Global equities got a boost with the US Federal Reserve announcing a dovish direction for its upcoming meeting.

What You Need To Know

The Fed officials have hinted that the Fed is willing to go for a more dovish rate hike of 50 bps instead of 75 bps; this has inspired a rally on Wall Street, which was followed by the Asian equities markets. On the other hand, China has implemented tighter Covid-related policies such as mass testing and lockdown in several cities including Beijing. In the Euro region, the economic bloc proposed a softer Russian oil price cap plan such as an extension on transition days. Further detail will be released later today after the meeting with the G7 nations. The oil prices reacted to the news positively on top of a drop in the U.S. stockpiles.

Look Out For

Current rate hike bets on 14th December Fed interest rate decision: 

75 bps (24.2%) VS 50 bps (75.8%)

Market Movement

DXY

The US Dollar retreated as investors digested concerns about China’s Covid-19 flare-up, insinuating demand for other riskier currencies. Meanwhile, the US equity market edged higher, underpinned by solid quarterly results from consumer discretionary companies and dip-buying in big tech and energy sectors. Energy stocks recovered their losses from a day earlier amid oil prices rebound following Saudi Arabia claiming that they will persist with plans to reduce oil production. Nevertheless, movements in the US Dollar will probably remain subdued in the coming days due to the Thanksgiving holiday on Thursday. 

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 48, suggesting that the bears are in control of the index as the RSI retreated sharply from the overbought territory.

Resistance level: 107.85, 109.70

Support level: 106.10, 104.70

XAU/USD

Gold prices edged lower as market participants looked past the flare-ups of spiking Covid-19 cases in China while waiting for the announcement of the FOMC Meeting Minutes. The Federal Reserve’s hawkish stance on the rate hike path is expected to remain under the US Dollar, but a view of a slower pace of rate hike from the Fed’s is not ruled out. As for now, investors will continue to monitor further monetary statements from the Federal Reserve to gauge the likelihood trend for the gold market.

The gold market is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 40, suggesting the commodity to be traded higher as technical correction since the RSI rebounded sharply from the oversold territory.  

Resistance level: 1785.00, 1815.00

Support level: 1730.00, 1680.00

EUR/USD

The dollar gained its strength after the release of the U.S. retail sales report with a better-than-expected result which urged the Fed to be more Hawkish in rate hikes. However, after the Fed officials hinted that the Fed is likely to raise just 50 bps instead of 75 bps for the upcoming rate hike, the Euro gained some strength against the dollar. 

The pair has dropped below its uptrend support line previously but is now back on track. The MACD line has crossed against the signal line below the zero line and the RSI has moved from the oversold zone and stayed above 50-level as of writing. 

Resistance level: 1.0398,1.0500

Support level: 1.0272, 1.0147

BTC/USD

BTC has gained back to trade above the psychological level at $16,000 due to a weaker dollar. The Fed has hinted that it is likely the Fed will opt for a more dovish approach to the upcoming rate hike. However, BTC is still under selling pressure as the liquidity issue faced by Genesis and BlockFi is yet to be solved. 

The king of crypto rebounded from its  crucial support level at 15650 and is now traded above the psychological level at 16000. There is a flag pattern depicting a bullish bias for the coin if it is able to stay above 16300. The MACD flowing near the zero line and the RSI has picked up from below and is now staying above the 50-level as of writing. 

Resistance level: 17000, 18360

Support level: 15650, 15000

DJ30

The Dow edged higher as investors looked past tightening Covid-19 policies in China while waiting for the announcement of the FOMC Meeting Minutes. Besides that, upbeat earnings results spurred further positive prospects for the US equity market. Best Buy surged more than 10% following the electronics retailer increasing its 2023 fiscal outlook and beating earning expectations. Meanwhile, Abercrombie & Fitch and American Eagle Outfitters rose by 21.4% and 18%, respectively, after the release of their financial reports. Investors are advised to keep an eye out for the development of the FOMC meeting minutes, due on Thursday, for further trading signals.

The Dow is trading higher while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum while RSI is at 65, suggesting the index will trade lower as technical correction since the RSI is going into overbought territory. 

Resistance level: 33115, 36810

Support level: 31370, 28760

GBP/USD

The pound rose 0.48% to 1.1887 against the weakened US dollar on Tuesday. As the Fed’s members said that they might adjust the rate hikes to 50 basis points instead of 75 basis points, yet the dollar gave up some of the previous day’s gains against other regional currencies. The finance data on Tuesday showed that the British government borrowed less than expected in October. However, the budget deficit will likely surge due to energy support measures and an economic slowdown in the following months.

The pound remains hovering between 1.1779 to 1.2000 after the announcement of tax rises and spending cuts last week. Investors could focus on the release of minutes from the Fed meeting, which will be held on Wednesday. Moreover, the MACD line is dropping near the zero line, which indicates the pair remains in a neutral-bullish zone. At the same time, RSI is trading around 56, which suggests a neutral-bullish momentum in the short term. 

Resistance：1.2000, 1.2266

Support： 1.1752, 1.1093

NAS100

The Nasdaq rose by 1.4% to 11,174 points on Tuesday. Energy stocks led the gains, driven up by rising oil prices. Moreover, investors could focus on the release of U.S. Federal Reserve minutes from its November policy meeting later on Wednesday. Investors are keenly awaiting it as they look for insight into officials’ perspectives on the economic conditions. 

MACD hovers above the zero line, which suggests the indices remain in bullish momentum. At the same time, RSI is trading around 58, indicating a bullish momentum ahead.

Resistance level ：12057，12967

Support level ：11006， 10429

CL OIL

Oil prices surged after the US crude stockpiles fell much more than market expected last week, according to American Petroleum Institute (API). US crude inventories declined by -4.800 million barrels for last week, better than economist forecast of -2.200 million barrels. In addition, oil prices received further bullish momentum as traders speculated the producer alliance OPEC+ could announce another production cut during its December meeting to tighten the 2-million-barrel-per-day supply. Nonetheless, concerns of demand disruption for oil could continue dominating the attention of investors as cities in China, the world’s top energy buyer, have imposed further restrictions to combat Covid-19 infections.

Crude oil prices are trading higher while currently near the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 46, suggesting the commodity to extend its gains after it successfully breakout the resistance level as the RSI climbed sharply from the oversold territory.

Resistance level: 83.10, 91.90

Support level: 76.45, 69.90