Dollar Strengthen on Robust Job Data

• The dollar index reached above the 107 mark after Initial Jobless Claims came better than market expectations.

• Japanese Yen bolstered by the upbeat CPI reading.

• ETH rose more than 8% in the last session.

Market Summary

The dollar regained strength after a brief technical correction, with the Dollar Index (DXY) rising above the 107 mark, bolstered by strong U.S. job data. Initial Jobless Claims came in below market expectations, signalling a resilient labour market and potentially paving the way for a more hawkish Fed stance.

The Japanese yen also strengthened following Japan‘s Core National CPI reading of 2.3%, which signals sustainable inflation and could accelerate the BoJ’s rate hike plans.

In commodities, gold remained strong as geopolitical tensions escalated. Russia's response to the recent Ukraine attack and ongoing Middle East unrest supported the precious metal's upward movement. Oil prices also ticked higher in response to these geopolitical risks.

Meanwhile, Ethereum surged by 8% in the last session, with rising open interest signalling a bullish bias. The cryptocurrency is showing signs of catching up to Bitcoin, potentially reclaiming its all-time high near $4,891.

Current rate hike bets on 18th December Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (40.4%) VS -25 bps (59.6%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index maintained its position above 106.45, signalling a continued uptrend. Strong U.S. job data, with Initial Jobless Claims coming in below expectations, fueled the dollar's strength, pushing the index to a one-year high and reinforcing its bullish momentum.

The Dollar Index is attempting to break above its next strong resistance level at 107.05; a break above such a level will be seen as a bullish signal for the index. The RSI is about to break into the overbought zone while the MACD rebounds from above the zero line, suggesting the bullish momentum is forming.

Resistance level: 107.80, 108.60

Support level: 106.15, 105.10

XAU/USD, H4

Gold prices climbed to a 2-week high, maintaining a bullish outlook despite being capped by a stronger dollar. Escalating geopolitical tensions in Europe and the Middle East are expected to support further gains in the precious metal.

Gold prices are trading at a recent high level. If the gold price can sustain above the $2641 mark, it shall be seen trading within its bullish trajectory. The RSI is breaking into the overbought zone while the MACD continues to edge higher, suggesting that the bullish momentum is gaining.

Resistance level: 2710.00, 2746.40

Support level: 2660.00, 2607.15

USD/JPY, H4

USD/JPY formed a lower-high pattern after reaching a 3-month high, signalling a potential trend reversal. The yen gained strength from an upbeat 2.3% CPI reading, easing uncertainty around BoJ policy moves and bolstering its performance against peers.

The pair is currently trading in a lower-high price pattern; a break below its 154 mark may suggest a bearish signal for the pair. The RSI is flowing below the 50 level while the MACD is about to break below the zero line, suggesting that bearish momentum is forming.

Resistance level: 157.30, 160.00

Support level: 153.45, 151.15

CL OIL, H4

Crude oil found support above its previous consolidation range, climbing to a 2-week high above $70. Escalating geopolitical tensions in Europe and the Middle East fueled the bullish momentum, with further gains likely if the situation worsens.

Oil prices have broken above their critical resistance level at the $70.0 mark, suggesting a bullish bias for the oil. The RSI continues to move higher while the MACD has broken above the zero line and is climbing, suggesting the bullish momentum is gaining.

Resistance level: 72.60, 74.80

Support level: 67.00, 65.60