USD Resumes Uptrend Ahead of the FOMC Minutes

Posted Wednesday, May 24, 2023 by
Skerdian Meta • 2 min read

The USD was bearish for months until two weeks ago when buyers started coming back and reversing the trend. FED members started giving out more hawkish signals, although markets still think that the FED is done with rate hikes for now, as inflation slows down.

That is keeping Gold down, which is currently facing a downtrend influenced by the stronger US dollar and rising yields in US Treasuries. Specifically, the 2-year yield has increased by 2.3 basis points to 4.305%, while the 10-year yield rose by 0.5 basis points to 3.7015%. Additionally, the US dollar index has shown a 0.31% increase for the day.

On the hourly chart, Gold reached a peak of $1,985.27 today and tested its 200-hour moving average, which was around $1,985.62 at that time. However, the price failed to surpass this average, leading to selling pressure. This failure to exceed the moving average, combined with the strengthened dollar and rising yields, likely prompted sellers to drive the price of gold down.

Gold H4 Chart – Buyers Failing at the 50 SMA

EUR/USD resuming the downtrend

Recent market conditions have been tough for risk assets, with inflation concerns intensifying after a high reading from the UK today. Additionally, there is renewed attention on China as COVID-19 cases increase. Besides that, the price action in stock markets seems to be influenced by developments in the US, which is facing difficulties, in part due to issues related to the debt ceiling.

These factors indicate that there are multiple global events impacting markets. Inflation worries, particularly driven by the UK’s high reading, can create uncertainty and affect investor sentiment. Rising COVID-19 cases in China may raise concerns about potential disruptions to economic activity and trade. The struggles in the US, including the self-inflicted wound from the debt ceiling issue, could further contribute to market volatility and uncertainty. The retrrace higher in EUR/USD has ended and it is faci today this pair broke below last week’s low.