Hawkish Fed Meeting Minutes Fuels Dollar’s Strength

• The Dollar is fueled by Hawkish Fed meeting minutes as Fed members raise concerns about sticky inflation in the country.

• Gold prices are poised at recent high levels and may face challenges from the strengthening Dollar.

• Oil declined by more than 1.5% in the last session as the demand outlook deteriorated as the marker considered the Fed stance.

Market Summary

Yesterday's market focus was dominated by U.S. economic indicators and the release of the Fed meeting minutes. The dollar experienced mixed movements, pressured by a weaker-than-expected U.S. ADP Nonfarm Employment Change but supported by better-than-expected Initial Jobless Claims data. The Fed minutes revealed a cautious stance, as members acknowledged the economy's resilience and the potential inflationary pressures from Trump administration policies, suggesting a careful monetary policy approach in 2025.

Gold prices, closely tied to the dollar's strength, remained near the $2,665 resistance level. A weakening dollar could drive gold prices higher. Meanwhile, oil prices fell 1.5%. The cryptocurrency market also continued its decline, with BTC and ETH extending their losses following a sharp drop in previous sessions.

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 continued its upward momentum, supported by rising US Treasury yields. The US 10-year yield hit 4.73%, its highest level since April 25, as investors anticipate that Trump's policies, including deregulation and tax cuts, will spur economic growth and inflation. Additionally, the better-than-expected US Initial Jobless Claims report helped maintain optimism around the dollar, with the Department of Labor reporting claims of 201K, outperforming the expected 214K. However, ADP Nonfarm Employment Change came in below expectations at 122K vs. 139K. Investors will be closely watching the US Nonfarm Payrolls and Unemployment rate for further clues on the dollar's direction.

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 59, suggesting the index might extend its losses since the RSI retreated from resistance level.

Resistance level: 109.40, 110.60

Support level: 107.90, 106.80

XAU/USD, H4

Gold prices gained for a second consecutive day, bolstered by uncertainties around potential tariffs. President-elect Donald Trump is reportedly considering declaring a national economic emergency to justify a large-scale tariff scheme, which could increase market uncertainties and drive demand for gold as a haven. The main catalyst for gold in the coming days remains the US jobs data.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 59, suggesting the gold might extend its gains since the RSI stays above the midline.

Resistance level: 2660.00, 2720.00

Support level: 2605.00, 2545.00

GBP/USD，H4

The GBP/USD pair has experienced significant volatility this week, initially gaining nearly 0.8% early on, only to see those gains erased in yesterday's session, bringing the pair to its recent lows. Despite the decline, the UK 10-year bond yield has surged to its highest level since August 2008, potentially supporting the British pound. This could trigger a technical rebound for the pair, offering some relief amidst the prevailing bearish sentiment.

The pair has recorded a new low, which suggests that it is trading in a bearish bias. The RSI is close to the oversold zone, while the MACD is edging lower, suggesting that the pair is trading with bearish momentum.

Resistance level: 1.2410, 1.2505

Support level: 1.2310, 1.2220

BTC/USD，H4

Bitcoin faced a sharp rejection at the 61.8% Fibonacci retracement level near $102,000, recording a significant drop in the previous session. This indicates strong downside pressure, compounded by the hawkish tone of the Fed meeting minutes, which dampened risk appetite across markets. However, reports of BTC whales accumulating over 30,000 BTC in December could offer support, potentially stabilizing prices near the $90,000 mark.

BTC continued to edge lower after a plummet in the previous session, suggesting a bearish bias for BTC. The RSI has slid to the oversold zone, while the MACD has broken below the zero line and is diverging, suggesting that the bearish momentum is gaining.

Resistance level: 98700.00, 102,000.00

Support level: 91400.00, 87,600.00