XAUUSD Hovers Near 50-Day SMA Resistance Amidst a Weakening USD

Zarith Sofea · 22 Feb 8.3K Views

WTI


Market Overview:

Oil prices continued their upward trend for a second consecutive day, supported by optimistic expectations regarding increased demand in the U.S., the world's largest oil consumer. The primary drivers for this surge are the ongoing efforts of refineries to resume operations after recent outages and the weakening of the U.S. dollar.

Price Movement:

Brent crude futures experienced a marginal increase of 0.2%, reaching $83.20 per barrel, while U.S. West Texas Intermediate crude futures for April rose by 0.2%, closing at $78.10 a barrel. This followed a 1% gain in oil prices on the previous day.

Analysis:

The improvement in oil prices can be attributed to the positive outlook on U.S. demand. As refineries aim to return to full capacity, the anticipation of increased oil consumption is driving prices higher. Additionally, the weakened U.S. dollar is contributing to the attractiveness of oil as an investment, as commodities typically exhibit an inverse relationship with the dollar.

Position and Entry Suggestions:

Given the current momentum and positive factors driving oil prices, a bullish stance seems reasonable. Traders may consider entering long positions in WTI with an entry point around the current levels, aiming for potential further gains as the market sentiment remains optimistic. It is crucial to monitor any developments in refinery operations and the U.S. dollar's strength as they could influence the direction of oil prices.


XAUUSD



Market Overview:

XAUUSD have seen consistent buying interest for the sixth consecutive day. However, the precious metal struggles to maintain momentum and remains below the critical 50-day Simple Moving Average (SMA) as the European session approaches.

Price Movement:

Gold is currently trading below the 50-day SMA, with the $2,020 region acting as immediate resistance. The downside is protected by the $2,000 psychological mark and the 100-day SMA.

Analysis:

Despite the continuous buying interest, gold faces resistance below the 50-day SMA, indicating potential challenges for further upward movement. The $2,020 resistance level is crucial for the bulls to overcome, as failure to do so may result in a retest of support levels, including the 100-day SMA near $2,000.

Position and Entry Suggestions:

Traders should exercise caution in the gold market. Long positions might be considered if gold manages to break above the $2,020 resistance level, targeting higher levels. Conversely, short positions could be explored if gold fails to sustain upward momentum and breaches the $2,000 support level. Close monitoring of the 50-day SMA is essential, as a decisive move above or below it could signal a more significant trend reversal.


USDJPY


Market Overview:

The Japanese Yen (JPY) has rebounded slightly after hitting a weekly low against the U.S. dollar (USD). The recovery is attributed to some hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda, contributing to increased JPY strength.

Price Movement:

The USDJPY pair is currently trading above the psychological level of 150.00, acting as immediate support. The weekly trough around 149.70-149.65 represents a key support zone, with additional buyers expected near the 149.25-149.20 area.

Analysis:

The recovery in USDJPY is linked to the hawkish stance of BoJ Governor Kazuo Ueda, which has boosted the Japanese Yen. The 150.00 psychological support is holding, but a breach could lead to further declines, with key support levels around 149.70-149.65 and 149.25-149.20.

Position and Entry Suggestions:

Given the current dynamics, traders may consider cautiously monitoring the USD/JPY pair. Long positions could be explored if the pair sustains above the 150.00 psychological support, with potential resistance at higher levels. However, if the support is breached, short positions may be considered, targeting support zones around 149.70-149.65 and 149.25-149.20. It's advisable to stay vigilant regarding any developments in Japanese authorities' statements and broader market sentiments impacting the USD.


Conclusion

In summary, the oil market appears bullish, benefiting from expectations of increased U.S. demand and a weakened U.S. dollar. Gold faces a critical resistance level, requiring careful consideration by traders. The USDJPY pair has seen a recovery due to hawkish comments from the BoJ, but key support and resistance levels need close monitoring. 



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Paraphrasing text from FXStreet, and Reuters all rights reserved by the original author.

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