During the recent trading sessions, we noticed a rebound in the price of the euro currency pair against the dollar, EUR/USD, with gains to the resistance level of 1.0556. It is stable near it at the beginning of trading today, Wednesday. The rebound came from a recovery for the currency pair after it tested its lowest level in five years to the support level 1.0349 and the euro’s gains came after the detailed European Central Bank talks showed a significant increase in interest rates in July. The European Central Bank is increasingly likely to raise interest rates in July, with a member of the Governing Council warning of the possibility of a surprise rate hike. In this regard, Dutch Central Bank Governor Claes Knott said in an interview on Tuesday that the European Central Bank should raise its key interest rate by 25 basis points in July, but it should not rule out a larger increase.

Knot’s comments were reported by the Dutch College Tour TV show. Comments have supported the possibility of a rate hike in July, but opening the door to any hike above 25 basis points is a hawkish surprise from a currency perspective. “The first rate hike at the July 21 monetary policy meeting is now being priced in, and that looks realistic to me,” added member Knott.

He also said that the European Central Bank should keep the door open for greater action if data over the next few months indicates inflation is “widening further or accumulating”. He also said, “A larger increase should not be ruled out … the next logical step would be half a percentage point.”

Nott’s comments come a day after European Central Bank Governing Council member Francois Villeroy de Gallo expressed concern that the euro was too weak, and thus was contributing to inflation. “Let me stress this: We will carefully monitor developments in the effective exchange rate as an important driver of imported inflation,” Villeroy said at a conference at the Bank of France. The comments are the latest in a string of indications that the European Central Bank is preparing the market to raise interest rates in response to rising inflation, a development that could support the euro’s view against the dollar, especially if expectations of a Fed rate hike are at saturation point.

The European Union has lowered its forecast for economic growth in the 27-nation bloc amid the prospect of a protracted Russian war in Ukraine and disruption of energy supplies. The EU’s executive arm has said that the EU’s gross domestic product will grow by 2.7% this year and 2.3% in 2023 – its first economic forecast since Russia’s invasion of Ukraine on February 24.

The European Commission’s previous forecast included growth of 4% this year and 2.8% in 2023. The EU economy grew 5.4% last year after the deep recession caused by the COVID-19 pandemic. GDP contracted by 5.9% in 2020. “The Russian invasion of Ukraine has presented new challenges, just as the Union has recovered from the economic effects of the pandemic,” the commission said when releasing the forecast. “War exacerbates pre-existing headwinds for growth”.

The war has darkened the generally bright economic picture of the European Union. Early this year, European policymakers were counting on strong, if weaker growth, as they grappled with rising inflation caused by global energy pressures.

Now, energy is a major problem for the European Union as it seeks to impose sanctions that are depriving Russia of tens of billions of trade revenue without plunging member states into recession. Higher energy prices are driving record-high inflation, making everything from food to transportation and housing more expensive. Russia is the largest supplier of oil, natural gas and coal in the European Union, accounting for about a quarter of the bloc’s total energy. The EU’s total energy imports from Russia last year amounted to 99 billion euros ($103 billion), or 62% of the bloc’s purchases of Russian goods.

According to the technical analysis of the pair: Despite the recent attempts to rebound in the EUR/USD price, the general trend according to the daily chart is still bearish. As I mentioned before over the same time period, a reversal will not occur without breaching the 1.0795 and 1.1000 resistance levels, respectively. Bears may return to control the trend as soon as the 1.0450 support is breached so far Eurodollar gains will remain subject to sale as the Fed’s monetary policy tightening path remains stronger than the ambiguous ECB tightening path. Today, the euro-dollar will be affected by the announcement of inflation figures in the euro zone.

Gold prices continued to decline, losses of the yellow metal this week, and reached the support level of $ 1832 for an ounce, the lowest in three months. The downward pressure came in conjunction with the rise in the price of the US dollar near its highest levels in two decades, amid expectations that the Federal Reserve will raise US interest rates in the coming months. Accordingly, the dollar index rose to 103.98, although it remained somewhat sluggish earlier in the day.

On the other hand, lower long-term bond yields helped limit the decline in the price of gold.

In the same performance, silver futures closed at $21.424 an ounce, while copper futures settled at $4.1545 a pound.

Today, Wednesday, investors and markets are awaiting the release of US inflation data, which may affect the monetary policy of the Federal Reserve. The Labor Department is due to release its report on consumer price inflation today, with the annual rate of price growth expected to slow to 8.1% in April from 8.5% in March. The recent snapshot of inflation could affect expectations about how aggressively the Federal Reserve plans to raise US interest rates.

Wall Street indices ended a choppy day of trading with a mixed close on Tuesday, after a rally in technology stocks helped reverse an early slide. Accordingly, the S&P 500 index closed 0.2% higher, cutting a three-day losing streak, after swinging between a gain of 1.9% and a loss of 0.8%. The day before, the benchmark index fell 3.2%, hitting its lowest level in more than a year.

