CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

The US Dollar gets crushed; Gold and commodity currencies bid

January 12, 2022 8:28 PM

With the US CPI for December in-line with expectations at 7%, traders took the opportunity to unload some of their long US Dollar positions.  As mentioned earlier in the CPI recap, the DXY had been trading sideways in a range between 95.50 and 97.00 since mid-November. On the release of the CPI print, the US Dollar Index moved sharply lower and is currently testing support at the bottom, rising trendline of the long-term channel it has been in since May 2021. Watch to see if the 94.90 level can hold.  (For support and resistance levels in the DXY see the CPI recap)

Source: Tradingview, Stone X

Forecasting 2022 inflation: Transitory no more?

One of the beneficiaries of a move lower in the US Dollar Index is Gold (XAU/USD), which has been in a symmetrical triangle since pulling back from its all-time highs in August 2020, near 2063.75.  More recently, the precious metal is attempting to form a double bottom near the apex of the triangle.  If the DXY continues lower, than Gold should move higher.  Before it takes out the neckline of the double bottom though, it must first pass through horizontal resistance at 1831.80.  Above there is the top, downward sloping trendline of the triangle near 1862.50.  The neckline for the double bottom is also the 50% retracement form the highs of August 7th, 2020 to the lows of March 9th, 2021, near 1876.  The target for the double bottom is near 2000!

Source: Tradingview, Stone X

 

Trade XAU/USD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

 

Gold has been riding near the 50- and 200-Day Moving Averages for the last few months, currently at 1806.27 and 1801.62, respectively. Its tough to consider those levels support right now.  Therefore, first support is at the January 7th lows near 1782.70, then the upward sloping trendline of the triangle near 1770.  Below there, price can fall to the double bottom lows near 1758.91.

Gold outlook 2022: Will precious metals get back on track after a lacklustre 2021?

AUD/USD has a high positive correlation with Gold.  The correlation coefficient between the two assets is +0.84. A reading above +0.80 is considered strong. Therefore, if Gold continues to move higher, AUD/USD should move higher as well.  The pair has just traded above the 61.8% Fibonacci retracement level from the highs of October 28th, 2021 to the lows of December 3rd, 2021 near 0.7274.  A confluence of resistance sits above near 0.7340, which consists of the following:

  • The 61.8% Fibonacci retracement from the previously mentioned timeframe
  • The top, red upward sloping trendline of the current channel
  • The upward sloping, blue trendline dating back to August 20th, 2021.

Above there is the 200 Day Moving Average and a downward sloping trendline dating back to June 11th, 2021 at 0.7427.

Source: Tradingview, Stone X

 

Trade AUD/USD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

 

Support is at Wednesday’s low and the 50-Day Moving Average between 0.7200 and 0.7210.  Below there is the bottom, upward sloping trendline of the channel near 0.7154. If price breaks below the trendline, AUD/USD can fall back to the recent lows at 0.6991.

Are commodity currencies poised for a big 2022?

With the selloff in the US Dollar, Gold has gone bid.  If the DXY continues to breakdown below the bottom trendline of the channel it has been in since May 2021, Gold may continue higher and bring AUD/USD along for the ride!

Learn more about forex trading opportunities.






StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024