The Federal Reserve has surprised markets by talking about two interest rate hikes by 2023, and has confirmed that the debate on tapering its purchases has also taken place at its latest policy meeting.
June 17, 2021, | AtoZ Markets– Markets have reacted to the U.S. central bank’s optimistic tone, and supported the dollar against its main monetary opponents.
Otherwise, gold has reacted with a drop in prices, while stocks have also been affected, and Treasury yields have fallen.
In the meantime, the dollar received two strong supports yesterday to strengthen as it is currently doing. The first one, the optimistic tone that Jerome Powell let us see from the Fed, and the second one, the conciliatory tone that was seen in the meeting that the presidents of the United States and Russia had yesterday in Geneva, Switzerland.
President Joe Biden after this meeting, made Russia look not as a direct competitor of the United States, but if as a secundary actor in a world where Washington is increasingly preoccupied with China.
Euro Remains Under Pressure Against the Dollar
EUR/USD has lost more than 200 pips after the Fed’s monetary policy statement, and marking new lows of two months. The price has broken the 200 EMA at 1.1938, and at this hour is trading below the 1.1900 area.
If the price manages to close the day above 1.1918 we could see a recovery of the EUR/USD, at least temporarily. However, the next level where the bears will find their support is 1.1835.
Gold Loses Its Shine
Gold prices have lost their luster, and many investors have punished the metal after the optimistic Fed’s statement. The big metal is often viewed as an inflation hedge, but now, is not to be so necessary for investors.
Along with the issue of demand, the gold trade is getting slapped by the rising prices trickling down to consumers.
Currently the price of gold is very close to the 61.8% Fibonacci retracement zone. Corresponding to a level that could mark strong support for the bearish movement.
If the price of the metal manages to descend below the $ 1750-60 zone, we could see the price return to levels of $ 1730 per ounce. On the other hand, at the level of the bulls, the next resistance to consider is located at $ 1795, if the zone of $ 1780 dollars per ounce can be efficiently overcome.
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