Midday Market Update: Central Banks Takes center stage

The dollar index underpinned Monday’s mood as foreign currencies suffered losses, in the early European session following a less-dovish Fed Chair Powell’s speech early morning. Later in the New York session, BoE MPC member Pill and FOMC member Bostic will be speaking. The RBA is anticipated to keep rates unchanged.

The EURUSD plunged by -0.31% ahead of the US PMI data. The EURUSD was downbeat despite positive German Trade Balance and European PMI data as the dollar continued to soar following strong NFP data released on Friday. The NFP data came in at 353K vs 187K expected giving the dollar a boost. Technically, bears are targeting the 1.07238 low while on the upside, 1.0800 remains a key resistance level. However, the upcoming Central Bank speeches and economic data releases could significantly impact the pair’s direction.

The Aussie dollar is down by -0.14% against the greenback head of the RBA interest rates meeting. The RBA is scheduled to keep rates unchanged at 4.35%. Earlier on Trade balance came in at 10.95B vs 11.764B underpinning a bearish sentiment on the Australian dollar. Technically, the pair breached a 0.6500 low and further downside could be expected towards the 0.6450 level. However, the Reserve Bank of Australia’s (RBA) monetary policy outlook and Chinese economic data will play crucial roles in AUDUSD’s trajectory.

US stock futures were mostly flat as investors closely watched US PMI data and Central Bank speeches. The US100 was slightly up by +0.20% as tech earnings continue to underpin sentiment. Key levels to watch out for are 17685.0, an all-time high, and 17372.2, Friday’s low. The US500 trimmed earlier gains to +0.02% as bulls remain range bound between 4977.2 high and 4903.8 low. Technically, the US30 faces resistance at the 38785.53 level and a break below the 38325.14 support could reinforce selling pressure towards the 38110.19.

European stocks were mixed as markets are mirroring the cautious optimism seen in the US. The UK100 is up +0.26% as bulls attempt to break the 7689.5 resistance while a failure to break above that level could see weakness towards the 7600 support level. The DAX was down by 0.05% as bulls retreated from the 16966.51 resistance level a key level to watch out for is the 16824.40 support level. CAC40 plunged towards the 7566.7 low and a break below that low could open way for the 7529.0 level.

The precious metal was down -0.71% and is currently retracing upwards towards the 2027.50 resistance level. A failure to break above that level could see Gold plummeting towards the 2015 level and failure to break below that level could see bulls attempting another rally back to the 2065.14 level. However, fundamentals like rising bond yields and a potentially hawkish Federal Reserve could limit gold’s gains.