Thursday Briefing: From DXY, Gold to Latest Russia – Ukraine Conflicts; July 21, 2022

US Dollar Index Overview

  • The DXY remains highly volatile after U.S. Key economic results and ECB’s interest Rate decision as ECB hiked rate by 50 bps to 0.50 pct.
  • It made intraday high at 107.32 and low at 106.41 mark.
  • A day Chart is up and H1 chart with triple EMA suggests down trend for the time being.
  • Immediate hurdles are seen at 107.32 to 106.72 mark.
  • A sustained close of either side on H1 chart requires for the further directions of the U.S. dollar.

Technical Analysis: XAU/USD (Gold):

  • Gold strengthens sharply as U.S. key Economic data misses expectations and gold jumps back above $1,700 mark.
  • The pair made intraday high at $1,710 and Low at $1,680 mark.
  • A day chart and H1 chart with triple EMA suggests down trend for the time being.
  • A sustained close above $1,708 on H1 chart requires for the upside rally.
  • Alternatively, a consistent close below $1,689 on H1 chart will test further supports.

Key Headlines for the FX market:

  • The European Central Bank raises interest rates by 50 bps for the first time in 11 years today with a bigger-than-flagged move seen as increasingly likely as policymakers fear losing control of runaway consumer price growth.
  • Italian Prime Minister Mario Draghi handed in his resignation to President Sergio Mattarella after his unity government fell apart, plunging the country into political turmoil.
  • Australia reported one of its highest daily death tolls from COVID while hospital admissions hovered near record levels, as authorities struggle to get ahead of highly contagious Omicron variants.
  • The BA.4/5 variants are good at evading immune protection from vaccination or prior infection and have been driving a surge of new infections globally.
  • Former finance minister Rishi Sunak and foreign secretary Liz Truss will battle it out to become Britain’s next prime minister after they won the final lawmaker vote, setting up the last stage of the contest to replace Boris Johnson.
  • The U.S. Federal Reserve will opt for another 75 basis point rate hike rather than a larger move at its meeting next week to quell stubbornly-high inflation as the likelihood of a recession over the next year rises to 40%.
  • The Bank of Japan projected inflation to exceed its target this year in fresh forecasts, but maintained ultra-low interest rates and signaled its resolve to remain an outlier in a wave of global central bank policy tightening.

Latest updates on Russia – Ukraine Conflicts:

  • Russia is resuming supplies of gas via a major pipeline to Europe, amid concerns Moscow would use its vast energy exports to push back against Western pressure over its invasion of Ukraine.
  • The resumption of the Nord Stream 1 pipeline at reduced capacity comes after comments from Russia’s foreign minister showed the Kremlin’s goals had expanded during the five-month war.

Source: Reuters

Keep an eye open for the latest news and fundamentals affecting the FX markets.
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