All Eye on Today’s PCE

• Today’s PCE reading will be a pivotal factor for the dollar.
• RBNZ, as expected, cut the interest rate level by 50 bps.
• BTC faced strong selling pressure after failing to nudge above the $100k mark.  

Market Summary

Ahead of today’s U.S. PCE reading, most asset classes remained steady as markets await direction. A higher-than-expected reading could bolster the dollar, pressuring other assets. Meanwhile, Wall Street extended gains, with the Dow Jones hitting a fresh all-time high.

In forex, the New Zealand dollar unexpectedly rallied to its weekly high despite the RBNZ cutting rates by 50 bps. In commodities, gold steadied following reports of a ceasefire agreement between Israel and Hezbollah in Lebanon. Oil, however, failed to hold above the critical $68.75 support level, signaling potential bearish momentum.

In the crypto market, BTC remains under pressure after failing to breach the $100k milestone, with futures contracts indicating increased bearish bets, potentially pointing to further declines.

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 U.S. Dollar weakened following the announcement of a ceasefire agreement between Israel and Lebanon, as improving global risk sentiment reduced demand for safe-haven currencies. President Biden's confirmation of the truce and phased withdrawal of Israeli forces eased geopolitical concerns, prompting a shift toward riskier assets. However, caution lingers in the market as Donald Trump hinted at new tariffs on China, Canada, and Mexico, which could reignite trade tensions and support the dollar as a haven asset in the near term.

The Dollar Index is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 50, suggesting the index might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 106.95, 107.80

Support level: 106.05, 105.15 

XAU/USD, H4

Gold prices retreated after news of a ceasefire between Israel and Lebanon improved global risk sentiment, leading to a sell-off in safe-haven assets. The easing of geopolitical tensions reduced gold's appeal, as investors shifted focus to risk-on assets. Nevertheless, uncertainties remain as Donald Trump’s comments about potential tariffs on major economies could revive geopolitical and economic risks, providing underlying support to gold prices moving forward.

Gold prices are trading flat while currently near the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 46, suggesting the commodity might experience technical correction since RSI rebounded sharply from oversold territory. 

Resistance level: 2655.00, 2710.00

Support level: 2615.00, 2555.00

GBP/USD，H4

The GBP/USD pair remained steady in the last session as the Pound lacked clear catalysts and the dollar held firm amid "wait-and-see" sentiment ahead of the U.S. PCE reading. This Fed-preferred inflation gauge is expected to influence next month's rate decision. A higher-than-expected PCE reading could strengthen the dollar, exerting downward pressure on the pair.

The GBP/USD is currently trading in an asymmetric triangle pattern, which gives a neutral signal for the pair. The RSI is seemingly moving upward while the MACD is edging higher, suggesting that the bearish momentum is easing. 

Resistance level: 1.2625, 1.2700

Support level: 1.2505, 1.2407 

EUR/USD，H4

The EUR/USD is forming a higher-low price pattern, hinting at a potential trend reversal. The pair’s movement will likely be influenced by upcoming inflation data from both economies: the U.S. PCE reading today and the eurozone CPI on Friday.

EUR/USD is currently trading in an ascending triangle pattern and has formed a higher-low price pattern. Should the pair be able to break above its next resistance at 1.0525, it can be seen as a bullish signal for the pair. The RSI has risen to above the 50 level while the MACD is on the brink of breaking above the zero line, suggesting that the bearish momentum is vanishing. 

Resistance level: 1.0525, 1.0607

Support level: 1.0440, 1.0321

USD/JPY, H4

The USD/JPY broke below its critical support at 153.65, signaling a bearish outlook. While the dollar remained steady ahead of today’s PCE reading, the Yen strengthened on robust Japanese inflation and PMI data, raising prospects of an early BoJ rate hike. The Yen also gained appeal as a safe haven amid rising uncertainty.

The pair has broken below its critical support level and is trading at its lowest point in 2 weeks, suggesting a bearish signal for the pair. The RSI is on the brink of breaking into the oversold zone while the MACD edges lower after it breaks below the zero line, suggesting that the bearish momentum is gaining. 

Resistance level: 153.65, 157.20

Support level:  151.20, 148.70 

Dow Jones, H4:

Despite the ceasefire boosting risk sentiment, U.S. equities traded flat as investors awaited key economic data. The focus now shifts to the Core PCE Price Index for October, a crucial indicator for inflation and the Federal Reserve's policy outlook. Trump’s tariff threats added to market jitters, with concerns about potential disruptions to global trade and economic growth. This uncertainty kept equity markets in a holding pattern ahead of further developments.

The Dow is trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 74, suggesting the index might enter overbought territory.  

Resistance level:  45295.00, 47150.00

Support level:  43840.00, 42815.00

CL OIL, H4

Crude oil prices extended their losses, driven by reduced geopolitical risk after the ceasefire announcement. Israeli Prime Minister Netanyahu emphasized readiness to respond to any violations, further calming the market. Meanwhile, discussions within OPEC+ to delay a planned January output hike ahead of Sunday’s policy meeting added to oil price volatility. The producer group’s decision will be critical in shaping market expectations for early 2025.

Oil prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 40, suggesting the commodity might extend its losses since the RSI stays below the midline.

Resistance level: 69.95, 72.65

Support level: 66.90, 65.60