On Wednesday (January 28) during the Asian trading session, the US Dollar Index hovered near 96.10; spot gold extended its gains, with the price currently around 5234 USD per ounce. Market participants are focusing intently on the Federal Reserve's interest rate decision due today, which is expected to trigger significant market movements. The Kshitij Consultancy Service team released a new analysis on Wednesday, offering a forward-looking perspective on the trends for gold, the US Dollar Index, EUR/USD, EUR/JPY, USD/JPY, AUD/USD, GBP/USD, and USD/CNY.
The Kshitij Consultancy Service team noted that the US Dollar Index declined after President Trump downplayed the dollar's drop. The index needs to hold above 96 to stage a rebound towards 98; otherwise, there is a risk of a fall to 94. Attention is on today's Federal Open Market Committee (FOMC) meeting, where the Fed is widely expected to keep interest rates unchanged.
On Tuesday, the spot gold price surged over 3%, continuing its record-breaking rally. This reflects how persistent economic and geopolitical uncertainties are driving investors to persistently seek refuge in the precious metal.
Spot gold closed Tuesday with a sharp gain of 173.19 USD, a rise of 3.46%, settling at 5181.10 USD per ounce.
President Trump stated on Tuesday that he did not believe the US dollar had fallen "too much," describing its performance as "great" and noting that exchange rates naturally fluctuate. These remarks accelerated the decline in the Dollar Index, which at one point hit a new low since February 2022 at 95.53.
The US Dollar Index (DXY), which tracks the dollar against a basket of six major currencies, closed Tuesday down a sharp 1.32% at 95.76.
Market focus is on the Fed's two-day policy meeting that began on Tuesday. While rates are universally expected to remain steady, Chairman Powell's post-meeting press conference on Wednesday is being closely watched amid concerns about the Fed's independence.
The FOMC will announce its interest rate decision at 03:00 Beijing Time on Thursday; Fed Chairman Powell will hold a monetary policy press conference at 03:30 Beijing Time on Thursday.
FXStreet analyst Christian Borjon Valencia noted that traders' attention is centered on the Fed's monetary policy decision on Wednesday and Chairman Powell's press conference. Additionally, vigilance is required for a potential announcement from President Trump regarding the new Fed Chair nominee.
Valencia cautioned that if Powell delivers hawkish remarks on Wednesday, it could trigger substantial profit-taking, thereby putting downward pressure on gold prices. In such a scenario, the first support level for gold would be 5000 USD/oz, followed by 4950 USD/oz and 4900 USD/oz.
The Kshitij Consultancy team has written about the trends for gold and major currency pairs. The main points of the article are as follows:
Gold Gold prices have surged. If the price can sustain above 5200 USD/oz, it could potentially rise further towards 5250-5300 USD/oz in the coming few trading sessions.
US Dollar Index The US Dollar Index fell further after President Trump indicated he was not concerned about the recent decline. The index dropped to a low of 95.81 before rebounding. As long as it holds above 96, there is a possibility of an attempt to recover towards 98 and higher. A confirmed break below 96 would shift the focus towards 94 and lower levels. The dollar's direction is expected to become clearer following today's FOMC meeting.
EUR/USD EUR/USD tested our set target of 1.20, even briefly surpassing it to reach a high of 1.2082, before pulling back. For further bullish momentum, EUR/USD must sustain above 1.20. Otherwise, a break below 1.20 could lead to a corrective move towards 1.18 in the medium term.
EUR/JPY As long as it remains above the support level of 182, EUR/JPY could trade within a broad range of 182-186.
USD/JPY USD/JPY rebounded after testing the support near 152. As long as this support holds, a rebound towards 156 remains possible in the short term.
USD/CNY USD/CNY has broken below 6.95. If this break is sustained, the decline could extend further towards 6.90 or lower.
AUD/USD AUD/USD rose to a high of 0.7022, slightly above our target of 0.70, before retreating. A break below 0.70 could lead to a corrective decline towards 0.68. Only a sustained break above 0.70 would shift the focus towards 0.72.
GBP/USD GBP/USD has risen as expected but now faces near-term resistance at 1.38 and higher at 1.40, which may temporarily cap its upside.
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