U.S. CPI Come Soft, Buoys Wall Street

• The U.S. CPI reading came softer than the market consensus, and the dollar was lacklustre.

• Wall Street rebounded after the CPI came softer and reinforced a dovish Fed expectation.

• Gold prices edge higher as the market is positioning for a more uncertain market.

Market Summary

The highly anticipated U.S. CPI data released yesterday came in weaker than expected, reinforcing expectations that the Federal Reserve could adopt a more dovish stance. The softer inflation print provided buoyancy to the equity market, with Wall Street snapping its losing streak—the S&P 500 and Nasdaq both closed higher.

In contrast, the dollar index remains under pressure, weighed down by dovish Fed expectations and uncertainty over Trumps trade policies. After threatening Canada with a 50% tariff, the U.S. President turned his focus to the European Union, raising the risk of escalating trade tensions.

Meanwhile, the Bank of Canada (BoC) cut interest rates by 25bps to 2.75%, a widely expected move that had limited impact on the Canadian dollar as markets had already priced it in.

In the commodity market, gold surged past its immediate resistance at $2,920, signaling a bullish breakout as traders sought safety amid global uncertainty and a weaker dollar. Oil prices also advanced, benefiting from the softer CPI print and expectations that a dovish Fed could fine-tune the global oil demand outlook.

Current rate hike bets on 19th March Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index (DXY) extended its decline as weaker-than-expected US inflation data reinforced expectations that the Federal Reserve may maintain a dovish stance for an extended period. The Consumer Price Index (CPI) fell to 2.9% in February from 3% in January, missing market forecasts, while Core CPI eased to 3.2% from 3.3%, further supporting the case for a more accommodative monetary policy. Additionally, Donald Trumps recession warnings and escalating tariff concerns weighed on the dollar, heightening uncertainty about the US economic outlook.

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 27, suggesting the index might enter oversold territory.

Resistance level: 105.45, 106.50

Support level: 103.40, 101.70

XAU/USD, H4

With soft inflation data and a deteriorating growth outlook, US Treasury yields continued to decline, reinforcing market expectations of potential rate cuts. As a result, gold prices rebounded, benefiting from increased demand for safe-haven assets amid economic and trade-related uncertainties. Adding to market jitters, Trumps expanded tariffs on steel and aluminum took effect, further straining global trade relations and dampening risk appetite.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 70, suggesting the commodity might enter overbought territory.

Resistance level: 2940.00, 2955.00

Support level: 2920.00, 2900.00

Nasdaq, H4

The Nasdaq staged a technical rebound in the last session after tumbling 3,000 points over the past three weeks, buoyed by a softer U.S. CPI print that reinforced market expectations of a more dovish Fed policy ahead. The prospect of lower rate hikes or potential easing has supported the broader equity market. However, risk sentiment remains fragile, as Trumps escalating tariff threats against major trade partners have injected uncertainty into global markets. While the tech-heavy index found short-term support, concerns over trade tensions could limit further upside momentum.

The Nasdaq has dipped to the lowest level since last September, suggesting a bearish bias for the pair. The RSI is flirting with the oversold zone while the MACD continues to edge lower, suggesting that the bearish momentum is gaining.

Resistance level: 19935.00, 20310.00

Support level: 19395.00, 18730.00

Crude Oil, H4

Crude oil prices surged as US inventory data fell short of expectations. According to the Energy Information Administration (EIA), US crude stockpiles rose by just 1.4 million barrels, significantly below the 2-million-barrel forecast, alleviating supply concerns. A weaker US dollar also provided additional support for dollar-denominated oil prices.

Crude oil prices are trading higher while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 64, suggesting the commodity might experience technical correction since the RSI retreated from overbought territory.

Resistance level: 67.80, 68.45

Support level: 66.70, 65.60