 Hi, my name is Leon Roeb, Coveragely Trader and Trading Coach at Trading180.com and welcome to this week's supply and demand, Forex and Gold, Fundamental and Technical Analysis. If you like the videos I provide every week, please don't forget to like, subscribe and share with your fellow trading colleagues as it helps support the channel, right? And so I did receive an email from this gentleman and something that I'm going to do every now and then. I'll answer some what I think are some good questions in this weekly video but I'll do it after the video. I'll do the analysis first but if you stick around until the end of the video I will give an answer to this question and they say sir that they were about to ask or asking previously we saw Fed reserve hike interest rates in the US and according to your teachings once interest rate hiked currency became strong or gain strength compared to their partner or their pair but Wednesday after the Fed hiked rates of 0.25% or 25 basis points we saw market fall down. What is the reason sir? Thanks so I will answer that for you at the end of the analysis but getting into the week ahead, 27th of March, zooming in a bit, the turmoil that has hit the banking sector will continue to take investors' intentions so we are in a risk-off environment due to the banking sector which has you know shook the aspects of the market, right? In the US Fed vice chair for supervision Michael Espar will testify before Senate and House also consumer income and spending the PCE price index and the final reading of the Q4 GDP growth will be released for the US elsewhere Euro area Germany France and Spain will publish inflation rate figures finally LFO business climate and GFK consumer confidence will take the spotlight in Germany so that's the major currencies and then we've also got down here it says yeah just slightly if I can here we are so in Asia traders will focus on the Chinese March NBS PMI for updates on the impact of the country's economic opening after February's factory activity expanded at the fastest pace in over 10 years and in Japan the markets await retail sales industrial production the unemployment rate and housing starts for February and in Australia economic releases will be headlined by retail sales data and the monthly inflation print for February and in New Zealand the attention will fall on business confidence in March so that's pretty much the data that is going to be coming out this week so let's look at the dollar index and the dollar index is just a measure of dollar strength against the basket of currencies like the euro the pound and the yen and for those of you who are subscribed even not necessarily subscribed but have seen the community tab on my YouTube channel you'll see that I did a bit of analysis on the dollar and and so let's see if I can just make this a bit larger for you guys to read and the analysis pretty much what I was saying was was that you know the Fed are basically close to pausing their hiking rates at the moment and the Fed is projected to hike rates at least once more before pausing which is support the dollar at least in the short term yeah so very short term but pals take statement which will get into was taken as dovish by the markets and the market is pricing in Fed cuts by the end of the year which will wait on the dollar and limit any upside moves and the current risk of sentiment though also does support the dollar but further banking shocks explicitly emanating from the US will put pressure on the US dollar so there are a lot of pros and cons when it comes to understanding you know what is potentially going to drive a currency higher or lower over the medium to long term in the short term pretty much anything can happen right nobody necessarily knows the market is more driven by liquidity but from the perspective of understanding where we're going to go potentially in over the next maybe six months to a year is a lot more easier to to project right and so looking at from a risk-off perspective we know we're in a risk-off environment because traders flat to safety is about the next recession yeah not the banks we also have a situation where hedge funds are seen targeting Deutsche Bank in irrational slides so there's definitely lots of risk off coming into the market from a global risk perspective and you know but more specifically looking at the dollar Powell's own guide to recessions shows rate cuts are coming to the gap between current and future short-term rate widens further and federal commenced rate cuts at the December meeting says TD securities and so a recession is certain and so are rate cuts this year that's the message from the bond market metric Federal Reserve Chairman Jerome Powell highlighted a year ago so the best guide to tip-off economic troubles in as sorry as the best guide to tip-off economic troubles in the US it talks about the expected three month T-bill rate in 18 months time dropped 134 basis points under the current rate that's below the previous record Nadir hitting January 2001 about two months before the US economy fell into a recession and so you know the bond market you know is projecting a recession in the bond market is very sensitive to interest rates in the economy and typically can lead the forex and typically does and so for me if we're talking about the US being in you know going into a recession in the next you know maybe you know nine months or so it's easier to then kind of project where prices may be in the next nine months six to nine months three to six to nine months but in the short term anything can happen right we can get a pullback for the dollar which allows short traders to get in for better prices right to short because they have the expectation that by maybe July August September we should be somewhere down here right and so that's really the play in the short term you can see obviously hikes supporting the dollar which may push it higher but over the long term medium to long term really you know my bias is to kind of short the the dollar so any pullbacks up into these types of zones where you've