Eyes on Today’s BoE Policy Decision

• In line with market expectations, the Fed’s interest rate decision cuts by 50 bps. 
• BoE’s interest rate decision is due today, with the expectation of staying unchanged. 
• The dovish moves from the Fed fuels BTC's uptrend movement. 

Market Summary

The Federal Reserve's monetary policy decision was announced yesterday, aligning with market expectations for a more aggressive rate cut. This bold move sparked significant volatility in the market, with the Dollar Index (DXY) fluctuating by over 1% during the event. However, as the rate cut had been largely priced in by the market, Wall Street reacted negatively, leading to declines across all three major indices by the end of the session.

Today's focus shifts to the Bank of England's (BoE) interest rate decision, where the expectation is for the British central bank to maintain its current rate. If this occurs, it could position the Pound Sterling as one of the stronger currencies, especially after the dovish actions from both the ECB and the Fed. Additionally, tomorrow's Japan CPI reading releasing in the Tokyo session will be key, as the market looks for a catalyst to lift the yen, which has been subdued this week.

In the commodity market, gold briefly reached a new all-time high near $2,600 before retreating as the dollar regained strength. Meanwhile, oil prices remained stable post-Fed, with the potential for gains once the market fully digests the implications of the Fed's dovish shift.

In the crypto market, BTC responded positively to the Fed’s decision, reaching its highest level in three weeks. The BTC ETFs have seen net positive inflows over multiple sessions, reflecting renewed market confidence in Bitcoin.

Current rate hike bets on 7th November Fed interest rate decision: 

Source: CME Fedwatch Tool

-50 bps (32%) VS -25 bps (68%) 

Market Movements

DOLLAR_INDX, H4

The US Dollar faced initial pressure after the Federal Reserve announced a 50 basis point rate cut, the first in four years, which was more aggressive than economists anticipated. While inflation has stabilized, the Fed's dovish stance suggests the possibility of further cuts, with investors already pricing in up to 70 basis points by year-end. Despite the dollar's initial drop, it quickly rebounded as bargain hunters stepped in at crucial support levels. Going forward, the dollar's direction will largely depend on upcoming economic data, with stronger-than-expected performance potentially limiting the chances of additional rate cuts.

The Dollar Index is trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 60, suggesting the index might extend its gains since the RSI stays above the midline. 

Resistance level: 101.80, 102.30

Support level: 100.55, 99.70

XAU/USD, H4

Gold prices surged following the Fed's aggressive rate cut as the weaker dollar made the metal more attractive. However, after hitting record highs, profit-taking led to a temporary pullback. The long-term outlook for gold remains bullish, driven by continued expectations of further rate cuts and rising market volatility as the US election approaches. Investors view gold as a safe-haven asset, especially with the Fed maintaining a dovish tone and central banks like the Bank of England (BoE) and European Central Bank (ECB) likely to follow similar monetary easing paths.

Gold prices are trading lower while currently near the support level. MACD has illustrated increasing bearish momentum, while RSI is at 41, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline. 

Resistance level: 2575.00, 2605.00

Support level: 2555.00, 2535.00

GBP/USD，H4

The Pound Sterling experienced heightened volatility in the last session following the Federal Reserve's monetary policy announcement. The GBP/USD pair surged to a recent high near 1.3300, only to sharply retrace back to its previous fair-value gap. The focus now turns to the Bank of England's (BoE) interest rate decision later today, with expectations that the central bank will maintain its current monetary policy stance. If this expectation holds, it could provide a bullish catalyst for Sterling, reinforcing its position against other major currencies that have recently seen more dovish moves. Traders will be closely monitoring the outcome for further momentum in the GBP/USD pair.

GBP/USD saw an easing in bullish strength and was rejected at 1.3300 in the last session. The pair remains trading within its bullish trajectory, and both RSI and MACD indicate that the bullish momentum with the pair remains intact. 

Resistance level:  1.3220, 1.3280

Support level:1.3135, 1.3065

EUR/USD，H4

The EUR/USD pair struggled for momentum due to a lack of catalysts and was negatively impacted by the latest Eurozone inflation data. The CPI reading came in at 2.2%, down from the previous 2.6%, which weakened the euro's strength. At the same time, the U.S. dollar received a boost from Jerome Powell's positive remarks following the Fed's monetary policy decision. Despite these pressures, the pair remains above the short-term support level at 1.1075, suggesting that the EUR/USD is still within its uptrend trajectory. Traders will likely keep an eye on further economic data and developments to determine if the pair can maintain its upward momentum.

EUR/USD seesawed by more than 100 pips as the pair reacted to yesterday's economic event. The RSI is declining, while the MACD has a deadly cross, suggesting that the bullish momentum is vanishing. 

Resistance level: 1.1170, 1.1228

Support level: 1.1105, 1.0985

S&P 500, H4

The S&P 500 snapped its seven-day winning streak in volatile trading, despite the larger-than-expected 50 basis point rate cut by the Federal Reserve. Investors opted for profit-taking, while the focus now shifts to more US economic data to assess the future direction for equities.

S&P 500 is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 58, suggesting the index might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 5650.00, 5790.00

Support level: 5505.00, 5400.00

USD/JPY, H4

The USD/JPY has been trading in an uptrend since its recent low but is currently encountering strong resistance near the 143.50 level. Despite the Fed's dovish policy stance, the pair has continued to move higher, driven by weakness in the Japanese yen, which has been weighed down by disappointing trade data. Yen traders should closely watch the Japanese CPI reading scheduled for tomorrow. Expectations of an increase in inflation could bolster the yen, potentially providing a reversal in the USD/JPY pair if the data comes in stronger than anticipated.

USD/JPY has approached its key resistance level at 143.50. A break above this level suggests a solid bullish signal for the pair. The RSI is on the brink of breaking into the overbought zone, while the MACD is set to break above the zero line, both suggesting that bullish momentum is gaining. 

Resistance level: 146.00, 149.20

Support level: 141.40, 138.90

CL OIL, H4

Crude oil prices rose following the Fed's rate cut, as easing monetary policies are likely to boost economic momentum and oil demand. Supply disruptions from Hurricane Francine and tensions in the Middle East further supported prices. However, US crude inventories unexpectedly increased by 1.96 million barrels per day, limiting gains.

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 49, suggesting the commodity might extend its gains since the RSI rebounded sharply from oversold territory. 

Resistance level: 70.50, 71.95

Support level: 68.60, 67.15