The dollar index was boosted by a hawkish tone from Federal Reserve officials, including the New York and Chicago presidents. This stance dampened market speculation of a possible rate cut in March next year and contributed to the dollar’s sudden strength. In contrast to the bullish U.S. equity markets, gold’s bullish run has been hampered by the dollar’s resurgence.
Meanwhile, oil prices continue to rally, driven by short-term declines in Russian exports due to Houthi attacks in the Red Sea. The Bank of Japan‘s (BoJ) upcoming policy meeting on Tuesday has caught the market’s attention, with traders hoping to gain insight into the BoJ’s upcoming monetary policy, which will provide clues as to the strength of the Japanese Yen.
Dollar Index, H4
In a stark reversal of its recent lackluster performance, the US Dollar staged an impressive rebound after New York Federal Reserve Bank President John Williams emphatically dismissed any notion of an imminent rate cut. In an exclusive interview with CNBC, John Williams categorically stated, “We’re not really talking about rate cuts right now,” underscoring the Federal Reserve’s cautious approach. The dollar’s resurgence followed a tumultuous week triggered by Fed officials’ earlier hints of a possible 75 basis point cut in 2024.
The Dollar Index is trading higher and is currently testing resistance. The MACD is showing increasing bullish momentum, while the RSI is at 44, suggesting that the index may extend its gains after the breakout, as the RSI has rebounded sharply from the oversold territory.
Resistance level: 102.55, 103.40.
Support: 101.80, 101.30.
GBP/USD, H4
The GBP/USD pair encountered resistance from its uptrend resistance level, resulting in a technical retracement. However, support was found near the 1.2670 level. The dollar’s strength was boosted by a hawkish tone from several Federal Reserve officials, which dispelled speculation of a March rate cut after Jerome Powell’s dovish statement last week. Traders are now eagerly awaiting the release of the UK’s Consumer Price Index (CPI) data on Wednesday to assess the strength of the Pound. The interplay of technical levels, central bank communication, and upcoming economic data continues to shape the dynamics of the GBP/USD pair.
The GBP/USD has experienced a technical retracement after rising to its uptrend resistance level. The cable has found support at the 38.2% Fibonacci level, indicating that the bullish momentum remains intact. The RSI remains at an elevated level while the MACD has crossed above, indicating that the bullish momentum is waning.
Resistance level: 1.2729, 1.2815.
Support: 1.2630, 1.2528.
AUD/USD, H4
The Australian Dollar is currently trading near its recent highs against the US Dollar, as traders are closely watching the minutes from the upcoming Reserve Bank of Australia (RBA) meeting. Investors are eager to gain insight into the RBA’s potential monetary policy moves, with market sentiment leaning towards a more dovish approach from the central bank. In contrast, the US Dollar has been supported by a hawkish tone from several Federal Reserve officials, emphasizing that it is too early to declare victory over inflation.
The AUD/USD is trading at an elevated level, waiting for a macro factor to push the pair higher. The RSI is floating near the overbought zone, while the MACD is flat above the zero line, indicating that the bullish momentum continues.