got supply as well as some support and resistance and even trend line resistance with moving average what traders would know as moving average but really is known as moving fair value resistance would be areas that I would look specifically into taking some trades but again in a risk-off environment the dollar typically does do well as long as the risk-off event isn't actually originating in the US so there is again that that could potentially be positive for the dollar but overall I think you know by the end of the year the dollar index should be somewhere down here meaning that if you are trading the dollar index we know how to trade the dollar index those are really the areas you're looking for but if you're not trading the dollar index and you're just looking to take you know dollar shorts on dollar crosses then you're looking at prices coming up to these areas and then looking for confirmation that the dollar is a sell on a dollar index and then looking for sell trades at areas on those dollar crosses like the dollar yen or if you're looking at the dollar Swiss and looking at the dollar yen we do again my my bias you know is to again get you know short on this currency pair and this is where you know those levels would be in order to look for some short trades and so if you are looking at pullbacks I would say anywhere within there would be decent you do also have a level of resistance right there and support that actually is quite decent and I would say also as well you do have this area here all right that area there for support and resistance level so within that large area of supply that area there we also got that zone right there as looking for potential short trades yet a Fed is hiking soon but they are sorry hiking but they're soon to pause whereas the Bank of Japan actually holding rates the moment and possible yield curve adjustment is a monetary policy which is actually designed to appreciate their currency so with the Bank of Japan for me I'm looking at any pullbacks on the dollar yen to look for short trades for the future and I think the Japanese yen is it's going to be a decent buy and especially if you know risk off persists and so that's also does strengthen the the yen dollar Swiss and so dollar Swiss similar to dollar yen but not so bullish on the on the Swiss Frank you do have these areas here quite wide zones of supply and you also have actually quite a wide zone of demand kind of comes all the way down here and so when again when you get these wide areas of supply and demand just break down those zones with obvious areas of support and resistance on the daily or even the intraday right so that's what you're really looking for I think if I was looking for any kind of short trades I think that would be the first area to look for any shorts any long trades really kind of I would say all the down at these the really the lower end of that zone in order to get long but not really a pair I'm looking for any kind of opportunities at the moment even to buy the dollar or sell the Swiss Frank but yeah those are the the areas to look for dollar CAD you had decent demand and if you were looking to buy the the US dollar from a shorting perspective buying the Canadian dollar I don't know really why you would want to buy the Canadian dollar you do have some hidden supply there which is probably say that's yeah that's it the Federal Reserve is still expected to high crits and the Bank of Canada are pausing and so in a risk-off environment I would expect really prices to kind of drift higher at least they come down to be supported in some way down in that demand zone around there so for me if I was looking to trade this pair it would be to the long side would be more of my bias but again I'm looking to trade this pair but if I was the US dollar should be the more of buy over the Canadian dollar especially the risk-off environment New Zealand dollar US dollar and so the New Zealand dollar does have a decent demand zone in and around there and then you also have some supply which looks like it looks like yeah it's kind of held around there so supply and then you've got a bit more supply up top as well so if you do want to be a buyer of the US dollar then you're looking at actually shorts probably right now if you're looking to buy the New Zealand dollar again it's a US dollar you're looking at really I probably say more buyers at the lows right here again in a risk-off environment I would expect in fact the Federal the US dollar to again appreciate over the New Zealand dollar both central banks are hiking to pause but I think in the short term I would expect really the US dollar to actually strengthen over the New Zealand dollar barring any kind of banking crisis development so they're a new a new bank that comes out that's gonna you know potentially go under deposits aren't gonna be saved from you know from the Federal Reserve then potentially you could have an obvious the New Zealand dollar start to appreciate because money will come out of the dollar because the risk sentiment is obviously emanating from the US but if it's not then I would say the dollar should be a potential buy in the very very very short term but again not really a pair that I'm looking at trading you've got the British pound versus the US dollar and fundamentally the the pound this week they ended up hiking by 25 basis points but the general consensus by the banks is that they are actually expected to pause in May and so the pause whereas the Federal Reserve are expected to probably you know hike in them in I think it's may as their next meeting is a much I think it might be may as their next meeting and so you could actually see a decent shorting opportunity somewhere around these highs yeah and again this is providing that you know the there's no more no more crisis the dust kind of settles on the banking issue and so from a monetary but from a monetary policy perspective I would expect the the dollar to actually strengthen in and around somewhere around these highs just based off of the fact that they've got probably one more hike in them