The Dow Jones Industrial Average was down 0.3%, while the Nasdaq Technology Index was up 1%. Big tech stocks, which have been swinging sharply up and down lately, helped cope with losses elsewhere in the market. The subtle market action came ahead of the Labor Department’s release of the US Consumer Price Index, a key economic report on inflation that investors will be watching closely as they try to gauge how aggressively the Federal Reserve is in raising interest rates while fighting inflation.

In contrast, US Treasury yields have risen, and stocks have been very volatile lately as Wall Street adjusts to a strong shift in the Fed’s policies away from supporting the economy. Where the central bank raises interest rates from their historical lows to combat the ever-increasing inflation, which reached its highest level in four decades. The Fed has raised its benchmark interest rate from nearly zero, as it has sat for most of the coronavirus pandemic. He indicated last week that he would double the size of future increases.

Higher prices for raw materials, freight and labor have slashed companies’ financial results and prospects. Many companies are raising prices on everything from clothing to food, raising concerns that consumers will eventually cut back on spending, hurting economic growth.

According to the technical analysis of gold: On the daily chart, the recent losses of the gold price have moved the technical indicators towards oversold levels and buying may be considered in preparation for the expected rebound in the gold price to rise again. The support levels of 1815 and 1790 may be the most appropriate to think about that. Global financial reaction from the announcement of US inflation figures.

In addition, global geopolitical tensions led by the Russian-Ukrainian war, along with fears of an epidemic, still represent a good environment to prevent the complete collapse of the gold price in light of the general trend of global central banks towards tightening their monetary policy. On the other hand, the psychological resistance of 1900 dollars for an ounce is still the most important for the bulls’ return to control the trend.

For the third consecutive day, the gold market has been subjected to profit-taking operations since it tried to breach the psychological top of $2000 an ounce at the beginning of this week’s trading. The recent selling operations pushed the price of gold towards the support level of $1940 an ounce before settling around the level of $1955 an ounce at the time of writing the analysis. The decline in the US dollar helped limit the losses of gold. The US dollar lost ground as investors reacted to less hawkish comments from Chicago Fed President Charles Evans and Atlanta Fed President Rafael Bostic.

Chicago Fed President Charles Evans said Tuesday that he favors a half-point rate hike in upcoming meetings and a rate hike to 2.25-2.50% by the end of the year. Atlanta Federal Reserve Chairman Rafael Bostic said a 75 basis point rate hike is not on the table, and expressed concerns about the impact of faster policy tightening on the US economic recovery.

Bostick added that the neutral interest rate could range between 2% and 2.5% and that the funds rate could be as high as 1.75%.

On the economic news front, a report from the National Association of Realtors showed that US existing home sales fell 2.7% to an annual rate of 5.77 million in March after declining 8.6% to a downwardly revised rate of 5.93 million in February. Economists had expected existing home sales to decline 3.7% to a rate of 5.80 million from 6.02 million originally reported for the previous month.

Overall, higher mortgage rates complicate the home buying equation during the spring home buying season, which is the typically busiest period for home sales. Interest rates are rising after a sharp rise in 10-year Treasury yields, reflecting expectations of higher interest rates in general as the Federal Reserve moves to raise short-term interest rates in order to combat rising inflation.

Higher rates can reduce the pool of buyers and cool home price growth which is good news for buyers. Higher rates also weaken their purchasing power. Currently, the housing market continues to favor sellers as buyers compete for fewer homes, leading to bidding wars, often paying the selling price much higher than the owner is asking.

The median home price in March jumped 15% from a year ago at this time to $375,300. Accordingly, NAR said this is the highest level ever in the data since 1999. On average, homes were sold within just 17 days of entering the market last month. It was 18 days in February. In a more balanced market between buyers and sellers, homes typically stay on the market for 45 days. As usual in the spring, the number of homes on the market in March increased from the previous month. There were about 950,000 properties on sale at the end of March, up 11.8% from February, but down 9.5% from March 2021.

According to the technical analysis of gold: Despite the recent profit-taking, the price of gold did not come out of the general upward trend. There will be no actual reversal of the trend without the gold price moving towards the support levels of 1910 dollars and the level of 1880 dollars an ounce, respectively. At the same time, it is the most appropriate levels to think about to buy gold again, as mentioned before. This is despite the tendency of the global central banks to tighten their policy strongly this year, which is negative for the yellow metal, but it is supported by other factors, most notably the Russian / Ukrainian war, which still exists in addition to the continuing concern of the global pandemic spread from China.

On the upside, the resistance of 1975 dollars will remain important for gold’s move towards the psychological top of 2000 dollars for an ounce again. The gold market will be affected today by the announcement of European inflation figures and the statements of monetary policy officials from Britain, the United States and the Eurozone