All Eye on BoE’s Monetary Decision Today

Market Summary

In the last session, the financial markets experienced relative calm, with the dollar index (DXY) maintaining stability around the 105.50 level, while U.S. equity markets remained near recent highs. Notable movements were observed in the bond markets, where the 10-year benchmark yields for Australia, New Zealand, and Japan saw increases, potentially bolstering their respective currencies. Conversely, tepid demand for U.S. sovereign debt could push yields higher and mitigate the dollar’s strength.

Attention is focused on the UK, where the Bank of England (BoE) is set to announce its interest rate decision alongside the release of the BoE’s monetary policy statement. These events are expected to shape the future price movements of the Sterling in the forex market.

In the commodity markets, gold prices remained stagnant as investors awaited catalysts to dictate a direction, while oil prices received a boost from a decline in U.S. stockpiles, which decreased by 1.362 million barrels. This development alleviated concerns regarding the outlook for crude demand, potentially supporting oil prices.

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Current rate hike bets on 12nd June Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (91.6%) VS -25 bps (8.4%)

Market Overview

Economic Calendar

(MT4 System Time)

Source: MQL5  

Market Movements

DOLLAR_INDX, H4

The Dollar Index, tracking the greenback against a basket of major currencies, continued its upward trajectory buoyed by growing expectations of a hawkish stance from the Federal Reserve. Investors closely monitored the pace and timing of potential Fed rate adjustments, as recent hawkish comments from various Fed officials fueled further gains in US Treasury yields. With anticipation surrounding forthcoming remarks from additional Fed speakers later in the week, market participants remained vigilant for further signals regarding the Fed’s monetary policy direction.

The Dollar Index is trading higher following the prior rebound from the support level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 56, suggesting the index might remain flat since the RSI stays near the midline. 

Resistance level: 105.85, 106.35

Support level: 105.05, 104.75

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XAU/USD, H4

Gold prices retreated in the wake of a strengthening US Dollar, as hawkish rhetoric from select Fed members exerted pressure on the precious metal. Short-term market sentiment suggested a period of consolidation for gold, with prices hovering within a narrow range amidst prevailing uncertainties. Investors were advised to monitor upcoming US economic data releases, Fed communications, and developments related to potential peace agreements in the Middle East for further trading cues.

Gold prices are trading lower following the prior retracement from the resistance level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 49, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory. 

Resistance level: 2325.00, 2350.00

Support level: 2290.00, 2270.00

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GBP/USD，H4

Pound Sterling witnessed a decline as market participants exercised caution ahead of the Bank of England’s interest rate decision, aiming to mitigate potential volatility. While expectations leaned towards the maintenance of the UK interest rate at 5.25% for the sixth consecutive meeting, economists anticipated a slightly dovish shift in the Bank of England’s outlook. This projection was based on indications of stabilised headline inflation, which returned to the targeted 2% level in April, prompting speculation of a nuanced adjustment in the central bank’s monetary policy stance.

GBP/USD is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 43, suggesting the pair might experience technical correction since the RSI rebounded sharply from oversold territory. 

Resistance level: 1.2535, 1.2610

Support level: 1.2475, 1.2425

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EUR/USD，H4

In the recent session, the EUR/USD pair exhibited little movement, trading flat after retracing from its recent high level. This suggests that the bearish momentum may have subsided for the time being. With many eurozone nations observing public holidays on Thursday, the euro is anticipated to continue trading sideways. Euro traders will turn their attention to Friday’s release of the ECB Account of Monetary Policy Meeting report. This report may provide valuable insights into the future monetary policy decisions of the European Central Bank (ECB), potentially influencing the direction of the euro in the forex market.

The pair experienced a retracement from its recent peak but has found support with the easing in bearish momentum. The MACD is edging lower, but the RSI has eased after approaching the 50 level from the top, suggesting the bearish momentum has eased.

Resistance level: 1.0775, 1.0865

Support level: 1.0700, 1.0630

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UK 100，H4

The FTSE 100 index has reached an all-time high, supported by a weaker Pound and dovish expectations surrounding the Bank of England’s (BoE) forthcoming monetary policy decision. Market participants anticipate that the BoE might adopt a more accommodative stance in response to easing inflation pressures within the UK. Investors are particularly focused on the BoE’s interest rate decision, which is due later today. The current market consensus leans towards a potential rate cut of 25 basis points in August, as inflation trends closer to the BoE’s target rate of 2%. This expected move could further influence market dynamics, impacting the UK’s currency and equity markets. 

UK100 has reached its zenith with strong bullish momentum. The RIS continues to hover within the overbought zone, while the MACD continues to edge higher, suggesting the index remains trading with strong bullish momentum. 

Resistance level: 8450.00, 8545.00

Support level: 8315.00, 8240.00

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NZD/USD, H4

The NZD/USD pair experienced downward pressure due to a strengthening U.S. dollar, which pulled back after the pair reached its recent peak. However, the bearish momentum has shown signs of easing, presenting an opportunity for the NZD/USD to potentially break above its downtrend channel. The inflation rate in New Zealand holding steady at 4% is a significant factor for the Reserve Bank of New Zealand (RBNZ). With inflation still double the typical target of around 2%, it’s unlikely that the RBNZ will initiate rate cuts in the near term. This scenario supports the potential strengthening of the NZD.

The pair has eased in its bearish momentum and has a chance to break above from its downtrend channel. The MACD has signs of rebounding before breaking below the zero line, while the RSI remains above the 50 levels, suggesting the bearish momentum is easing. 

Resistance level: 0.6050, 0.6100

Support level: 0.5950, 0.5890

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CL OIL, H4

Crude oil prices edged slightly higher, supported by bargain hunting, as attention shifted towards upcoming trade data from China, the world’s largest importer of crude. Investors awaited insights into China’s oil import figures, which saw a marginal increase in the first quarter of 2024. Despite ongoing stability in Chinese oil demand amid economic resilience, concerns lingered over the potential impact of any further weakness in the Chinese economy on crude consumption. Additionally, market attention remained fixated on efforts to broker a possible ceasefire in the Middle East, with heightened diplomatic initiatives from the United States.

Oil prices are trading higher following prior rebounded from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 54, suggesting the commodity might extend its gains toward resistance level since the RSI stays above the midline. 

Resistance level: 80.40, 81.90

Support level: 78.00, 75.95

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