After a few sessions characterised by weakness, the Dollar Index is almost flat during the early part of Wednesday’s session. The greenback’s losses over the last few days were the result of investors starting to accept that perhaps it is too early to be worrying about inflation, and that perhaps the Fed will remain committed to its current dovish stance for a prolonged period of time. Later today we should find out more about what was crossing the minds of the Fed’s FOMC members during their last meeting, with the publication of the meeting’s minutes. These minutes will be carefully analysed by investors keen to find more clues on whether or not the Fed really believes its own narrative of not hiking rates until at least 2024, despite the revised forecasts and employment strength that point to a faster than expected recovery for the American economy.
Bullion’s recovery has been stopped – for the time being – by the resistance placed at $1,750, as mentioned in the last few days’ commentaries. A solid bounce above this level could pull in more buyers but for the moment gold is still recovering momentum after the double bottom at $1,675, helped by the slowing down of the greenback. Zooming out, we can see that the first support level is placed at $1,725 for the spot price, followed by another support on the psychological threshold of $1,700 and of course by the double bottom placed at $1,675.
European markets were mixed on Wednesday’s open with Paris and Frankfurt the most resilient markets while Zurich, Warsaw and Copenhagen led declines as investors preferred to remain on the sidelines for the time being. The majority of benchmarks are trading with lower volumes than usual as investors have put any decisions on hold prior to today’s FOMC minutes release. The extremely dovish environment put in place last year by most central banks has significantly helped stock markets rise to record highs by boosting investments almost everywhere. However, with the recent worries about the potential for higher borrowing costs, most traders now fear the party may soon be over. Today’s FOMC minutes release will be crucial as it will provide investors with more hints about the short to mid-term monetary policy outlook. Meanwhile, energy related stocks may suffer increased volatility later this afternoon with the highly awaited US crude oil inventories data.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Independent writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.