Dollar Strengthen on Upbeat Economic Data

• The dollar strengthened on upbeat economic data and a Hawkish stance from the Fed’s Governors. 
• Australian dollar surge on high CPI reading fuels an RBA rate hike expectation. 
• BTC performed a technical rebound followed by the plummet in the earlier session. 

Market Summary

On the back of the upbeat CB Consumer Confidence reading of 100.4, several Fed governors issued hawkish comments on upcoming monetary policy, which ultimately bolstered the dollar's strength. Despite the Fed's hawkish outlook, the U.S. equity market rallied, driven by Nvidia, the AI bellwether company, which rose approximately 7%, fueling gains in the Nasdaq and S&P 500.

Meanwhile, the Australian dollar surged sharply in the Asian morning session after the country’s CPI reading exceeded market expectations, increasing the likelihood that the Reserve Bank of Australia may resume its rate hike policy.

In the commodity market, gold prices fell back to their key liquidity zone near the $2,315 level due to the strengthened dollar. On the other hand, oil prices' bullish momentum was hindered by disappointing API weekly crude data. Additionally, BTC and ETH both rebounded from their recent low levels as the selling sentiment eased.

Current rate hike bets on 31st July Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (91.7%) VS -25 bps (8.3%) 

Market Movements

DOLLAR_INDX, H4

The Dollar Index, trading against a basket of six major currencies, rebounded slightly following better-than-expected US economic data and hawkish remarks from Federal Reserve members. The Conference Board reported US Consumer Confidence at 100.4, exceeding the expected 100.0. Fed Governor Michelle Bowman advised holding the current policy rate steady for some time and reiterated her willingness to raise borrowing costs if necessary. Fed Governor Lisa Cook mentioned that while it would be appropriate to cut interest rates "at some point" due to significant progress on inflation and a gradual cooling of the labor market, the timing remains uncertain.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 53, suggesting the index might extend its gains after breakout since the RSI stays above the midline. 

Resistance level: 105.65, 106.35

Support level: 105.15, 104.45

XAU/USD, H4Gold prices retreated slightly, weighed down by hawkish statements from the Federal Reserve and better-than-expected US economic data. Despite the hawkish tone from Fed officials, market participants should continue to focus on upcoming US economic data, including GDP and the Core PCE Price Index, for further trading signals.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 41, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level: 2330.00, 2365.00

Support level: 2295.00, 2260.00

GBP/USD，H4

The Pound Sterling rebounded against the U.S. dollar from its recent low level but saw its bullish trend ease as the dollar strengthened last night. The dollar's rise was fueled by positive economic indicators and hawkish comments from Fed governors, suggesting that the monetary tightening policy will last longer to curb persistent inflation in the U.S.

GBP/USD has rebounded from its recent low level but has yet to reach its previous high level, suggesting the pair remain trading with a long-term bearish trend. The RSI hovering near the 50 level while the MACD is on the brink of breaking above the zero line suggests the bearish momentum is vanishing. 

Resistance level: 1.2760. 1.2850

Support level: 1.2660, 1.2600

EUR/USD，H4The EUR/USD pair faced rejection at its liquidity zone near the 1.0740 level and is currently trading within a wide sideways range. With a lack of catalysts for the euro, the pair is primarily influenced by dollar-related factors. The upbeat U.S. CB Consumer Confidence reading prompted hawkish comments from Fed governors, resulting in a strengthened dollar.

The EUR/USD is currently trading sideways between 1.0745 and 1.0680. The RSI is hovering near the 50 level, while the MACD is about to cross above the zero line, suggesting the bearish momentum has drastically eased. 

Resistance level: 1.0730, 1.0770

Support level: 1.0680, 1.0612

Nasdaq，H4

The Nasdaq rebounded slightly, buoyed by strength in Nvidia and other tech megacaps, while the Dow Jones slipped slightly ahead of crucial inflation data due later this week. AI chip firm Nvidia climbed 6.80%, bouncing back aggressively after a three-session selloff, and the broader chip sector continued to outperform the US equity market. Alphabet and Meta both rose more than 2%, boosting the US equity market. Despite the short-term rebound, investors should remain cautious of upcoming US economic reports, including the Core PCE Price Index and future monetary policy expectations, for further trading signals.

Nasdaq is trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 62, suggesting the index might extend its gains after breakout since the RSI stays above the midline. 

Resistance level: 19735.00, 20135.00

Support level: 19425.00, 19205.00

USD/JPY, H4

The Japanese Yen is once again approaching its critical zone at the 160 mark after a technical correction in the early session. The strengthening of the dollar, driven by positive economic indicators, continues to put pressure on the lacklustre Yen. Meanwhile, market strategists suggest that the Bank of Japan may potentially intervene on Friday when the U.S. PCE reading is due. Traders should be extra cautious with the highly anticipated PCE release on Friday.

USD/JPY is on the brink of breaking above its key psychological resistance level at the 160 mark; a break above suggests a solid bullish signal for the pair. The RSI has dropped out from the overbought zone while the MACD eases on the above, suggesting the bullish momentum is easing. 

Resistance level: 161.20, 162.00

Support level: 158.75, 157.90

CL OIL, H4

Crude oil prices retreated slightly following a bearish inventory report. According to the American Petroleum Institute (API), US crude oil inventories increased by 0.914 million barrels, significantly higher than the expected decrease of 3.000 million barrels. Gasoline inventories also rose by 3.843 million barrels. The higher-than-expected inventories report raised concerns about the potential oil demand outlook, diminishing oil prices.

Oil prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 47, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level: 82.15, 84.75

Support level: 80.05, 78.60