Dollar and Wall Street Bullish on Trump Victory

• Wall Street was bullish, while Nasdaq recorded an all-time high after Donald Trump won the election.
• Gold plummets as the demand for the safe-haven asset eases after the U.S. political uncertainty is resolved.
• Eyes are on today’s BoE interest rate decision, which is due today with the expectation of a first rate cut from the British Central Bank. 

Market Summary

The market has responded decisively to the U.S. presidential election results from November 5, which confirmed Donald Trump’s re-election, fueling what’s now dubbed the “Trump trade.” The dollar index remains strong, hovering above the 105.00 level, marking its highest point since July. Wall Street also rallied sharply in the previous session, with the Dow Jones surging 1,500 points, the Nasdaq hitting a record high, and Tesla shares benefiting from Trump’s victory, as Elon Musk was a prominent sponsor of the campaign.

Looking ahead, traders should closely monitor today’s Fed monetary policy decision. Despite previous market expectations for a 25-basis-point rate cut, the FOMC may choose to keep rates steady, potentially positioning itself to support a Trump administration that could drive inflationary pressures. Additionally, the Bank of England is set to announce its rate decision today, with an anticipated rate cut that could weigh on the British pound.

In the commodities space, gold is experiencing significant selling pressure, dropping over 2% as political uncertainty fades. The cryptocurrency market is also gaining momentum, driven by expectations of a more favourable regulatory landscape under Trump’s leadership. Ethereum (ETH), for instance, jumped more than 10% after the election outcome, indicating a bullish sentiment across the crypto market.

Current rate hike bets on 7th November Fed interest rate decision: 

Source: CME Fedwatch Tool

-50 bps (3.2%) VS -25 bps (96.8%) 

Market Movements

DOLLAR_INDX, H4

The Dollar Index, which tracks the dollar against a basket of six major currencies, spiked aggressively, hitting a four-month high following Trump's win. Expectations for pro-growth policies involving immigration, tax cuts, and potential tariffs could spur U.S. economic growth and inflation, making the dollar an appealing asset. Rising inflation concerns have already prompted global investors to adjust their strategies to manage potential inflationary pressures. In line with this outlook, U.S. Treasury yields surged to multi-month highs as investors priced in future rate hikes. 

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 69, suggesting the index might enter overbought territory. 

Resistance level: 105.15, 106.05

Support level: 104.35, 103.45

XAU/USD, H1

Gold prices unexpectedly declined as improved political stability and rising Treasury yields lessened the precious metal's safe-haven appeal. Investor risk appetite remained strong, with many reallocating funds towards higher-risk assets such as U.S. equities and cryptocurrencies. Looking forward, investors are likely to focus on further political developments from President Trump and upcoming FOMC rate decisions later this week to assess gold's potential movements.

Gold prices are trading flat while currently testing the support level. MACD has illustrated increasing bullish momentum, while RSI is at 51, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 2755.00, 2775.00

Support level: 2735.00, 2720.00

GBP/USD，H4

The GBP/USD pair has fallen to recent lows, finding support near the 1.2850 level. Price volatility for the pair is likely to increase as both the Bank of England (BoE) and the Federal Reserve (Fed) announce their monetary policy decisions today. Notably, the BoE is anticipated to implement its first rate cut, marking a possible end to its monetary tightening cycle, which could trigger a sharp decline in the pound’s strength.

GBP/USD is trailing toward its lowest level, suggesting a bearish bias for the pair. The RSI remains low while the MACD hovers close to the zero line, suggesting the pair remain trading with a bearish momentum. 

Resistance level: 1.2940, 1.3040

Support level: 1.2815, 1.2680

EUR/USD，H4

The EUR/USD pair saw a notable drop after failing to hold above the key 1.0770 level, marking a new low and signalling a bearish outlook. Traders should keep a close watch on today’s Fed interest rate decision. Should the Fed surprise markets by keeping rates unchanged, it could strengthen the dollar, putting further pressure on the EUR/USD pair.

The EUR/USD has gone to a new low, suggesting a bearish bias for the pair. The RSI has gotten into the oversold zone while the MACD has crossed below the zero line and is diverging, suggesting the bearish momentum is gaining. 

Resistance level: 1.0815, 1.0890

Support level: 1.0675, 1.0623 

AUD/USD, H4

The AUD/USD pair successfully held its ground near the 0.6550 support level and staged a technical rebound, indicating a potential trend reversal. The Australian dollar demonstrated resilience against a strengthening U.S. dollar as markets anticipate potential positive news from the Chinese government on a new economic stimulus package, which could bolster the Aussie as a proxy for Chinese economic health.

The AUD/USD rebounded at its support level and was able to surge past its resistance level at the 0.6580 mark, suggesting a bullish bias for the pair. The RSI hovered close to the 50 level while the MACD formed a higher-low pattern suggests the bearish momentum is easing. 

Resistance level: 0.6673, 0.6730

Support level:  0.6550, 0.6490

Nasdaq (US100), H4

The tech-heavy Nasdaq surged following Trump’s recent election victory, buoyed by heightened optimism that his administration will support economic growth. The broader equity market traded with a strong positive sentiment, reflecting confidence in Trump’s economic policies. Tesla Inc., one of Nasdaq’s heavyweight stocks, stood out in the previous session, with shares climbing as founder Elon Musk—who played a major role in supporting Trump’s campaign—benefited from the election outcome.

Nasdaq reached an all-time high in the last session, suggesting a bullish bias for the index; the RSI is reaching the overbought zone while the MACD remains close to the zero line, suggesting a bullish momentum may be forming for the index. 

Resistance level:  21150.00, 21950.00

Support level:  20560.00, 19860.00

CL OIL, H4

Crude oil prices rebounded sharply in anticipation of potential renewed sanctions on Iran and Venezuela, which could decrease supply and support higher prices. Iran, a significant OPEC member producing roughly 3.2 million barrels per day, or 3% of global output, is likely to face additional pressures under Trump’s policies.

Oil prices are trading higher while currently near the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 56, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline. 

Resistance level: 72.60, 74.75

Support level: 69.90, 68.45