Dow Jones Reach New High on Trump Victory

• The dollar extended its rally to its highest level in 4-months in the last session.
• Dow Jones climbed to new high at 44,484.00 mark as Wall Street rallied on Trump victory.
• Gold declined to a new low as the safe-haven asset is pressured by the strengthening dollar. 

Market Summary

The U.S. dollar extended its rally, reaching a four-month high after Trump’s presidential election victory. However, a pivotal test awaits on Wednesday with the release of U.S. CPI data, which could significantly impact the dollar’s trajectory. Wall Street remained robust, with the Dow Jones hitting an all-time high of 44,484 in yesterday’s session. Reflecting the trend seen post-Trump’s 2016 win, when Wall Street rallied for a year, optimism in the equity markets is notably high.

The digital asset market is also riding a wave of optimism, with Bitcoin surging nearly 10% in the last session and approaching the $90,000 mark. Conversely, safe-haven gold continues to face selling pressure, approaching its October low around $2,605. Oil prices, meanwhile, have been pressured to recent lows following a disappointing Chinese stimulus package and continued underwhelming economic data from China, which has raised concerns about demand.

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, which measures the dollar against six major currencies, is continuing its upward trajectory as market participants digest the new Trump presidency. Investors are anticipating that Trump's tariff and immigration policies, coupled with a series of stimulus plans, could heighten inflationary pressures. This, in turn, may lead the Federal Reserve to proceed with rate cuts at a slower pace. With U.S. CPI data on the horizon, investors should closely analyze inflation trends to anticipate the dollar's future movement, which could see continued strength if inflation expectations are realized.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 66, suggesting the index might extend its gains since the RSI stays above the midline. 

Resistance level: 106.05, 107.15

Support level: 104.35, 103.45

XAU/USD, H4

Gold prices remain stable after a sharp drop, as rising U.S. Treasury yields prompt a sell-off in non-yielding assets like gold. Investors appear hesitant, eyeing upcoming events like the U.S. CPI report and Fed statements to gauge gold's longer-term direction. Although near-term pressures on gold are likely, Trump’s tariff policies, if implemented, could renew demand for the precious metal as safe haven, especially if they lead to heightened geopolitical tensions.

Gold prices are trading flat while currently near the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 26, suggesting the commodity might enter oversold territory. 

Resistance level: 2660.00, 2705.00

Support level: 2610.00, 2555.00 

GBP/USD，H4

The GBP/USD pair has broken below its ascending triangle pattern, signalling a bearish outlook. The pair has been pushed lower by the dollar’s continued rally to a four-month high. UK job data is set for release today, with expectations for a rise in the unemployment rate, potentially adding further pressure on the Sterling.

GBP/USD has picked a direction after the pair dropped below the ascending triangle pattern, suggesting a bearish signal for the pair. The RSI is moving toward the oversold zone while the MACD edges are lower, suggesting the pair remains trading with bearish momentum. 

Resistance level: 1.2940, 1.3040

Support level: 1.2815, 1.2680

EUR/USD，H4

The EUR/USD has dropped to its lowest level since April, weighed down by the strengthened dollar following Trump’s victory. Additionally, subdued economic indicators from the Eurozone are dampening the euro’s momentum, reinforcing a bearish outlook for the pair.

The EUR/USD has reached a new low at 1.0650, suggesting a bearish bias for the pair. The RSI has dropped into the oversold zone while the MACD continues to edge lower, suggesting that the bearish momentum is gaining. 

Resistance level: 1.0675, 1.0735

Support level: 1.0621, 1.0573

Dow Jones, H4

The Dow Jones surged to a new high of 44,484 in yesterday's session, signalling robust bullish momentum in the index. The rally was fueled by a surge in optimism following Trump's re-election, as investors anticipate pro-growth policies reminiscent of his first term, which saw strong Wall Street gains. This renewed confidence has sparked a buying spree, further driving the index upward.

The Dow surged by nearly 10% in yesterday's session, suggesting the index remains bullish. The RSI has broken into the overbought zone while the MACD is diverging after it has broken above the zero line, suggesting the bullish momentum is gaining. 

Resistance level: 45000.00, 47195.00

Support level:  43830.00, 42820.00

USD/JPY, H4

The USD/JPY pair has rebounded but remains below its previous highs, indicating that it continues to trend downward. Fundamentally, the yen is weighed down by the Bank of Japan’s dovish outlook, with signals that a rate hike may be postponed until next year. Meanwhile, the dollar remains resilient, bolstered by renewed confidence following the recent U.S. election, which has strengthened investor sentiment toward the greenback.

The USD/JPY has rebounded but has eased in its bullish momentum, suggesting a potential trend reversal for the pair. The RSI is hovering near the 50 level while the MACD is flowing close to the zero line, giving a neutral signal for the pair. 

Resistance level:  155.00, 156.25

Support level:  152.75, 151.65

CL OIL, H4

Oil prices continue to slide, with China’s latest round of fiscal stimulus falling short of investor expectations, especially as it lacked measures specifically targeting private consumption. Additionally, Hurricane Rafael, initially expected to impact U.S. oil production, weakened into a tropical storm, reducing concerns over potential supply disruptions in the Gulf of Mexico. As China, the world’s top oil importer, maintains cautious stimulus spending, demand uncertainties weigh on oil markets.

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 30, suggesting the commodity might enter oversold territory. 

Resistance level: 68.45, 69.85

Support level: 67.10, 63.80