toward the Euro against the US Dollar, reflecting broader market dynamics and investor confidence in the Eurozone’s economic recovery prospects.

EURUSD Daily Chart

USD/JPY

The USD/JPY pair presents a different scenario, where a sell recommendation has been issued due to anticipated resistance at the 147.25 mark. Traders are advised to consider entry at this pivot point, with expectations of a downward movement ranging between 50-100 pips to target levels of 146.45 and 146.00.

The anticipation of limited upward potential, capped by the identified resistance, suggests a cautious approach toward the US Dollar against the Japanese Yen, reflecting nuances in market sentiment and economic indicators influencing both currencies.

USD/JPY Daily Chart

AUD/USD

The AUD/USD currency pair appears to be facing downward pressure, as indicated by a sell recommendation with an entry pivot at 0.6640. The forecasted decline of 20-45 pips, targeting take profit levels at 0.6590 and 0.6565, signifies potential challenges for the Australian Dollar against its US counterpart. This bearish perspective is further corroborated by the RSI, which shows downside momentum, hinting at underlying factors such as commodity price fluctuations and trade relations that may impact the AUD’s performance.

China’s New Loans data could serve as a catalyst for movement in this pair. The recent sell-off to support levels indicates potential bearish sentiment. Additionally, traders might expect further downward movement if the US inflation data suggests a resilient USD.

AUD/USD Daily Chart

XAUUSD

Amid inflation concerns, gold maintains its position as a safe-haven asset. Despite recent consolidation, overbought conditions suggest caution. The precious metal maintains its allure with a bullish bias above the pivot level of $2168.00 per ounce.

The recommendation to buy, coupled with target take profit levels at $2195.00 and $2205.00, reflects optimism for the precious metal’s value appreciation. The RSI’s indication of a potential bounce reinforces gold’s status as a safe-haven asset, especially in times of economic uncertainty or inflation concerns. As traders navigate the spot market’s intraday movements, gold’s enduring appeal underscores its strategic importance in diversified investment portfolios.

XAU/USD Daily Chart

Disclaimer:

All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance.

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