Dollar Holds Firm as Markets Await Fed Decision

Tech stocks recover after Nvidias historic sell-off, as bargain hunters lift AI-linked shares.

• Dollar Index flat as markets brace for the FOMC rate decision, with Trumps rate cut pressure looming.

• Gold rebounds following market stabilization, though Fed policy remains the key driver.

Market Summary

The U.S. dollar remained firm ahead of key central bank decisions, with USD/CAD edging higher as traders anticipated a rate cut from the Bank of Canada. Meanwhile, market sentiment stayed cautious ahead of the Federal Reserve‘s policy meeting, with investors closely watching for any signals on future rate changes. Gold rebounded after recent sell-offs, with its trajectory tied to the Fed’s outlook and safe-haven demand.

Oil prices remained steady in Asian trading after U.S. crude inventory data showed a smaller-than-expected build。 Meanwhile, the Australian dollar extended its losses for the third consecutive day as weak inflation data reinforced expectations of a February rate cut by the RBA, adding downside risks to AUD/USD.

Bitcoin held above the $100K mark, supported by dip-buying and optimism over potential crypto-friendly regulations. In the stock market, U.S. equities rebounded, led by Nvidias recovery after suffering a historic selloff. Despite the rebound, volatility remains high as investors assess the impact of DeepSeek AI on tech giants and broader market conditions.

Current rate hike bets on 29th January Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (97.3%) VS -25 bps (2.7%)

Market Movements

DOLLAR_INDX, H4

Major markets remained muted ahead of the Federal Reserve‘s two-day policy meeting, set to conclude on Wednesday. While the Fed is widely expected to maintain its current stance, investors are closely monitoring its statement for insights on future policy direction. Former President Trump’s repeated calls for rate cuts have added uncertainty to the outlook, keeping traders on edge. The Dollar Index remained flat as investors adopted a wait-and-see approach.

The Dollar Index is trading flat while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 52, suggesting the index might consolidate in a zone since the RSI near the midline.

Resistance level: 107.95, 109.00

Support level: 106.80, 105.75

XAU/USD, H4

Gold prices recovered as market sentiment stabilized, prompting investors to rebuild positions after a recent sell-off. The decline had been driven by institutional liquidations to cover margin calls following DeepSeek AI‘s impact on Wall Street, which triggered a sharp Nasdaq selloff. Moving forward, gold’s trajectory remains tied to the Feds policy outlook, with monetary policy expectations playing a key role in shaping safe-haven demand.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 69, suggesting the commodity might enter overbought territory.

Resistance level: 2765.00, 2785.00

Support level: 2740.00, 2720.00

BTC/USD，H4

Bitcoin surrendered most of its early gains but remained supported as traders bought the dip below $100,000. Meanwhile, President Trump’s push for crypto-friendly regulations, following his recent executive order, remains a key driver of market sentiment.

BTC is trading flat while currently near the support level of 100,455. MACD has illustrated increasing bullish momentum, while RSI is at 47, suggesting the crypto might edge higher since the RSI rebounded from oversold territory.

Resistance level: 107850.00, 115000.00

Support level: 100455.00, 95560.00

Crude Oil, H4

Oil prices stabilized in Asian trade on Wednesday after industry data showed a smaller-than-expected build in U.S. crude inventories. The American Petroleum Institute reported a 2.86-million-barrel increase last week, below market expectations of 3.7 million barrels.

Crude oil is trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 45, suggesting the commodity might extend its gains since the RSI rebounded sharply from oversold territory.

Resistance level: 74.65, 76.85

Support level: 72.50, 69.85