Dollar Remain Firm Ahead of CPI

• The dollar index (DXY) reaches a new high ahead of the U.S. CPI reading. 
• Wall Street Retreat as the Treasury yield continues to surge. 
• The gold was weighed on the strengthening gold and reached its recent low level. 

Market Summary

The treasury market experienced intensified sell-off pressure, driving yields higher and boosting dollar strength in recent sessions. The Dollar Index (DXY) reached the 106.00 mark for the first time since June, with all eyes on the upcoming U.S. CPI reading, which could be pivotal for the dollar's trajectory. Rising yields have pressured Wall Street, leading to a pullback in the previous session; however, major indices like the Nasdaq and S&P 500 are still trending within an upward trajectory. Wall Street sentiment appears to echo in Asian markets, where the Hang Seng Index remains notably weak amid market disappointment over China's economic stimulus measures. 

In commodities, gold is holding support above the $2,600 level, following a nearly 3% decline this week, as investors await the CPI data. Oil prices continue to soften, weighed down by a bleak demand outlook.

Additionally, traders will closely watch Australia’s job data release in tomorrow’s Tokyo session. Given the Reserve Bank of Australia’s continued stance on restrictive monetary policy, a robust job market could reinforce expectations of further tightening. This data will likely weigh into the RBA’s upcoming policy decisions, with stronger employment figures potentially supporting the case for sustained monetary restraint.

Current rate hike bets on 18th December Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (32.2%) VS -25 bps (67.8%) 

Market Movements

DOLLAR_INDX, H4

The Dollar Index, measuring the dollar against six key currencies, reached a six-month high as Trump’s proposed inflationary import tariffs continue to push U.S. Treasury yields higher. Expectations that these tariffs will drive up prices and lead to a more hawkish stance from the Federal Reserve add further support to the dollar. Moving forward, the U.S. CPI report is a significant event, and its results could prompt notable shifts in dollar sentiment. Investors should watch closely, as inflation data is likely to impact the Fed's policy approach and subsequent dollar movements.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 68, suggesting the index might extend its gains since the RSI stays above the midline. 

Resistance level: 106.15, 107.15

Support level: 105.15, 104.30

XAU/USD, H4

Gold prices fell below $2,600 for the first time since mid-September, with the Greenback hitting a six-month high and rising Treasury yields intensifying pressure on non-yielding assets like gold. Fed funds rate futures, as per Chicago Board of Trade (CBOT) data, have pushed the projected terminal rate up to approximately 3.99%, signaling expectations for a less dovish Fed stance. The CME FedWatch Tool further shows that the probability of a December rate cut has declined from 65% to 58%.

Gold prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 28, suggesting the commodity might enter oversold territory. 

Resistance level: 2660.00, 2705.00

Support level: 2595.00, 2550.00

GBP/USD，H4

The GBP/USD pair continued its slide, reaching a new low of 1.2730 in the latest session. The Pound Sterling faced downward pressure following soft U.K. job data, with the unemployment rate rising to 4.3%, the highest since August. Meanwhile, the U.S. dollar remains strong ahead of today’s anticipated CPI release, adding further weight to the pair’s downside momentum.

GBP/USD reached a new low after the pair broke below from the ascending triangle pattern, suggesting a bearish signal for the pair. The RSI has reached the oversold zone while the MACD continues to edge lower, suggesting the bearish momentum is gaining. 

Resistance level: 1.2815, 1.2885

Support level: 1.2680, 1.2610

EUR/USD，H4

The EUR/USD pair dropped to a one-year low, breaking through the psychological support level at 1.0600, reinforcing a bearish outlook. The pair faced pressure from a stronger U.S. dollar, buoyed by anticipation of today’s U.S. CPI data. This inflation reading is expected to play a crucial role in the Federal Reserve’s interest rate decision for December, intensifying market focus on the dollar’s strength.

The EUR/USD has broken below the psychological level at 1.0600, marking its one-year low, suggesting a bearish bias for the pair. The RSI has gotten into the oversold zone while the MACD edge lower, suggesting the bearish momentum is gaining. 

Resistance level: 1.0675, 1.0735

Support level: 1.0573, 1.0528

AUD/USD, H4

The pair slid to its lowest level in November, breaking below the crucial 0.6550 support mark, signalling potential bearish momentum. With the Australian job data scheduled for release tomorrow, market sentiment toward the Aussie dollar hinges on this outcome. Given the Reserve Bank of Australia’s restrictive stance to combat inflation, weaker-than-expected employment figures could sway the RBA’s outlook, potentially dampening the Aussie dollar as traders anticipate a possible policy shift.

The AUD/USD pair has reached its new low and the bearish momentum is seemingly gaining. The RSI remained below the 50 level, while the MACD edged lower after breaking below the zero line, suggesting that the pair remained trading with bearish momentum. 

Resistance level: 0.6550,  0.6610

Support level:  0.6490, 0.6420

USD/CHF, H4

The USD/CHF pair has hit its highest level since August and is in a consolidation phase, with traders anticipating the upcoming U.S. CPI release. The Swiss National Bank's ultra-low interest rates have limited the Swiss franc's strength, creating a divergence with the U.S. dollar. Should the CPI reading exceed market expectations, it would likely reinforce dollar strength, providing momentum for USD/CHF to climb further. This inflation data will be pivotal, as an upside surprise could support a continuation of the pair's bullish trajectory.

The USD/CHF is currently consolidating, a break above from the range shall be seen as a bullish signal for the pair. The RSI remains close to the overbought zone while the MACD is edging high, suggesting the bullish momentum remains strong. 

Resistance level:  0.8860, 0.8915

Support level:  0.8765, 0.8720

BTC/USD, H4

Bitcoin surged to fresh highs as the prospect of a crypto-friendly regulatory environment under Trump spurred buying interest. Following Trump’s re-election, Bitcoin’s rally has outpaced other asset classes, even as broader risk sentiment dampens. Institutional inflows into Bitcoin ETFs, notably Blackrock’s iShares Bitcoin Trust (IBIT), which recorded over $1 billion in single-day inflows post-election, signal growing investor confidence in crypto’s legitimacy as an asset class.

BTC/USD is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, MACD has illustrated diminishing bullish momentum, while RSI is at 73, suggesting the BTC/USD might enter overbought territory. 

Resistance level: 88360.00, 95000.00

Support level: 83830.00, 80275.00

CL OIL, H4

Oil prices hovered near a two-week low after a 5% drop across two sessions, influenced by OPEC’s downward revisions in demand growth forecasts, a stronger U.S. dollar, and lukewarm sentiment around China’s recent stimulus initiatives. OPEC’s adjustments mark the fourth consecutive demand growth cut, with global economic uncertainties compounding the bearish sentiment. 

Oil prices are trading lower following the prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 35, suggesting the commodity might enter oversold territory. 

Resistance level: 69.45, 72.55

Support level: 67.10, 65.45