whereas the Bank of England are probably likely looking to to hold rates but also as well just to back that up so the Bank of England Hawks see turning point as inflation expectations cool and so in order for the Bank of England to really continue to hike inflation they have to see inflation really being a problem and and going higher right because in order to combat inflation you need to hike interest rates and if they see inflation as coming down right and the Hawks the hawkish central bankers the Bank of England are actually you know thinking to themselves well in fact inflation is probably coming down yeah then it looks like the central bank is less likely to hike rates and so that's the reason for the potential pausing rates whereas the Fed potentially looking to hike rates and so if prices do drift higher I do think that this could potentially be the ceiling prices could go obviously a little bit higher and that as well potentially looking out for a stop hunt and then start to come back down but overall as we start to go into the second half of the year this potentially could be a nice buying opportunity for the pound if you're looking to buy the the pound looking at the euro dollar and the euro dollar this week kind of suffered a little bit from the the Deutsche Bank the recent Deutsche Bank issue and the sell-off simply because the Deutsche Bank is a European bank and if there's a banking crisis also coming from Europe then that's going to affect the the euro and so you know we've had this area here again it's not necessarily a fantastic zone but there is an area here of resistance that price has you know reacted from within that demand zone and if I was looking for another area within this demand zone if prices do break that then it's just best to kind of look down into the lower time frames and then see where those maybe support resistance areas are me personally I'm gonna probably likely to maybe look for something around here that'd be quite decent as an area that's been traded in the past and so there might be an opportunity around these areas or at the absolute lows it's gonna be around here so those are the areas that I'd probably start to look for buying opportunities so on a lower time frame but from a daily perspective my bias is still actually to continue to buy the euro over the dollar so any pullbacks into these zones I think are going to be nice buying opportunities the euro one second the euro area economy strengthens more on service sector surge so composite PMI rises to 54.1 above the economist estimate of 52% but manufacturing out the stalls as new orders continue to fall but the euro zone economic growth continue to pick up in March driven exclusively by the service sector has concerns over energy supplies recede and so if the the economy for the euro continues to outperform as expected then for me I think the euro is more of a buy than the dollar moving on to the Australian dollar US dollar and the Australian dollar again hiking rates from the Fed and the RBI are actually expected to pause now I am actually quite bullish on the Australian dollar reason being more so is because of the China component and if China actually continued to reopen and the reopening goes well then a beneficiary of that should be Australia now would I buy the Australian dollar against the US dollar potentially yes but I think for now I really want to see China data come out a lot stronger and if it does there I think actually any pullbacks into this zone and even the zone below it can be a really good buying opportunity if prices you know start to fall due to potential short-term risk off if it comes down to the 65 area and then you get you know strong data out of China as everybody starts to actually end you know their rate hiking soon as well because everyone's going to be in the same boat and I say when I say everybody I mean all central banks are going to be in the same boat because all central banks are looking to pause rates and then comes well what else do we look at in terms of a divergence who's going into a recession and who's not right and I think the RBA will be best placed to avoid the recession if at the same time the US are going into a recession and China are reopening so I think this is going to be really a really nice area the 65 cent area for a buying opportunity for the Australian dollar but we'd have to get down there and see what happens fundamentally and gold right finally gold and gold you know pretty much pretty obvious what's happened with the dollar with the uncertainty and you know risk off sentiment gold has done its thing also as well with recessions being potentially priced in within the next maybe six to nine months by the end of the year a lot of the smart money who were seeing this well in advance and for anyone who's been following me following me for any length of time would have known that you know pretty much in my videos I was you know looking to you know buy gold or saying to potentially buy gold not financial advice of course but explaining that there was a lot of central banks at increase their gold buying and when that happens you know traders kind of expect prices to just jump and go you know you know to the moon right but it doesn't necessarily happen because you know the buying that these central banks have to do take can take time because of liquidity issues and so this can take months and months and months it takes six months for you know for for banks to do their you know their buying and now we're seeing actually you know the forecast you know come true right in terms of you know having that long-term or longer term bias as to why you should have been buying gold or the reasons for buying gold back in you know September October November right yes the dollar was strengthening you know at the time but you know there were obviously indicators that you know there was going to be a recession potentially going into 2023 2024 and so if that was obviously your trade idea now it's paying off so getting back to the present I would say any pullbacks down into you know the 1900s now