Fundamental Weekly Forecasts for US Dollar, GBPUSD and Gold - Gold Price Rebounds from Fibonacci Level and 1170 Still Possible
US Dollar - "As we focus our attention on monetary policy as the most active driver for the FX market at the moment, it is still important to keep a close eye on the health of speculative appetite. While US equity indexes closed at record highs this past Friday, they show many of the hallmarks of fractious conviction. Tepid growth forecasts, diminished earnings, near-record low rates of return and record levels of exposure to ‘risk’ leave the investment community in a truly precarious position. Should sentiment start to unravel, the question for the Dollar is how quickly the focus turns to liquidity and whether safe haven needs outpace the likely tempering of Fed rate forecasts in the transitional phase."
GBPUSD - "The US Dollar has been unable to rise even when key economic data proved clearly supportive (such as January’s payrolls report) while speculative net-long USD positioning is near a record high. On balance, this warns that the “policy divergence” narrative that propelled the greenback higher since mid-2014 may be running out of fresh fodder. If Yellen restates recently voiced worries about an increasingly wobbly global environment, that may pour cold water on tightening speculation and narrow the spread in the Fed vs. BOE policy outlook. Needless to say, that is likely to encourage the Pound upward."
Gold - "From a technical standpoint, gold rebounded off key support this week at the $1196/98. This level is defined by the confluence of the 61.8% retracement of the November advance & the 1.618% extension of the decline off the January high and is backed closely by a basic trendline support off the November low. We’ reserve this region as our near-term bullish invalidation level and although the broader bias remains weighted to the down-side, near-term this structure may offer stronger support."
