US Interest Rate Increase of 50 BPS Could Squeeze XAU

2022年5月5日

The Fed officially raised interest rates 50 bps to 0.75 – 1% with balance sheet cuts of $30 billion for treasuries and $17.5 billion for mortgage-backed securities. This situation will clearly make the dollar will become stronger for the future again. This situation is a certainty for market participants where the Fed will continue to raise interest rates by around 50 bps or more in the future in order to combat inflation which is already relatively high in America. As for the balance sheet, the Fed will start cutting on June 1 next with an estimated $47.5 billion every month and will change after 3 months.

Fed chairman Jerome Powell's remarks gave market participants hope that there will be aggressive tightening and rate hikes going forward. However, last night DXY weakened because the interest rate hike was only 50 bps below market participants' expectations of 75 bps, but this is a temporary weakening. So that the major direction of the market fundamentally tends to strengthen the dollar.

Market Direction
By looking at the phenomenon above, it can be concluded that the Dollar is predicted to tend to strengthen against the Euro, Yen, NZD, CHF.
The above circumstances will tend to have an impact on the pair:
The pair XAU/USD leads to bearish
Entry Sell
R1: 1916.57
R2: 1938.25
R3: 1958.48
Take Profit
S1: 1858.56
S2: 1827.54
S3: 1806.72