Powell Dovish Remark Keeps Dollar Subdue

• Jerome Powell's dovish remark boosted Wall Street to rally.

• The U.S. dollar remains lacklustre after the Fed holds the rate unchanged.

• All eyes are on today's BoE interest rate decision to gauge the strength of the Pound Sterling.

Market Summary

The Federal Reserve‘s rate decision was announced yesterday, aligning with market expectations as the central bank opted to keep rates unchanged. However, the real market mover came during Fed Chair Jerome Powell’s press conference following the announcement. Powell highlighted concerns over inflationary pressures stemming from the aggressive trade policies imposed by the Trump administration, which could pose challenges to price stability. Additionally, he acknowledged signs of a slowing U.S. economy and an easing labor market—comments that reinforced a dovish interpretation of his speech.

As a result, Wall Street rallied, with all three major indices closing higher, while U.S. Treasury yields tumbled to fresh lows. The softer yields weighed on the U.S. dollar, keeping the greenback under pressure against its peers. Meanwhile, in the eurozone, the latest CPI reading came in below both the previous figure and market expectations, dealing a blow to the euro.

The Australian dollar also took a sharp hit after a surprisingly weak jobs report, which showed employment falling by 52.8k—significantly worse than market forecasts—sending the currency lower.

In today‘s forex market, traders are turning their focus to the Bank of England’s interest rate decision and Governor Andrew Bailey‘s remarks, which could shape expectations for the pound’s trajectory.

In the commodities market, gold continued its relentless climb, surging past the $3,050 mark. The precious metal has now gained over 2% this week without any notable pullback, signaling that bullish momentum remains firmly intact.

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 US Dollar dipped following the FOMC meeting, as dovish expectations suggested the Fed may continue easing before tightening again. The Federal Reserve kept interest rates unchanged in its target range of 4.25% to 4.5% and reaffirmed its forecast for two rate cuts in 2025, despite persistent tariff-driven inflation concerns. Fed Chair Jerome Powell acknowledged that recession risks have increased but maintained that a severe downturn remains unlikely. The central bank lowered its economic growth forecast, now expecting 1.7% GDP growth in 2025—a 0.4 percentage point downgrade.

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 30, suggesting the index might enter oversold territory.

Resistance level: 105.65, 107.60

Support level: 103.30, 101.70

XAU/USD, H4

Gold prices surged to record highs as the Feds commitment to rate cuts fueled demand for the safe-haven asset, despite the risks of inflation from rising trade tariffs. Recession fears have further driven investors toward gold. Meanwhile, Russia-Ukraine hostilities persist, with talks of a 30-day ceasefire on energy infrastructure attacks yielding no progress. In the Middle East, tensions escalated as Israeli airstrikes killed 400 people on Tuesday, intensifying geopolitical risks and adding further support for gold prices.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 73, suggesting the commodity might enter overbought territory.

Resistance level: 3050.00, 3095.00

Support level: 3005.00, 2950.00

GBP/USD，H4

The British pound capitalized on a weaker U.S. dollar in the last session, propelling GBP/USD above its immediate resistance at the 1.3000 mark—a bullish signal for the pair. The greenback remained under pressure following the Federal Reserve‘s dovish tone, as policymakers acknowledged signs of a slowing U.S. economy and an easing labour market. Attention now turns to the Bank of England’s interest rate decision, with markets widely expecting the central bank to hold rates steady. While such a move is already priced in, any hawkish signals from BoE policymakers could further support the pound, allowing the pair to extend its gains.

The pair has been trading in a higher-low price pattern and has broken above its psychological resistance level at the 1.3000 mark, suggesting a bullish signal for the pair. The RSI remains hovering above the 50 level, while the MACD shows signs of rebounding from above the zero line, suggesting that the pair remains trading with bullish momentum.

Resistance level: 1.3100, 1.3178

Support level: 1.2880, 1.2788