FOMC meeting minutes show policymakers striking a more balanced tone
The release of the FOMC meeting minutes this week showed that Federal Reserve officials were less dovish towards the United States economy than market participants had been fearing. However, Federal Open Market Committee members did express concerns about the ongoing slowing of the Chinese and global economy, which gave the US central bank an overall more balanced outlook. The market reaction saw the US dollar firming across the board, with equity markets holding onto recent strong gains. Investors had feared that the Federal Reserve was starting to turn more bearish on the US economy, which could lead the US central bank to change its stance towards tightening fiscal policy.
∙ The EURUSD pair is only bearish while trading below the 1.1300 level, key support is found at the 1.1215 and 1.1180 levels.
∙ If the EURUSD pair trades above the 1.1370 level, further upside towards the 1.1410 and 1.1450 levels remains possible.
Japanese economy falters
The Japanese economy posted much weaker than expected export and manufacturing data this week, heightening fears that the world’s third-largest economy, in terms of nominal GDP, could be falling into an economic recession. Japanese export data for the month of January contracted a worse than expected 8.4 percent year-on-year, while exports to the Chinese economy fell by 17.4 percent year-on-year. The Japanese Manufacturing Purchase Managers Index for the first month of this year fell the most in over two years, with the official headline PMI reading coming in at 48.5.
∙ The USDJPY pair is bullish while trading above the 110.40 level, key resistance is found at the 111.40 and 112.30 levels.
∙ If the USDJPY pair trades below the 110.40 level, sellers may test towards the 110.24 and 109.70 support levels.
Bitcoin bulls return
Bitcoin moved towards the $4,000 resistance level this week, as the number one cryptocurrency finally came to life after weeks of relatively muted range-bound trading. The BTCUSD pair edged higher as the broader cryptocurrency market enjoyed a strong bid tone. Ethereum continued to build on its former weekly gains, with the second largest cryptocurrency posting double-digit gains and moving close to the $150.00 level. Litecoin posted modest gains, with the fifth largest cryptocurrency briefly trading back above the psychological $50.00 level.
∙ The BTCUSD pair is only bullish while trading above the $3,700 level, key resistance is found at the $4,400 and $5,000 levels.
∙ If the BTCUSD pair trades below the $3,700 level, sellers may test towards the $3,600 and $3,330 levels.
Gold moved to a fresh 2019 trading higher this week, with the yellow-metal touching levels not seen since April of last year. Spot gold edged closer to the $1,350 technical level, after performing a major bullish breakout above the important $1,326 resistance level in early week trading. Gold has been in favour with investors since the start of the year due to heightened risks to the global economy, such as the Sino-U.S trade war, Brexit risks increasing and the general slowing of the global economy.
∙ XAUUSD is only bullish while trading above the $1,320 level, key resistance is found at the $1,350 and $1,375 levels.
∙ If XAUUSD declines below the $1,320 level, sellers may test towards the $1,312 and $1,298 support levels.