All Eye on Today’s FOMC Interest Rate Decision

• Dollar stood firm at its recent high level ahead of the FOMC interest rate decision.

• Yesterday, upbeat UK job data fueled the strength of the Pound Sterling.

• Gold remains trading in a lacklustre manner ahead of the crucial FOMC announcement.

Market Summary

Ahead of the Fed's interest rate decision today, the U.S. dollar maintained its recent high levels, while Wall Street faced downside risk. This market sentiment was largely driven by the U.S. retail sales data, which came in higher-than-expected and reinforced hawkish expectations for the Fed's upcoming decision. Among the major currencies, the Pound Sterling stood out as it was buoyed by upbeat UK employment data, with the employment change reading significantly exceeding market expectations, coming in at 173k. Traders of the Pound are advised to pay close attention to tomorrow's BoE interest rate decision, where expectations suggest the Bank of England will keep interest rates unchanged.

In the commodity market, both gold and oil faced headwinds. Gold prices were suppressed by the strengthening U.S. dollar, while the Middle East crisis seemed to be easing, reducing demand for safe-haven assets. Meanwhile, oil prices remained under pressure due to expectations of high supply and low demand in 2025, despite a surprising drawdown in U.S. crude stockpiles, as reported yesterday.

Market Movements

DOLLAR_INDX, H4

The Dollar Index has successfully found support above its critical pivotal point near the 106.70 mark, signaling a potential trend reversal for the dollar. The greenback gained momentum following the release of upbeat U.S. Retail Sales data, which exceeded market expectations and bolstered optimism about the resilience of the U.S. economy. However, market participants remain cautious as all attention now shifts to today's Federal Reserve monetary policy decision and the accompanying statement from Fed Chair Jerome Powell.

The Dollar Index is traded sideways, looking for higher-trade momentum. The RSI remains above the 50 level while the MACD continues to slide, suggesting that the bullish momentum is easing.

Resistance level: 106.75, 107.60

Support level: 105.70, 104.55

XAU/USD, H4

Gold prices remain under pressure, lacking a clear catalyst in recent sessions and trading at new near-term lows, indicating a bearish bias for the precious metal. With the Federal Reserve's interest rate decision scheduled for today, market participants are bracing for potential hawkish signals from the central bank. A robust dollar would likely weigh on gold prices, exerting additional downside pressure as the non-yielding asset becomes less attractive in a rising rate environment.

Gold slides to a new low and is trading with a lower-high price pattern, suggesting a bearish signal for the gold. The RSI is close to the oversold zone, while the MACD has broken below the zero line, suggesting that bearish momentum is forming.

Resistance level: 2656.00, 2718.00

Support level: 2612.00, 2555.00

GBP/USD，H4

The GBP/USD pair edged higher in the previous session, supported by robust UK job data, but faced rejection at the critical short-term resistance level of 1.2725. The Pound Sterling gained momentum as employment change figures came in significantly stronger than market expectations, underscoring resilience in the UK labour market. However, the pair's upward trajectory remains uncertain as traders focus on today's Fed's interest rate decision, accompanied by Jerome Powell's statement; while the UK CPI reading is expected to provide fresh insights into inflation trends and the Bank of England's future policy stance.

GBP/USD rebounded strongly from its recent low level but faced strong selling pressure when approaching the 1.2725 mark; a break above such a level shall be seen as a bullish signal for the pair. The RSI continues to climb while the MACD attempts to break above the zero line, suggesting that a bullish momentum is forming.

Resistance level: 1.2790, 1.2850

Support level:1.2620, 1.2505

USD/JPY, H4

Despite a slight correction at its recent peak, the USD/JPY continues to trade within its uptrend trajectory. A breakout above the recent high of 154.20 could signal further bullish momentum for the pair. The Japanese Yen remains lacklustre, with market expectations of a dovish Bank of Japan (BoJ) stance weighing on its performance. Meanwhile, a potential strengthening of the U.S. dollar following todays Fed interest rate decision could fuel further upward momentum for the USD/JPY pair, reinforcing the bullish outlook in the short term.

The pair is hovering flat at its recent high level; a break above its recent peak at the 154.15 mark shall be seen as a bullish signal for the pair. The RSI remain close to the overbought zone while the MACD has crossed on the above, suggesting the bullish momentum may be easing.

Resistance level: 157.15, 160.05

Support level: 151.55, 149.00