Yen Eases on Dovish BoJ Monetary Policy Prospect

• The dollar stood firm above the $105.00 mark, recovering from its losses after the Feds rate cut.

• Wall Street rally on Trumps victory in the election.

• BTC reached a new all-time high, topping above the $80,000 mark.

Market Summary

The U.S. dollar held steady following a recent sell-off driven by the Fed's dovish monetary policy moves. The Fed is expected to align its actions with Trumps policies, which could potentially elevate inflation, prompting the U.S. central bank to focus on mitigating inflationary risks. Meanwhile, the Japanese yen softened at the start of the week as markets absorbed the BoJ's recent policy outlook, indicating the central bank may delay its next rate hike until next year.

On Wall Street, all three major indexes continued their rally, with investors encouraged by Trump‘s victory and his pro-growth promises, such as tax cuts and heightened tariffs on trade partners. In commodities, safe-haven gold continued its slide for a second consecutive session amid weaker demand, while oil prices declined,. In the financial markets, crypto took center stage as BTC surged to an all-time high above $80,000, bolstered by President Trump’s supportive stance on digital assets and the prospect of a more relaxed regulatory framework in the U.S.

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 U.S. Dollar Index, which tracks the dollar against a basket of six major currencies, has continued to advance as markets digest Trump‘s win. With expectations of increased tariffs under Trump’s trade policies, the dollar is perceived as a safe-haven, with investors pivoting toward it amid concerns over global economic risk. The dollars resilience stems from the anticipated tariff-induced economic support that could favor the U.S. economy, although it may add strain to foreign economies. Consequently, the dollar remains in a favorable position as a globally preferred asset, with further potential upside.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 60, suggesting the index might extend its gains after breakout since the RSI stays above the midline.

Resistance level: 105.15, 105.65

Support level: 104.35, 103.45

XAU/USD, H4

Gold prices (XAU/USD) are currently trading in negative territory near $2,680 as the early Asian session opens, weighed down by a stronger dollar driven by Trumps victory. The U.S. Dollar Index (DXY) has reached approximately 105.00, a four-month high. Speculation around the Federal Reserve potentially slowing its pace of rate cuts further strengthens the dollar and exerts downward pressure on USD-denominated gold.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 39, suggesting the commodity might extend its losses since the RSI stays below the midline.

Resistance level: 2705.00, 2790.00

Support level: 2660.00, 2607.00

CL OIL, H4

Oil prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 40, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline.

Resistance level: 72.55, 74.75

Support level: 69.85, 68.45