US Dollar Weakening Is Slowing Down

After the initial shock in the markets after the Trump tariffs is seems that we are entering a face of consolidation of the dollar index showing signs of stability in the majority of forex pairs as well as the commodities like gold. If we take a look at the U.S treasury bond yields we will see a slight improvement from the lows of 4.18% to the current 4.31% which means that capital might start flowing in favor of the dollar supporting it against the pairs traded against it.

This has as an effect the consolidation seen on the gold chart which has somewhat corrected to the downside after reaching a new all-time high. Although geopolitical tensions tend to keep the price of gold high and might even push it higher if we see further escalations.

On the economic calendar for this week there is the publication of the PCE price index which is expected to remain static at 2.5% year over year hinting that there might be a phase of stability on the figure of the next U.S inflation data.

U.S 10 year treasury bond yields:

United States PCE price index:

Crude Oil Is Correcting to the Upside

US Oil prices have risen due to a significant decrease in US crude stockpiles, with crude oil inventories in the United States fell by 4.6 million barrels for the week ending March 21, a larger decrease than the expected dip of 2.5 million barrels, according to the American Petroleum Institute (API). The market is evaluating the potential impact of a Russia-Ukraine ceasefire in the Black Sea, with some energy traders considering a return to Russia if sanctions are lifted. Despite oil prices being down over 10% since this year’s peak due to global trade tensions, traders are buying bullish oil options to hedge against potential price spikes caused by US sanctions on countries like Venezuela and Iran.

President Trump has signed an executive order that could impose tariffs on countries buying Venezuelan crude oil and liquid fuels, potentially impacting China, which is Venezuela’s largest buyer. Despite these supply threats, analysts predict a well-supplied oil market this year with soft prices, citing potential economic slowdown due to Trump’s tariffs and concerns over global demand growth.

From the technical analysis perspective the price of crude oil broke above the declining channel that was in effect since mid January and is currently at a major technical resistance level which consists of the upper band of the Bollineger bands, the and the 50-day moving average. At the same time the Stochastic oscillator is in the extreme overbought levels hinting that a bearish correction might be seen in the upcoming sessions while the Bllinger bands are somewhat contracted meaning that volatility might not be there for a significant move in the near short term.

Gold Momentum Is Losing Steam

Gold remains above $3,025 with a positive bias but lacks strong bullish conviction. Safe-haven demand is supported by concerns over US President Donald Trump’s upcoming reciprocal tariff announcement on April 2, as well as extra tariffs on Venezuela and potential retaliatory measures against key trading partners, adding to market uncertainty, and the Federal Reserve’s (Fed) outlook for two rate cuts by the end of the year.

However, gains are limited by renewed US Dollar strength and an overall positive risk sentiment in financial markets. Gold prices are also influenced by weak US consumer confidence, signaling recession risks. Meanwhile, China’s economic stimulus boosts risk sentiment, supporting equities and limiting gold’s upside potential.

From the technical analysis standpoint the price has continued its bullish momentum and found sufficient resistance on the upper band of the Bollinger bands slightly pushing it down and currently trading just above $3,000. The moving averages are confirming the bullish momentum in the market while the Stochastic oscillator has declined just below its extreme overbought levels.

The Bollinger bands are still somewhat expanded showing that volatility is still there and has the potential to push even higher. In the case of a bearish correction in the market, which has no real evidence or signs of happening any time soon, the first area of technical support might be found around $2,950 which is the 161.8% of the Fibonacci extension level as well as the area of price reaction in late February.

This article was submitted by Antreas Themistokleous, an analyst at ExnessExness.

The opinions in this article are personal to the writer. They do not reflect those of Exness or FX Empire.