looks quite cheap right and the 1800s looks even and even better bargain those are the areas to look for any kind of any kind of buy trades and there is a nice accurate level of support in there as well and I think you've got a nice decent area of support in there and so yeah I think these areas are decent for any kind of buy trades for gold if you are a gold you know bug if you think the dollars go to see gonna you know get gonna strengthen which I actually don't then you're looking for any kind of short trades not sure whether you're gonna do that right now I mean there is obviously a supply zone here from way back in April 2022 but I think the path for these resistance is to the upside and so that brings me to the end of the technical analysis and fundamentals and I'm gonna get to answering the question from that gentleman so again I think this gentleman for his really good question which I will reread again which he said he was about asking previously we saw the Federal Reserve hike interest rates in the US and according to your teachings once interest rates are hiked currencies become strong or gain strength in compared to the partner but Wednesday after the Fed hike rates by point two five percent or 25 basis points we saw the market fall down what is the reason sir thank you very much and this is a very common question and something that's you know kind of misunderstood by a lot of traders who are new to fundamental analysis and so fundamental analysis is understanding current value but also future potential value and so if you're going to a you know forex factory or anywhere with an economic calendar and looking to press buy or sell when the data is released you're already too late because the market has priced in yeah that that news data right they've done their forecasts and so you know the the 25 basis point hike yeah 25 basis point hike was pretty much priced in and one of the ways you can you can find out where or how you know which interest rates are actually baked in and hiked in a priced into the market is if you go to the CMA CMA group and I'll leave the link in the description box below and this basically tells you whether hikes are being priced in or not so at the moment you see on the top right hand side where it says probabilities you'll see ease no change and you'll see hike and before the the rate hike yeah in the weeks leading up to it in fact there was something like an 80% chance that the probability was saying that there was going to be a hike so the market had already kind of pretty much priced in the 25 basis point move right into the market and so when they actually hiked rates what the market is actually now thinking or you know was was thinking up until that point was what is the Federal Reserve going to do after announcing the hike right so when on Wednesday when the FMC statement came out it was all about what are we going to see now what is the future right what's going to happen to the dollar what the Federal Reserve is going to do to potential hikes or holds in the future and so on that day on that evening I in in the private members discord group I was posting some analysis from from you know the experts and the analysts that were basically saying that the you know you can see BI jerseys says pals comment that the committee considered a pause was taken as dovish by the markets regardless they didn't receive to a cut so as you mentioned the key here isn't whether they'll hike one more time but rather how long it will be before they cut that is in my view the challenge the Fed has once again and so now we're talking about not necessarily just rate you know rate hikes in fact we're talking about potential rate cuts in the future and so that's what the market is now pricing in they're not pricing in the 25 basis points because that's already been priced in and it was priced in you know a week or so before the announcement yeah what they're now pricing in is actually the fact that there's probably like to be a pause or even a cut and so cuts do the opposite from hiking rates which is you know to devalue the currency rather than appreciate a currency which is what hikes would do and so this is why you saw the market fall down on a rate hike because sometimes some people might call it or some analysts call it a dovish hike where you know the the hike yes is a hike but at the end of the day it could have been potentially a forced hike due to inflation or the fact that the central bank wasn't didn't remain hawkish and say okay well we're planning to hike you know 10 more times and buy a 50 or you know a hundred basis points in fact they were actually thinking about pausing so the market has to revalue the dollar based on their one month three month and six month and even one year expectations of what the federal reserve is going to do and so they're not looking to hike rates or appreciate their currency they're looking to potentially pause and they may be a cut hence the reason why after the rate hike you saw the market fall down yeah so it's not about look going to forex factory and then looking waiting for the announcement I remember those days many many many years ago where you would go to forex factory would look at the calendar wait for it wait for the countdown and as soon as the positive news came out you would try and press buy no no no no those those days are you know that's that's long long long long gone that that strategy is is is not never going to serve you well it's all about reading up on what the future statements are going to likely to look like what the actually what the current statement is and what the future is likely to look like based on what they're saying in their statements because they will tell you what they are looking to do and so again the statement was considered hawkish I'm sorry the statement was considered dovish hence the reason why you saw the markets sell off anyways hope that explains it take care if you have any more questions good questions by the way then I will answer it at the next weekly video and I hope you have a great trading week guys and take care