US Dollar Drifts Lower, Gold Rally Continues, US NFPs on the Horizon – DailyFX

USD Analysis, Prices, Charts

• Fed Chairman Jerome Powell remains positive, but it depends on the data.
• The US dollar index is trending lower and looking for guidance from Friday’s NFP report.
• Gold hit new highs.

Fed Chairman Jerome Powell gave little market reaction on Wednesday in the first of his two semi-annual testimonies, reiterating that interest rates are likely to fall later this year if economic data allows. Powell told the House of Representatives that cutting interest rates this year would be “probably appropriate” “if the economy progresses broadly as expected” and that inflation is expected to continue falling. Powell’s second day of testimony begins today at 3pm UK time, but is not expected to provide any further insight into the future direction of US interest rates.

More likely to trigger a move in the US dollar will be Friday’s monthly US employment report (NFP), which will be aired at 13:30 UK time. Another 200,000 new jobs are expected to be announced, well below last month’s blockbuster 353,000, while the unemployment rate is expected to remain stable at 3.7%. There is.

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The US dollar fell following Powell’s testimony yesterday and remains on the defensive in the early days of Europe’s reversal. The interest rate-sensitive two-year U.S. Treasury yield continues to fall after hitting a recent peak of 4.76% on February 23 and could soon test 4.50%. The 200-day simple move is acting as resistance for now, and the yield ceiling is likely to hold.

US 2-year Treasury yield daily chart

The US dollar index today opened below all three simple moving averages for the first time since early January, highlighting the current weakness in the US dollar. Further declines will target 103.00 before the 61.8% Fibonacci retracement level at 102.49 comes into focus. The CCI indicator shows that the US dollar is in highly oversold territory.

US dollar index daily chart

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Gold has been a beneficiary of the recent weakness in the US dollar, with the precious metal hitting new highs earlier today. Gold is up nearly 9% from its Feb. 14 lows and looks set to rise further in the coming weeks, but with CCI values ​​significantly overbought, the precious metal will need to move on from recent gains before rallying further. It is likely to consolidate the rally.

gold daily price chart

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According to IG Retail trader data, 43.06% of traders are net long, and the ratio of traders short to long is 1.32 to 1. The number of net-long traders is down 7.09% from yesterday. 15.59% lower than last weekMeanwhile, the number of traders who are net short has increased by 2.11% since yesterday. This is an increase of 48.39% from last week.

Although we usually take a contrarian view of crowd sentiment, The fact that traders are net short suggests that gold prices may continue to rise.

what do you think about us dollar and gold – Bullish or Bearish?? Let us know using the form at the end of this article or contact the author via Twitter. @nickcawley1.