*U.S. GDP came short yesterday, failing to catalyse the dollar's strength.
*Gold surged to a record high on the back of the soft U.S. dollar.
*Eye on today's PCE reading with a chance to spur the dollar.
Market Summary
The market’s attention was on the U.S. GDP release, as Wednesday’s FOMC decision failed to provide a clear catalyst for the dollar. However, weaker-than-expected GDP data reinforced expectations that the Federal Reserve may proceed with rate cuts in the near term, weighing on the dollar’s strength. Despite concerns over slowing economic growth, President Trump’s tariff threats on Canada and Mexico—set to take effect on February 1—have helped buoy the greenback.
Today, traders will be closely watching the PCE inflation reading, with expectations of a higher print that could provide much-needed support for the dollar.
Meanwhile, the euro weakened in the previous session as the ECB cut interest rates by 25 bps, while disappointing eurozone GDP data added further downside pressure. In contrast, the Japanese yen strengthened after markets digested comments from the BoJ Deputy Governor, who reaffirmed the likelihood of continuous rate hikes in the near term, with economic conditions supporting the move.
In the commodity market, gold stole the spotlight, surging more than 1% in the last session. The safe-haven asset reached record highs as heightened uncertainty across global markets continued to drive demand.
Current rate hike bets on 19th March Fed interest rate decision:
Source: CME Fedwatch Tool
0 bps (100.0%) VS -25 bps (0%)
Market Movements
DOLLAR_INDX, H4
The U.S. dollar experienced a choppy session yesterday, influenced by conflicting market forces. Initially, the greenback came under pressure after weaker-than-expected GDP data fueled concerns over slowing economic growth, causing the dollar index to break below its recent consolidation range. However, losses were quickly reversed after President Trump reaffirmed plans to impose a 25% tariff on Canadian and Mexican imports starting February 1, which helped buoy the dollar. Looking ahead, all eyes are on today’s PCE inflation reading, which could serve as a key catalyst.
The Dollar Index remains flat and is trading within its consolidation range. The RSI has found support above the 50 level, while the MACD is about to break above the zero line, suggesting bullish momentum may be forming.
Resistance level:109.80, 111.60
Support level: 106.80, 105.75
XAU/USD, H4
Gold has decisively broken above its resistance level and remains elevated near record highs, reinforcing its strong bullish momentum. The precious metal capitalized on a softer U.S. dollar following weaker-than-expected GDP data, while President Trump’s recent protectionist stance, including proposed tariffs on Canada and Mexico, has fueled uncertainty in global markets. This, in turn, has intensified demand for safe-haven assets like gold.
Gold prices remain supported at above their long-term support level and have reached a record high, suggesting a strong bullish bias for gold. The RSI is about to break into the overbought zone while the MACD has rebounded and is diverging, suggesting that the bullish momentum is gaining.
Resistance level: 2830.00, 2884.50
Support level: 2754.70, 2718.10
EUR/USD,H4
The EUR/USD pair has broken below the short-term support level at the 1.0400 mark, signaling a bearish bias for the pair. The euro faced pressure from weaker-than-expected GDP data and the ECB's recent rate cut decision, which further undermined its strength. The 25 bps interest rate cut by the ECB is likely to weigh on the euro in the near term, as it signals continued dovish monetary policy, keeping the pair under downward pressure.
The EUR/USD has declined to below its short-term support level and its lowest level in two weeks, suggesting a bearish bias for the pair. The RSI is easing while the MACD is about to break below the zero line, suggesting that bearish momentum may be forming.
Resistance level: 1.0458, 1.0530
Support level: 1.0345, 1.0230
USD/JPY,H4
The USD/JPY pair continues to trade within its bearish trajectory, reaching its recent low as the Japanese yen capitalizes on a soft U.S. dollar. Despite the dollar's lackluster performance in recent sessions, the yen has strengthened, supported by the BoJ Deputy Governor's hawkish comments. His suggestion that the Bank of Japan may continue to raise rates in the near term has bolstered the yen's strength, further pressuring the USD/JPY pair to the downside.
The USD/JPY pair remains below the long-term downtrend resistance level and is poised to break below its recent low levels, suggesting a bearish bias for the pair. The RSI has gotten below the 50 level while the MACD remains below the zero line, suggesting that the pair is training with bearish momentum.
Resistance level: 155.15, 156.00
Support level: 152.60, 150.60
Dow Jones, H4:
The Dow Jones has displayed a strong performance over the past three weeks, gaining nearly 8% from its recent lows. The initial rebound was fueled by the "Trump trade" sentiment, as investors anticipated favorable policies following his inauguration. Recently, the index has been supported by President Trump's protectionist policies, which are seen as potentially benefiting U.S. companies and providing further bullish momentum for the Dow. However, the market remains cautious, closely monitoring the Federal Reserve's upcoming monetary policy decisions and their potential impact on the broader market. The U.S. PCE reading, due for release today, will be a key data point to watch.
The Dow has been trading in a higher-high price pattern and has reached its all-time peak levels, suggesting a bullish bias for the index. The RSI is now hovering close to the overbought zone while the MACD is flowing flat at the elevated levels, suggesting that the index remains trading with bullish momentum.
Resistance level: 45050.00, 45500.00
Support level: 44700.00, 44260.00
USOIL, H4
Oil prices experienced a brief surge, breaking above the downtrend channel, which suggests a potential trend reversal. The rally in oil prices was largely driven by President Donald Trump's statement about imposing high tariffs on Canada and Mexico, both of which are among the largest crude oil exporters to the U.S. This announcement has raised concerns about potential disruptions to oil supplies, which could lead to higher prices in the short term.
Oil prices have broken above the downtrend channel. If they can sustain above the $73.20 mark, it will be a trend reversal signal for oil. The RSI has rebounded for a while, and the MACD is heading toward the zero line from below, suggesting that the bearish momentum is easing.
Resistance level: 75.10, 78.70
Support level: 69.60, 66.85