Dollar Gains on Upbeat U.S. GDP Data

• Dollar Strengthens on Upbeat GDP Report
• Gold Prices Near Record Highs Amid Lingering Risk Aversion
• Market Subdued on US Holiday; Eyes on US PCE Index for Direction

Market Summary

The Dollar surged as upbeat U.S. GDP data, surpassing expectations at 3.4%, fueled speculation of a Federal Reserve pullback on anticipated rate cuts, heightening investor confidence in the currency. Concurrently, safe-haven gold experienced significant bullish momentum as investors hedged portfolios ahead of pivotal events despite the dollar's ascent. Eyes are keenly set on the potential impact of the US PCE Price Index report for further market signals amidst subdued trading due to U.S. holidays. Meanwhile, oil prices soared nearly 2% buoyed by robust U.S. economic data bolstering demand prospects, while OPEC's decision to extend supply cuts added to bullish sentiment, fostering expectations of a tighter supply landscape. Investors are poised to strategize for potential weekend shifts, preparing for promising trading opportunities come Monday.

Current rate hike bets on 1st May Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (85.5%) VS -25 bps (14.5%)  

Market Movements 

DOLLAR_INDX, H4

The Dollar Index received a boost, surging past its previous resistance level at 104.45, driven by a series of positive economic indicators released yesterday. The U.S. GDP growth rate exceeded market forecasts, registering at 3.4%, while Initial Jobless Claims dropped, suggesting a robust job market. This upbeat economic data has led market participants to temper their expectations for a Federal Reserve interest rate cut in 2024, underpinning the dollar's strengthened position.

The Dollar Index has broken above the level at 104.45, suggesting a bullish bias signal for the index. The RSI constantly flows at the elevated level while the MACD maintains at above zero, suggesting the bullish momentum remains intact with the index. 

Resistance level: 104.95, 105.40

Support level:104.00, 103.65

 XAU/USD, H4

Gold prices soared to a record high of $2236.25 yesterday, moving in sync with the dollar's trajectory. Despite the upbeat economic data, traders in the gold market are strategically positioning themselves ahead of the highly anticipated release of the U.S. Personal Consumption Expenditures (PCE) reading scheduled for later today. This data release will provide insights into the Federal Reserve's sentiment regarding the upcoming monetary policy. Market speculation is currently focused on the possibility of signs of easing inflation, which could potentially drive gold prices up by nearly 2% in the last session.

Gold prices have broken its uptrend channel from the above, suggesting that gold prices are trading with extremely strong bullish momentum. The RSI has broken into the overbought zone while the MACD has moved upward and diverged, suggesting the bullish momentum is growing. 

Resistance level:  2245.00, 2258.00

Support level:  2217.40, 2197.35

 GBP/USD，H4

The GBP/USD pair remains under its downward trend resistance level, indicating a continued bearish trajectory. The UK GDP figures, released yesterday and aligning with market expectations, were insufficient to bolster Sterling's strength. Conversely, the US dollar received a significant boost from the country's positive economic data, applying additional downward pressure on the pair.

The GBP/USD trade remains on a bearish trajectory and is maintained below the downtrend resistance level. The RSI continues to flow below the 50 level, while the MACD is approaching the zero line from below, suggesting that the bearish momentum may be easing. 

Resistance level: 1.2710, 1.2770

Support level: 1.2530, 1.2440

EUR/USD，H4

The EUR/USD pair faced downward pressure as the US Dollar continued to appreciate. Investor sentiment favoured the US economy's gradual recovery over the European region, heightening expectations for the Federal Reserve to maintain elevated interest rates. In contrast, the European Central Bank signalled potential monetary policy easing as inflation stabilised, exacerbating the downward trend for the EUR/USD pair.

EUR/USD is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 33, suggesting the pair might extend its losses after breakout since the RSI stays below the midline. 

Resistance level: 1.0866, 1.0960

Support level: 1.0770, 1.0710

 AUD/USD，H4

The Australian Dollar extended losses for a second consecutive session, driven by disappointing Consumer Inflation Expectations and Retail Sales figures from Australia. Additionally, the ongoing bullish trend for the US Dollar, particularly ahead of the pivotal PCE report, further weighed on the AUD/USD pair. However, subdued market activity due to Good Friday trading is expected to limit significant movements for the Australian Dollar.

AUD/USD is trading flat, consolidating in a range between resistance and support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 45, suggesting the pair might experience technical correction since the RSI rebounded sharply from oversold territory. 

Resistance level: 0.6535, 0.6585

Support level: 0.6485, 0.6410

 USD/JPY, H4

The Japanese yen stabilised following recent losses, with the USD/JPY pair hovering near its highest level in 34 years amidst government warnings of potential currency market intervention. Previous monetary policy disparities with other central banks prompted aggressive selling of the Japanese yen, driving it to three-decade lows. Prime Minister Fumio Kishida's declaration of readiness to address excessive currency market movements underscored volatility concerns, prompting investors to remain vigilant for potential intervention actions impacting the Japanese yen.

USD/JPY is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 50, suggesting the pair might be trading flat since the RSI near the midline. 

Resistance level: 151.95, 153.10

Support level: 150.80, 149.35

Dow Jones, H4

The US equity market saw marginal gains, with both the Dow Jones and the S&P 500 reaching record highs at the close of the quarter. Exceptional post-pandemic economic performance in the US, exemplified by surpassing GDP readings, reinforced the country's robust economic outlook. As Western hemisphere markets observe Good Friday, reduced activity is anticipated in Asian markets.

Dow Jones 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 after breakout since the RSI stays above the midline. 

Resistance level: 39855.00, 40995.00

Support level: 39825.00, 39150.00

 CL OIL, H4

Crude oil prices are on a continuous ascent and are currently testing the resistance level at $83. The optimistic outlook for oil prices persists due to the announced production cuts by OPEC+ and the resulting tighter oil supply expectations. Additionally, the decline in the oil and gas rig count in the U.S. during the last week of March has contributed to the bullish sentiment surrounding oil prices.

Oil prices continue to climb after a rebound from their liquidity zone and are currently testing the resistance level at $83. The RSI has broken into the overbought zone, while the MACD rebound above the zero line suggests a fresh bullish momentum is forming. 

Resistance level: 82.85, 85.45

Support level: 80.20, 78.00