20 October 2025,03:43
Daily Market Analysis New
20 October 2025, 03:43
Key Takeaways:
*A conciliatory tone from former President Trump eased U.S.–China tensions, improving risk sentiment and lifting the greenback late in the week.
*The dollar’s rebound and Wall Street’s recovery triggered profit-taking in gold, which retraced sharply after recent gains.
*Despite the short-term bounce, expectations of fiscal deficits, dovish Fed policy, and lingering trade risks continue to weigh on the dollar’s longer-term outlook.
Market Summary:
The U.S. dollar staged a technical rebound last Friday, buoyed by a de-escalation in trade war rhetoric from the White House. The move came after a week of heightened tensions, initially sparked by former President Trump’s threats of 100% tariffs on China and accusations regarding rare earth exports and soybean imports. The subsequent threat of retaliatory tariffs from China had fueled market anxiety, putting pressure on risk assets and supporting safe havens.
However, a shift to a more conciliatory tone from Trump late in the week, expressing confidence in reaching a mutual agreement, provided immediate relief. This fostered a marked improvement in risk-on sentiment, propelling Wall Street to a higher close and strengthening the dollar, while triggering a sharp retracement in safe-haven gold.
Despite the short-term rally, the fundamental outlook for the dollar remains clouded by significant structural headwinds. The underlying threat of renewed trade tension continues to loom, which historically poses a risk to the currency’s value. Concurrently, the broader market theme of “debasement trade”—driven by expectations of persistent fiscal deficits and a dovish Federal Reserve—remains a persistent drag. Consequently, while the dollar benefitted from a temporary sentiment shift, gold and other non-yielding assets are likely to retain their appeal as hedges against ongoing macroeconomic and geopolitical uncertainties.
Technical Analysis
The U.S. Dollar Index (DXY) staged a mild technical rebound above its pivotal support level at 98.00, following a 1.33% decline from its recent peak. However, with the previous bullish structure now broken, the index continues to trade within a bearish trajectory and is expected to encounter strong resistance below the 98.75 level.
A rejection near this resistance followed by a break below 98.00 would reinforce the bearish outlook and signal potential for further downside momentum. From a technical standpoint, the Relative Strength Index (RSI) has approached the oversold zone, while the MACD has crossed below the zero line, both indicating that bearish momentum remains dominant in the near term.
Resistance level: 98.75, 99.50
Support level: 98.00, 97.35
Gold prices experienced a sharp technical retracement in the previous session, briefly dipping into a key liquidity zone near the $4,200 level. The swift break below and subsequent rebound suggest a potential liquidity grab, often viewed as a bullish signal indicating renewed buying interest.
If gold manages to gain momentum and break above the 50% Fibonacci retracement level near $4,290, it could further validate a bullish trend reversal. Technical indicators also point to improving sentiment — the RSI shows signs of recovery, while the MACD is nearing a bullish crossover below the zero line, both indicating that bearish momentum is easing.
Resistance level: 4295.00, 4375.00
Support level: 4203.00, 4122.00
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