Dollar Holds Firm as Markets Await Fed Decision

Market Summary

The U.S. dollar remained firm ahead of key central bank decisions, with USD/CAD edging higher as traders anticipated a rate cut from the Bank of Canada. Meanwhile, market sentiment stayed cautious ahead of the Federal Reserve’s policy meeting, with investors closely watching for any signals on future rate changes. Gold rebounded after recent sell-offs, with its trajectory tied to the Fed’s outlook and safe-haven demand.

Oil prices remained steady in Asian trading after U.S. crude inventory data showed a smaller-than-expected build, but concerns over weak Chinese economic data and ongoing trade risks kept prices under pressure. Meanwhile, the Australian dollar extended its losses for the third consecutive day as weak inflation data reinforced expectations of a February rate cut by the RBA, adding downside risks to AUD/USD.

Bitcoin held above the $100K mark, supported by dip-buying and optimism over potential crypto-friendly regulations. In the stock market, U.S. equities rebounded, led by Nvidia’s recovery after suffering a historic selloff. Despite the rebound, volatility remains high as investors assess the impact of DeepSeek AI on tech giants and broader market conditions.

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Current rate hike bets on 29th January Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (97.3%) VS -25 bps (2.7%)

Market Overview

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

Major markets remained muted ahead of the Federal Reserve’s two-day policy meeting, set to conclude on Wednesday. While the Fed is widely expected to maintain its current stance, investors are closely monitoring its statement for insights on future policy direction. Former President Trump’s repeated calls for rate cuts have added uncertainty to the outlook, keeping traders on edge. The Dollar Index remained flat as investors adopted a wait-and-see approach.

The Dollar Index is trading flat while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 52, suggesting the index might consolidate in a zone since the RSI near the midline. 

Resistance level: 107.95, 109.00

Support level: 106.80, 105.75

XAU/USD, H4

Gold prices recovered as market sentiment stabilized, prompting investors to rebuild positions after a recent sell-off. The decline had been driven by institutional liquidations to cover margin calls following DeepSeek AI’s impact on Wall Street, which triggered a sharp Nasdaq selloff. Moving forward, gold’s trajectory remains tied to the Fed’s policy outlook, with monetary policy expectations playing a key role in shaping safe-haven demand.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 69, suggesting the commodity might enter overbought territory. 

Resistance level:  2765.00, 2785.00

Support level: 2740.00, 2720.00

USD/CAD，H4

USD/CAD，H4

USD/CAD edged higher as demand for the U.S. dollar remained firm ahead of key central bank decisions. While the Fed is expected to hold rates steady, traders are watching for any signals on future policy shifts, especially as Trump continues to push for immediate rate cuts. Meanwhile, the Bank of Canada is anticipated to cut rates by 25 basis points to 3.0%, which could weigh on the Canadian dollar.

USD/CAD is trading higher following the prior rebound from the support level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 54, suggesting the pair might consolidate since the RSI near the midline. 

Resistance level: 1.4450, 1.4525

Support level: 1.4305, 1.4190

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AUD/USD，H4

The Australian dollar extended its losing streak for the third straight day, hitting a one-week low after softer-than-expected inflation data reinforced expectations of a February rate cut by the Reserve Bank of Australia (RBA). The Consumer Price Index (CPI) rose by just 0.20%, missing the 0.30% forecast. Additionally, renewed concerns over China’s economic outlook and trade tensions with the U.S. further dampened sentiment, increasing downside risks for AUD/USD ahead of the FOMC decision.

AUD/USD is trading lower following the prior breakout below the previous support level. MACD has illustrated diminishing bullish momentum, while RSI is at 37, suggesting the pair might extend its losses since the RSI stays below the midline. 

Resistance level: 0.6525, 0.6290

Support level: 0.6200, 0.6145

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Nasdaq, H4: 

U.S. stocks closed higher on Tuesday, led by a recovery in Nvidia and other AI-linked tech shares. The Nasdaq outperformed as Nvidia rebounded after suffering a record $593 billion single-day market value loss on Monday—the largest in history. Despite the recovery, market volatility remains elevated as investors digest DeepSeek AI’s competitive threat to U.S. tech giants.

Nasdaq is trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 51, suggesting the index might extend its gains since the RSI rebounded sharply from oversold territory. 

Resistance level: 21820.00, 22140.00

Support level: 21255.00, 20765.00

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Crude Oil, H4

Oil prices stabilized in Asian trade on Wednesday after industry data showed a smaller-than-expected build in U.S. crude inventories. The American Petroleum Institute reported a 2.86-million-barrel increase last week, below market expectations of 3.7 million barrels. However, concerns over weak Chinese economic data and President Trump’s trade tariff plans continue to weigh on sentiment, keeping crude prices under pressure.

Crude oil is trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 45, suggesting the commodity might extend its gains since the RSI rebounded sharply from oversold territory. 

Resistance level: 74.65, 76.85

Support level: 72.50, 69.85

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