Market Focus

US stocks market edged higher on Tuesday following the comments from the Federal Reserve Chairman Jerome Powell on the latest rate hike. The Nasdaq Composite led the rally, rising 1.95%. The Dow Jones Industrial Average rose 0.74%, while the S&P 500 added 1.13% at the end of the day.

The market looked to bet on the aggressive move from the Fed, stepping on the gas to respond to the high inflation environment. According to the CME FedWatch Tool, the possibility that the Fed will reach 2.25% by the end of 2022 is more than 70%. Even the Fed’s more dovish policymakers are joining Powell’s call for a more aggressive stance.

Tesla shares soared nearly 8% on Tuesday following the news of the new Tesla factory in Germany. Tesla officially opened its first manufacturing facility in Europe as the company looks to take pressure off its other manufacturing sites in the US and China. According to Elon Musk, the CEO of Tesla, the new factory can produce up to 500,000 vehicles per year.

Main Pairs Movement:

The Japanese yen kept up its bearish tone for a fourth day against the US dollar following a faster pace of the US rate hikes and the concern over Japan’s growing trade deficit. USDJPY was up 1.08%, finishing with 120.761 on Tuesday.

EURUSD witnessed decent buying interest after a deep correction. On Tuesday, EURUSD was up 0.11%, rising to 1.10276. The macroeconomic calendar is scarce this week, with price action eyeing the discussion on the embargo of Russia’s oil.

Gold suffered modest selling pressure on Tuesday as the Fed continued to express its hawkish tone. Gold slid to $ 1921.04 as US bond yields climbed.

WTI dropped 2.07%, consolidating around $108 as the EU looks to embargo Russia’s oil. Oil prices are likely to fluctuate recently on the mixed response from the EU and the latest situation in Ukraine.

Technical Analysis:

GBPUSD (4-Hour Chart)

Cable traded higher against the dollar after extremely hawkish remarks by Fed Chairman Jerome Powell. The British Pound has been on a steady uptrend for the past five trading days. Weakness surrounding the U.S. Dollar has helped Cable rebound above the 1.32 price level. Market participants will now turn their focus to the U.K.’s CPI figure, which is scheduled to release later today.

On the technical side, Cable has broken through our previously estimated resistance level and has now met fresh resistance at around the 1.3254 price region. RSI for Cable sits at 49.1 as of writing. On the four hour chart, Cable is currently trading above its 50-day SMA but below its 100 and 200-day SMAs.

Resistance:  1.3254

Support: 1.3121, 1.3018

EURUSD (4-Hour Chart)

The EURUSD pair could not maintain its upward momentum despite the broad-based weakness of the Greenback. Recent developments from Eastern Europe continue to weigh on the shared currency. Furthermore, the European Union still does not have a uniform approach towards their plans for economic sanctions on Russia. 

On the technical side, EURUSD has broken below our projected upward trend but the pair is still trading above our previously estimated support level at 1.0985. RSI for the pair sits at 44.21, as of writing. On the four hour chart, EURUSD is currently trading above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1.1127

Support: 1.0985, 1.0845

XAUUSD (4-Hour Chart)

Gold mounted a short term rally after Fed Chairman Jerome Powell’s extremely hawkish speech on Monday. Market participants should note that interest rates and gold prices have historically presented a positive correlation. Thus, when interest rates rise, gold prices tend to rise as well. However, as market sentiment shifted, gold traded lower to its recent levels and is currently at $1921 per ounce.

On the technical side, gold continues to trade around our projected support level of $1918 per ounce, but the precious metal is seeing less buying volume as the war between Ukraine and Russia drags on. RSI for XAUUSD was last seen at 42.56. On the four hour chart, XAUUSD is currently trading below its 50 and 100-day SMAs but above its 200-day SMA.

Resistance: 1961

Support: 1918