Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar retreats to near 98.8 with the continued strength of the yen and expectations of monetary policy tightening in Japan.
• Markets are pricing a probability of close to 60% for a US rate hike of 25 basis points next week.
• Gold is trading near $4,400 under pressure from rate hike expectations and higher oil prices.
• Markets are awaiting the US inflation data ahead of the Federal Reserve’s next meeting.
• Brent crude is trading near $98 and West Texas near $93 amid escalating supply risks.
• Bitcoin is moving within the $81,500–$84,400 range with institutional flows continuing and leverage declining.

Fundamental Analysis

• The Dollar and Monetary Policy
• • The dollar index fell to around 98.8 on Tuesday, continuing its decline for the second consecutive session, with the continued strength of the Japanese yen amid expectations that the Bank of Japan is moving toward a more hawkish monetary policy and the continued unwinding of speculative positions based on interest rate differentials.
  • In the United States, investors’ focus shifted to the inflation data scheduled for release this week, which may provide clearer signals regarding the Federal Reserve’s decision at its meeting next week.
  • Market pricing currently points to a probability of close to 60% for a US interest rate increase of 25 basis points, after the recent jobs data came in stronger than expected and reinforced confidence in the economy’s ability to withstand further monetary tightening.
  • Markets also expect tightening moves from other major central banks, with the decisions of the European Central Bank and the Bank of Japan awaited during the coming period, which increases the sensitivity of currencies and yields to any new remarks or data.
  • At the same time, investors continued to follow developments in the Middle East, where the renewed confrontation between the United States and Iran has led to a rise in oil prices and brought energy-related inflation risks back to the forefront.

• Gold:
  • Gold traded near the $4,400 per ounce level on Tuesday after its retreat in the previous session, affected by growing expectations of interest rate hikes by a number of major central banks and the rise in energy prices.
  • The rise in oil prices represents a pressure factor on gold because it reinforces inflation risks, which supports the likelihood of interest rates remaining high or being raised again, something that is usually negative for the metal, which generates no yield.
  • The increase in the probability of a US rate hike to around 60% ahead of the Federal Reserve’s next meeting also added to the pressures on gold, especially with the inflation data awaited that may settle the direction of market expectations.
  • On the other hand, gold is still receiving support from investment and hedging demand, in addition to continued central bank purchases and what is known as the currency debasement trade, which are factors that keep long-term demand for the metal strong.
  • Gold’s direction over the coming days remains tied to a large degree to the US inflation data and the movement of the dollar and yields, in addition to any new escalation in the Middle East.

• Oil:
  • Brent crude rose to near $98 per barrel, while West Texas Intermediate moved near $93, with oil prices remaining at their highest levels in around three months amid escalating geopolitical risks in the Gulf region.
  • Iran said that an agreement with the Sultanate of Oman regarding the management of navigation through the Strait of Hormuz is close to completion, but markets viewed this development with caution because of concerns over an increase in Tehran’s ability to influence traffic movement through the strategic waterway.
  • At the same time, markets continue to assess the US response after it targeted Iranian oil tankers over the weekend, amid an increasing exchange of attacks between the two sides around the Strait of Hormuz.
  • Oil prices rose by around 10% during the past week as hostilities escalated, while facilities belonging to Saudi Aramco in Jazan came under a new attack on Monday, despite the limited damage.
  • Despite the elevated risks, energy flows from the Gulf are still continuing, as reports point to the passage of around 7 million barrels per day of crude oil and refined products through the Strait of Hormuz.

• Bitcoin
  • Bitcoin moved within an important sideways range between $81,500 and $84,400, with its attempts continuing to break above the upper area without clear success in closing above the $82,614 level.
  • The options market showed a clear concentration in put contracts below the $75,000 level, while call contracts were concentrated between $82,000 and $100,000, which reflects a division between hedging against a decline and betting on a continuation of the advance.
  • At the same time, net flows into exchange-traded funds amounted to around $986.7 million, which provides clear institutional support for the market.
  • Institutions also continued their buying operations during the recent volatility, with transactions of around 376 Bitcoin near $78,100 and 4,603 Bitcoin near $80,300.
  • Derivatives data showed a significant decline in leverage, after open positions in futures on Binance dropped for a short period below their 180-day average, causing a strong wave of liquidations before recovering again.
  • A break above the $82,600–$84,400 range remains an important factor for the continuation of the upward momentum, while the $75 thousand level represents a main support area in the event that selling pressure returns.

Today’s Economic Data (GMT+3 / KSA time)

• From Japan, Gross Domestic Product (QoQ) 02:50

GOLD

• Trend: Sideways with a downward bias
• Timeframe: 30 minutes
• Current price: 4,407.02
• First scenario: Buy on a break above 4,432.90
• Targets: 4,464.68 then 4,499.82
• Alternative scenario: Sell on a break below 4,391.39
• Targets: 4,357.21 then 4,324.47
• Note: Gold is moving within a sideways range with clear selling pressure below the moving averages, so a break above 4,432.90 is required to improve the bullish picture, while a break below 4,391.39 makes a return of the decline more likely.

CRUDE OIL

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: near 94.00
• First scenario: Buy on a break above 94.51
• Targets: 96.23 then 98.13
• Alternative scenario: Sell on a break below 92.47
• Targets: 90.52 then 88.75
• Note: Oil is holding a strong bullish structure and is trading above the moving averages after a clear upward wave. A break above 94.51 supports a continuation of the advance, while a break below 92.47 would be the first clear signal that the price is entering a downward correction.

EURUSD

• Trend: Sideways with an upward bias
• Timeframe: 30 minutes
• Current price: 1.16223
• First scenario: Buy on a break above 1.16448
• Targets: 1.16727 then 1.17080
• Alternative scenario: Sell on a break below 1.16126
• Targets: 1.15783 then 1.15489
• Note: The price is moving above the short-term moving averages and the long-term moving average with clear consolidation. A break above 1.16448 supports the completion of the advance, while a break below 1.16126 weakens the positive scenario and opens the way for a decline.

GBPUSD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 1.35377
• First scenario: Buy on a break above 1.35602
• Targets: 1.35931 then 1.36296
• Alternative scenario: Sell on a break below 1.35240
• Targets: 1.34886 then 1.34546
• Note: The pound is holding its position above the moving averages after the recent recovery wave. A break above 1.35602 supports an extension of the advance, while a break below 1.35240 restores selling pressure.

NAS 100

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 29,578.05
• First scenario: Buy on a break above 29,769.06
• Targets: 29,901.81 then 30,027.01
• Alternative scenario: Sell on a break below 29,475.93
• Targets: 29,307.96 then 29,098.20
• Note: The index is still holding a bullish structure and is trading above the main moving averages, but the price is currently going through a correction phase after a rejection of the 29,700 area. A break above 29,769.06 confirms a resumption of the advance, while a break below 29,475.93 supports a deeper correction.