Dollar Strengthen on Strong Economic Performance

Market Summary

The U.S. 10-year Treasury yield continued its ascent, reaching a high of 4.65%—its strongest level since last April—and is expected to approach 5% as markets brace for Donald Trump's inauguration this month. This has provided support for the dollar, which rebounded from its recent bearish trend. Positive U.S. economic data, including upbeat PMI readings and JOLTs job openings, have fueled inflation concerns, weighing on Wall Street, which closed sharply lower.

In the commodities market, gold faced downward pressure, retreating from the $2665 level as a stronger dollar overshadowed the safe-haven asset, leaving it to trade inversely to the greenback's strength. Oil prices rose, supported by a drop in OPEC output in December and strong U.S. economic data, which bolstered demand expectations. Meanwhile, risk-off sentiment in the broader market led to a sharp sell-off in cryptocurrencies, with Bitcoin and Ethereum both falling over 5% in the last session.

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

Source: CME Fedwatch Tool

0 bps (90.4%) VS -25 bps (9.6%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index advanced further, supported by better-than-expected U.S. economic data. The ISM Non-Manufacturing PMI came in at 54.1 (vs. expectations of 53.5), while the Prices component jumped to 64.4 (vs. expectations of 57.5). Additionally, the JOLTS Job Openings report showed 8.098M openings, beating forecasts of 7.730M. These strong data points underscore resilience in the U.S. services and labor markets, reducing the likelihood of immediate rate cuts. The U.S. rate futures market now indicates a 95% probability of a rate pause this month, with only a 4.8% chance of easing, according to LSEG estimates.

The Dollar Index is trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 54, suggesting the index might extend its gains since the RSI stays above the midline.

Resistance level: 109.50, 110.60

Support level: 107.50, 105.75

XAU/USD, H4

Gold prices declined following robust U.S. economic data and expectations of a potential rate pause rather than cuts. Rising Treasury yields reduce the appeal of non-yielding assets like gold. However, losses were capped by persistent uncertainties surrounding upcoming U.S. policy implementations. Traders will closely watch the U.S. Nonfarm Payrolls (NFP) report for additional clues.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 51, suggesting the commodity might extend its losses since the RSI retreated sharply from overbought territory.

Resistance level: 2665.00, 2685.00

Support level: 2640.00, 2615.00

CL OIL, H4

U.S. crude oil futures edged higher after the American Petroleum Institute (API) reported a substantial decline in crude inventories. Stockpiles fell by about 4 million barrels for the week ended Jan. 3, significantly exceeding economists' expectations of a 250,000-barrel draw. The data highlights tightening supply, providing bullish momentum for oil prices.

Oil prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 67, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline.

Resistance level: 74.85, 75.95

Support level: 73.55, 72.75

BTC/USD，H4

Bitcoin briefly breached six-digit levels on Tuesday, continuing its recent recovery. However, gains were pared as profit-taking emerged. Strong U.S. economic data led to rising Treasury yields, which typically weigh on the crypto market due to higher opportunity costs. Investors are now focusing on potential policy announcements from President-elect Donald Trump and the upcoming U.S. jobs report for further direction.

BTC/USD is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 75, suggesting the crypto might enter overbought territory.

Resistance level: 102990.00, 107570.00

Support level: 98970.00, 93255.00