Dollar Plummet on Trump’s Treasury Secretary Speculation

• The U.S. dollar plunged on speculation on the U.S. treasury secretary selection.
• All eyes are on tomorrow’s RBNZ interest rate decision that could hammer the Kiwi lower.
• BTC shy away from breaking the $100k mark. 

Market Summary

The U.S. Dollar faced a sell-off during the Asian session as market sentiment shifted with speculation around Donald Trump’s potential Cabinet appointments. Reports suggest Scott Bessent may be considered for Treasury Secretary, a move viewed as bond-market friendly, leading to lower Treasury yields and pressuring the dollar. Despite this, the dollar's fundamental strength remains intact, with Wednesday’s PCE reading expected to significantly influence its direction.

Elsewhere, the RBNZ’s interest rate decision tomorrow is in focus, with a 50 bps rate cut anticipated, potentially weighing on the New Zealand dollar.

In commodities, gold continues to trade near recent highs, supported by geopolitical tensions and a weakening dollar. Should the greenback extend its technical correction, gold’s rally may persist. Oil prices also remain elevated amid intensifying conflicts in Eastern Europe and the Middle East.

Meanwhile, Bitcoin (BTC) is nearing the critical $100,000 milestone, briefly retracing to $99,800 under selling pressure. A renewed risk-on sentiment could propel BTC beyond this psychological barrier.

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 climbed, supported by better-than-expected U.S. PMI data. The Markit Manufacturing PMI rose to 48.8 (previous: 48.5), aligning with expectations, while the S&P Global Services PMI jumped to 57.0 (previous: 55.0), beating the forecast of 55.2. However, the greenback retreated from its highs on technical corrections as traders await key data, including the PCE Price Index—the Federal Reserve's preferred inflation gauge—expected to show a 2.3% annual rise in October.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated diminishing bullish momentum, while RSI is at 53, suggesting the index might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 107.80, 108.60

Support level: 106.95, 106.00

XAU/USD, H4

Gold (XAU/USD) extended its rally to a fresh two-week high, trading above $2,700. The metal's safe-haven appeal has been bolstered by geopolitical uncertainties, especially the escalating Russia-Ukraine conflict. Additionally, concerns over U.S. budget deficits tied to President-elect Donald Trump's proposed expansionary policies fueled risk aversion. Traders are closely watching developments in the U.S. and global geopolitical tensions for further cues.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 68, suggesting the commodity might enter overbought territory. 

Resistance level: 2710.00, 2746.40

Support level: 2660.00, 2607.15 

GBP/USD，H4

The Pound Sterling surged over 0.5% at the week's start, primarily driven by a weakening U.S. Dollar. The greenback faced selling pressure amid speculation surrounding Donald Trump's potential Treasury Secretary pick. However, the Pound's upside was capped by disappointing UK economic data released last Friday, including weaker-than-expected Retail Sales and PMI readings, which weighed on its strength.

The GBP/USD jumped after approaching its new low last Friday. However, the pair remain capped at 1.2624 resistance level, suggesting that the pair remain trading within its bearish trajectory. The RSI rebounded while the MACD edged higher, suggesting that the bearish momentum is easing. 

Resistance level: 1.2625, 1.2700

Support level: 1.2505, 1.2407

EUR/USD，H4

EUR/USD opened the week with a gap higher as the dollar weakened sharply on speculation surrounding Trump’s cabinet picks. Supporting the euro, October’s CPI data showed signs of recovery, boosting sentiment. Traders now await November’s CPI release this Friday, which is expected to directly influence the pair’s trajectory.

EUR/USD jumped from its recent low level but is yet to break its bearish structure, suggesting a bearish bias for the pair. The RSI has rebounded while the MACD continue to edge lower, suggesting that the pair remain trading with bearish momentum. 

Resistance level: 1.0525, 1.0607

Support level: 1.0440, 1.0321 

USD/JPY, H4

USD/JPY is testing a critical support level near 153.50, with a break below signalling potential bearish momentum. The pair is trading in a lower-high pattern and has edged lower recently due to a softer U.S. dollar. Traders should monitor tomorrow's Japanese CPI release, which could influence the yen's strength.

The pair is currency trading in a lower-high price pattern and is poised at its critical support level. The RSI is hovering at below the 50 level while the MACD is breaking below the zero line, suggesting the pair's bearish momentum is forming. 

Resistance level: 157.30,  160.00

Support level:  151.20, 148.70 

Dow Jones, H4:

The U.S. equity market surged to a new all-time high, supported by strong upward momentum. U.S. long-term Treasury yields slipped amid speculation over Trump’s Cabinet appointments. If risk-on sentiment persists, the Dow Jones could extend its rally and aim for another record high.

The index has surged nearly 3% after it consolidated at its previous low level, suggesting a bullish bias for the index. The RSI is breaking into the overbought zone while the MACD is diverging after breaking above the zero line, suggesting that the bullish momentum is gaining. 

Resistance level:  45135.00, 45690.00

Support level:  44390.00, 43835.00

CL OIL, H4

Oil prices surged to a two-week high, fueled by heightened supply concerns as the Russia-Ukraine war intensifies. Russia’s use of its Oreshnik hypersonic missile in combat, along with U.S. sanctions on Gazprombank, amplified fears of disruptions. On the demand side, China's new trade measures, aimed at boosting energy imports, and increased crude imports in India further supported oil prices. Analysts anticipate stronger imports from China and India to sustain oil's upward momentum.

Oil prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 66, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 72.60, 74.80

Support level: 69.95, 66.90