Forex

The US Dollar Index soared to a 7-week high following robust nonfarm payroll statistics published in early February, which showed 353,000 jobs gained, exceeding expectations.

The Average hourly earnings increased by 0.6%. The strong report lowered expectations for near-term Fed Reserve rate reduction. The dollar had lately declined due to decreasing Treasury yields, but fears about the U.S. regional banks subsided, resulting in a rise in yields.

The EURUSD pair experienced a halt in its decline on 6th February, finding support at the 1.0720 level. Since then, positive momentum has emerged, with the pair attempting to breach the 1.0765 level by today's open. This suggests a potential recovery in the near term, with expectations of further gains targeting 1.0805 and, subsequently, 1.0860.



However, on 27th February, the pair lacked significant movement, remaining range-bound between critical levels of support at 1.0765 and resistance between 1.0860 and 1.0890. The conflicting signals from technical indicators have led to a continuation of neutrality in our outlook.

The GBPUSD pair exhibited notable strength in early February, successfully surpassing the 1.2610 level and nearing the critical resistance at 1.2645. This positive momentum hinted at the activation of a bullish scenario for the remainder of the day, with the potential for further gains upon surpassing this level, targeting 1.2765.

Nonetheless, towards the end of the month, the pair displayed a slight bearish bias, leading to a potential test of the key support level at 1.2650. As emphasized in previous reports, maintaining support above this level sustains the bullish trend scenario, influenced by the presence of a double-bottom pattern on the chart. Looking ahead, our attention remains on targets at 1.2760 and 1.2827.

The USDJPY pair experienced a slight bearish bias through mid-February, testing the intraday bullish trend line as RSI negativity influenced price action. Despite this, support from the EMA50 remained intact, signaling the potential for resuming the bullish wave targeting 151.70 and 152.25 levels.

Currently, the pair fluctuates near the bullish channel's support line, reinforced by the EMA50, which adds further strength. Expectations lean towards continuing the bullish momentum on intraday and short-term bases, with the next target at 151.70. However, the sustainability of the bullish wave hinges on price stability above 150.15. A break below this level could subject the price to corrective bearish pressure, with the initial target at 148.40.

The AUDUSD failed to break 0.6500 and settled below since February 14. A closer look at the chart reveals that the price has completed forming a head and shoulders pattern, which we expect to push the price to negative targets that exceed 0.6410 and reach 0.6270 in the near term.

Commodities

The daily gold chart shows that the precious metal has reached its highest one-day rally within February. From a technical standpoint, gold stays broadly in the middle of its three-month range of $1975 to $2075. Despite a steady upside rally, the 14-day RSI remains near neutral, so readers may wish to maintain a bullish bias throughout March.

Oil prices started the last month with a steady upward movement above the resistance zone between $77.80 and $78.00. The bulls drove the price to $79.00. The present price action is favorable above the 50-day simple moving average, while the RSI remains stable above 50.

There was a slight drop from the $78.38 high in late February, and the support was tested at $76.00. There was a drop below the 23.6% Fibonacci retracement level of the upward run from the recent swing low near $76.96 to the $78.68 high.

The daily chart shows that XAG/USD has extended its losses to levels last seen in mid- February after briefly consolidating within the 50 and 200-day moving averages around approximately $23.00-$23.30. Even though silver's price action stays sideways, it is slanted to the negative, which might drive prices below $22.00.

Indices

The US Dollar Index (DXY) exceeded the resistance at 104.00 in February. Investors are anticipating the release of the fourth-quarter (Q4) figures for the US GDP. Meanwhile, the US Dollar (USD) is supported by the aggressive remarks made by Federal Reserve (Fed) leaders. Several Federal Reserve officials have alluded to a measured and gradual approach.

The NASDAQ fluctuates between the gains and losses recorded in February while investors watch for more trigger events. Crucially, the latest effort to settle below 17,900 did not succeed. Because traders want to ensure they get the next part of the AI surge, they are still getting ready to sell tech equities. The NASDAQ must close over the crucial resistance level between 18,000 and 18,050 to gain traction. It is optimistic for the NASDAQ if the RSI appears in the moderate range.

The Dow Jones, made up of blue-chip equities, is witnessing a more moderate increase of over 2%, while the S&P 500 followed suit with a 4% jump. These changes set the indexes up for possible gains as the month's trading draws close.

Market Events

According to the Bureau of Labor Statistics, the average hourly earnings in the US were reported as 0.6%, 0.3% higher than expected.

The USD ISM Services PMI for January was published as 53.4 on 5th February, which was 50.6 in December 2023.

On February 13th, the UK data revealed that December unemployment decreased to 3.8% from estimates of 4.0%. While down from 6.7% during November, the average wage in the UK increased by 5.8% in December, above predictions of 5.6%. UK unemployment claims increased by 14.1K in January, less than the projected 15.2 thousand.

US Core Retail Sales appeared as -0.6% for February, 0.10% less than the January data (0.4%). The retail sales were also down to -0.8%, 0.6% less than expected.

According to the Fed meeting minutes, the likelihood of a US interest rate decrease of 0.25% in March dropped to just 4.5%, the likelihood of a cut in May to 37%, and the likelihood of a cut in June to 71%. Traders had previously projected 150 basis points of Fed rate reduction this year; they now estimate 75 basis points.