Fundamental analysis GBPUSD, EURUSD, NZDUSD, AUDUSD, USDCAD, XAUUSD, Brent, WTI for 27.01.2022

Last Wednesday, the U.S. dollar strengthened against major currencies after the Fed's monetary policy meeting. The regulator made it clear that it will continue to pursue a hawkish policy despite the presence of significant global risks. The Fed is ignoring Omicron, stock market declines, and geopolitical instability in eastern Western Europe.

Fed Chairman Jerome Powell has said that high inflation will last a long time and could rise even higher. Most members of the Open Market Committee believe that the labor market has almost reached full employment. Thus, the strong labor market, combined with high inflation, created the necessary conditions for a rate hike. The first round of monetary tightening will obviously take place in March, but Powell avoided answering the question of whether to expect a 50 basis points increase at once. In general, the speech of the head of the Fed was the most "hawkish" since he took office. If the regulator intends to raise the key rate in March, May, and June, with the price pressure continuing to grow, the tightening of the monetary policy will continue in the second half-year. Seven rounds of monetary tightening by 115 basis points in 2022 could be a reality.

The Fed meeting put a lot of pressure on EUR/USD, but on Wednesday the pair held above 1.1200. Today, the trading instrument broke through a strong psychological level and updated its lows in a year and a half. It looks like the euro's decline will continue on expectations of a 0.5% hike in the federal funds rate in March.

GBP/USD losses in the second half of January were also substantial, but not as large as the EUR's. The decline of the Pound is limited by the stance of the Bank of England. Also noteworthy is the decline in UK business activity in January. The pair is testing the level of 1.3400, while technical analysis shows that the trading instrument may suffer further losses. At the same time, it should be taken into account that the recovery of the U.S. stock market will contribute to the growth of GBP.

Currencies of the Pacific zone continue to fall amid a loss of appetite for risky assets. AUD/USD is holding above local lows thanks to the economy's quick recovery after a long lockdown, as well as the central bank's willingness to make monetary policy adjustments. The NZD/USD has fallen this low since late 2020. The New Zealand regulator is limited in action and the epidemiological situation is weakening economic activity. The National Bank of Canada has disappointed investors by keeping the current interest rate. USD/CAD has consolidated above 1.2600 and is moving towards the range of 1.2730-1.2780.

Oil prices are rising this week. The media continues to talk about rising tensions on the border between Russia and Ukraine. In the case of full-scale military conflict, Brent and WTI will go up sharply on fears of supply disruptions. In addition, investors are waiting for OPEC+ meeting which will take place on February 2. The major oil producers are likely to continue with their production growth plans, which will push the market higher.

The XAU/USD, which made a lot of progress in January, started falling again amid a stronger dollar. After the hawkish Fed meeting, market participants closed a big volume of long positions, which contributed to a sharp decline in the trading instrument.