Dollar Hits 1-Week Low, Focus On PCE Report

The US Dollar grapples with a one-week low against major currencies as investors await critical US inflation data for Federal Reserve policy insights.

The US Dollar grapples with a one-week low against major currencies as investors await critical US inflation data for Federal Reserve policy insights. Disappointing Q3 GDP figures, revealing a growth rate of 4.9%, below market expectations, contribute to the Dollar’s decline. Attention shifts to the US PCE Index for potential market shifts. Gold stages a recovery on Dollar depreciation, attracting cautious investors amid subdued market movements and concerns over a downbeat US GDP report. Angola’s OPEC exit briefly impacts oil prices, leading to a dip, but supply disruption fears drive a rebound. In the equities market, US Treasury yields enhance the appeal of US stocks amid rate cut expectations

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Current rate hike bets on 31 January Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (85.0%) VS 25 bps (15%) 

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Market Overview

Economic Calendar

Market Movements

DOLLAR_INDX, H4

The US Dollar faced downward pressure, slipping to a one-week low against major currencies, with investors eagerly awaiting US inflation data to glean insights into the Federal Reserve’s future policy trajectory. Lingering uncertainties arose after disappointing GDP figures painted a bleak picture of the US economic outlook, revealing a Q3 growth rate of 4.9%, missing market expectations. Eyes are now on the US PCE Index for potential market shifts.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 32, suggesting the index might extend its losses after breakout since the RSI stays below the midline. 

Resistance level: 102.60, 103.50

Support level: 101.75, 101.30

XAU/USD, H4

Gold staged a comeback, propelled by the weakening US Dollar, which enhanced the appeal of the dollar-denominated precious metal. The subdued market movement, driven by concerns over the downbeat US GDP report, led investors to seek the safety of gold as they adopted a cautious stance ahead of crucial US inflation data. The subdued market atmosphere might persist as global investors prepare for Christmas Eve.

Gold prices are trading higher following the prior breakout above the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 69, suggesting the commodity might enter oversold territory. 

Resistance level: 2090.00, 2145.00

Support level: 2045.00, 1985.00

GBP/USD，H4

GBP/USD exhibited resilience after a sharp decline fueled by UK inflation falling to a two-year low of 3.9% in October, prompting market expectations of imminent Bank of England rate cuts. However, the pessimistic tone of US economic data weighed on the US Dollar, providing bullish momentum to GBP/USD.

GBP/USD is trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 53, suggesting the pair might extend its gains since the RSI stays above the midline. 

Resistance level: 1.2729, 1.2815

Support level: 1.2630, 1.2528

EUR/USD，H4

The EUR/USD pair continued its bullish trajectory, primarily driven by the depreciation of the US Dollar. Dovish signals from the Federal Reserve, coupled with lackluster US economic data, created a contrast with the European Central Bank’s slightly hawkish stance. The ECB’s wait-and-see approach highlighted the divergence in monetary policy expectations.

EUR/USD is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 67, suggesting the pair might extend its gains after breakout since the RSI stays above the midline. 

Resistance level: 1.1010, 1.1080

Support level: 1.0945, 1.0850

USD/JPY，H4

The Japanese yen maintained its strength despite a downbeat inflation report from Japan. As per the Statistics Bureau, Japan’s National Consumer Price Index (CPI) for November recorded a decline from 3.3% in October to 2.8% YoY.  Investor pessimism toward the US economic outlook, compounded by disappointing US GDP figures, kept the US Dollar under pressure, impacting USD/JPY.

USD/JPY is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 37, suggesting the pair might extend its losses since the RSI stays below the midline. 

Resistance level: 143.20, 144.60

Support level: 141.55, 140.20

Dow Jones, H4

US equity markets rebounded as dip-buying emerged, countering the impact of worse-than-expected GDP reports and uncertainties surrounding US inflation. The anticipation of rate cuts, reflected in US Treasury yields, enhanced the appeal of US equities. Investors remain vigilant for economic reports, particularly the core PCE Price Index, a key gauge of inflation influencing future Fed decisions.

The Dow is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 74, suggesting the index might enter overbought territory. 

Resistance level: 37650, 39010

Support level: 36575, 35730

AUD/USD, H4

AUD/USD extended its gains, reaching a fresh four-month high, largely due to a weaker US Dollar. Lack of significant catalysts from Australia kept the focus on the Dollar’s performance, with worse-than-expected US economic data contributing to the ongoing strength of the Australian dollar. Investors remain attentive to the US Core PCE Index for potential market shifts.

AUD/USD is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 68, suggesting the pair might enter overbought territory. 

Resistance level: 0.6800, 0.6895

Support level: 0.6710, 0.6615

CL OIL, H4

Oil prices experienced a slight dip following Angola’s announcement of its exit from OPEC, citing instabilities within the group and raising concerns about OPEC+ cooperation. Angola’s oil minister expressed concerns about aggressive production cuts within OPEC, leading to the decision to exit. Despite this, oil prices rebounded on fears of supply disruptions, driven by escalating tensions in the Red Sea and Suez Canal.

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 55, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 78.65, 84.00

Support level: 72.85, 68.00