All Eyes on Jerome Powell Speech Today

The eagerly anticipated U.S. Consumer Price Index (CPI) reading was unveiled last night, aligning with market expectations and indicating signs of moderation in the country's inflation rate. In contrast to the robust U.S. job data released last Friday, which suggested strength in the job market, traders are on edge, awaiting Federal Reserve Chair Jerome Powell's speech later today for insights into the Fed's upcoming monetary policy. The U.S. equity markets continue to exhibit bullish momentum, buoyed by the softer-than-expected inflation data, as market speculation leans toward a potentially more dovish policy stance from the Fed. Conversely, oil prices experienced a nearly 4% decline last night following the release of the Energy Information Administration (EIA) report forecasting a record-high U.S. oil output for the year. Coupled with increasing oil flows from Russia, this projection is anticipated to further dampen oil prices.

Current rate hike bets on 13rd December Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (98.0%) VS 25 bps (2%)   

Market Movements 

DOLLAR_INDX, H4

The Dollar Index maintains its holding pattern within a range as investors eagerly anticipate the Federal Reserve's forthcoming monetary policy decisions. The recently released Consumer Price Index (CPI) data, showing a slight increase in November, hasn't shifted the overall trend for the dollar. Eyes remain fixed on the Fed's statement, with expectations leaning towards a dovish stance, potentially influencing rate cut expectations and impacting the dollar's appeal in the market.

The Dollar Index is trading higher while currently near the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 58, suggesting the index might experience technical correction since the RSI retreated sharply from overbought territory. 

Resistance level: 104.45, 105.60

Support level: 103.55, 102.65

XAU/USD, H4

Despite a better-than-expected inflation report, the overall trend for the gold market remains subdued. Investors are on edge, awaiting the Federal Reserve's monetary policy decisions for potential trading signals. A dovish tilt in the Fed's statement might trigger rate cut expectations, potentially diminishing the appeal of the US Dollar and providing a boost to gold prices.

Gold prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 33, suggesting the commodity might enter oversold territory. 

Resistance level: 2010.00, 2030.00

Support level: 1980.00, 1955.00

GBP/USD，H4

The GBP/USD pair engaged in a sideways pattern as a confluence of mixed macroeconomic factors influenced the back-and-forth movement of prices. On one side, the U.S. Consumer Price Index (CPI) reading aligned with market expectations, indicating signs of easing inflation. However, the UK job market presented a contrasting picture, suggesting a further softening in the labour force, which mitigated the strength of the Sterling but counterbalanced the weakening dollar. 

GBP/USD has eased from its downtrend pattern and is currently traded sideways awaiting for the catalyst to pick a direction. The RSI is gradually moving upward while the MACD has crossed and is approaching the zero line from below suggesting a potential trend reversal for the Cable. 

Resistance level: 1.2630, 1.2730

Support level: 1.2530, 1.2435

EUR/USD，H4

The EUR/USD pair recorded a marginal uptick in the last session as the dollar's strength showed signs of easing. The U.S. Consumer Price Index (CPI) data released yesterday indicated a moderation in inflation in the U.S., providing room for the pair to inch slightly higher. Attention is now squarely on the Federal Reserve's interest rate decision later today, as well as the accompanying speech from the Fed's chair. These key events are anticipated to play a crucial role in determining the pair's trajectory.

EUR/USD is now trading above its previous resistance level at 1.0776, suggesting an ease in bearish momentum. While the MCAD is on the brink of breaking above the zero line, the RSI has been gaining, suggesting that the bullish momentum is building up. 

Resistance level: 1.0866, 1.0955

Support level: 1.0700, 1.0630

USD/JPY，H4

The USD/JPY pair has exhibited a muted performance recently, even as the dollar experienced a slight easing in strength during the last session. The softening of the U.S. inflation was evident in the latest Consumer Price Index (CPI) reading, which came in lower than its previous figure. Market attention is now focused on Jerome Powell's speech later today, eagerly awaiting insights into the Federal Reserve's upcoming monetary policy moves. Additionally, there is anticipation for the Bank of Japan's interest rate decision next week, further contributing to the cautious sentiment and monitoring of central bank developments in the currency markets.

The USD/JPY experienced a jump on Monday but still kept below its crucial pivotal level, suggesting the pair is still trading in a long-term downtrend pattern. The RSI is flowing flat near the 50-level while the MACD is on the brink of breaking above the zero line, suggesting an ease in bearish momentum. 

Resistance level: 146.75, 148.65

Support level: 143.80, 141.65

Dow Jones, H4

The US equity market extends gains, albeit at a measured pace, influenced by higher-than-expected inflation readings and the possibility of dovish expectations from the Federal Reserve. As expectations of a more lenient monetary policy persist, US Treasury yields dip, providing support to the equity market.

The Dow is trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum. However, RSI is at 80, suggesting the index might enter overbought territory. 

Resistance level: 36575.00, 36955.00

Support level: 35930.00, 35435.00

CL OIL, H4

Crude oil prices extend their decline, reaching a six-month low, amidst concerns about a pessimistic economic outlook impacting demand. Despite voluntary supply curbs by OPEC+, forecasts from both OPEC and the IEA indicating a slowdown in global oil demand growth for 2024 weigh on market sentiment. Investors are closely watching the upcoming Fed meeting and crude oil inventories data for further signals.

Oil prices are trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum. However, RSI is at 32, suggesting the commodity might enter oversold territory. 

Resistance level: 69.25, 72.15

Support level: 66.85, 64.85