Wall Street Rebounds Ahead of Christmas Holiday

* Wall Street edged higher in the last session before the market closed for the Christmas holiday. 

* The U.S. Dollar rebounded as the market perceived a more hawkish approach from the Fed in the near term. 

* The Pound Sterling was hammered by the low GDP reading coupled with the recent poor UK economic indicators. 

Market Summary

Wall Street closed higher in yesterday’s session, ahead of the Christmas holiday, with many markets expected to be closed. The “Santa Claus” rally, a phenomenon where markets often close positively in the final week of the year, is likely to have a positive impact on equity markets in the coming days.

Meanwhile, the U.S. dollar rebounded, supported by a rise in the U.S. long-term treasury yield, which reached its highest level since May. The Federal Reserve is anticipated to maintain a restrictive monetary policy into 2025, driven by a resilient U.S. economy and the potential for inflationary pressures to persist.

In contrast, the Pound Sterling came under pressure after the downbeat GDP reading released yesterday, suggesting that the Bank of England (BoE) may be inclined to implement more aggressive rate cuts in the near term. Similarly, the Japanese Yen also traded lower, as the Bank of Japan (BoJ) monetary meeting minutes revealed a more cautious approach regarding rate hikes, undermining the Yen’s strength.

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

Source: CME Fedwatch Tool

0 bps (91.4%) VS -25 bps (8.6%) 

Market Overview

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The U.S. Dollar climbed in yesterday’s session, hovering near its highest level of the week as it continued to draw support from rising U.S. Treasury yields, which have surged to their highest levels since May. However, with the Christmas holiday approaching, trading activity is likely to slow, and the dollar is expected to stay relatively calm in the near term

The dollar index rebounded from its support level at 107.60 mark but has yet to reach its previous high level, potentially forming a “head-and-shoulders” price pattern. The RSI remains close to the 50 level while the MACD continues to slide, suggesting that the bullish momentum is easing. 

Resistance level: 108.60, 109.50

Support level: 107.60, 106.75

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XAU/USD, H4

Gold slipped in yesterday’s session but found support above the $2600 mark, indicating that it may still be trading within its bullish trajectory despite recent weakness. However, the strengthening U.S. Dollar and hawkish expectations from the Federal Reserve are likely to cap further gains and hinder upward momentum for the precious metal. Additionally, signs of a slowdown in central bank demand for gold have weighed on prices, adding to the downside pressure. 

Gold is currently hovering above the $2605 mark; a break below such a level shall be a bearish signal for the gold. The RSI remains kept below the 50 level while the MACD edged higher, suggesting that the bearish momentum is easing. 

Resistance level: 2656.00, 2718.00

Support level: 2556.00, 2485.65

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GBP/USD，H4

The GBP/USD pair posted a marginal decline in the previous session, pressured by a strengthening U.S. dollar and a lackluster UK GDP report that failed to meet market expectations. Technically, the pair is consolidating within an asymmetric triangle pattern, signalling neutral momentum as traders await a breakout direction. Fundamentally, the Pound Sterling faces continued downside pressure amid soft economic data and dovish expectations from the Bank of England. Meanwhile, the U.S. dollar remains supported by rising Treasury yields and hawkish Fed sentiment, which could further weigh on the pair in the near term.

Despite the GBP/USD pair having a higher-low but a lower-high price pattern, suggesting a neutral signal for the pair. The RSI remains below the 50 levels while the MACD hovers flat below the zero line, suggesting that the pair remain trading with bearish momentum. 

Resistance level: 1.2620, 1.2700

Support level:1.2506, 1.2410

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EUR/USD，H4

The EUR/USD pair faced rejection at its resistance level of 1.0445 and posted a marginal decline in the last session. Technically, the pair needs to hold support above the 1.0400 level to sustain its bullish trajectory. A break below this support could shift the outlook to bearish in the near term. Fundamentally, the euro continues to lack key catalysts, leaving it vulnerable to downside pressure from a strengthening U.S. dollar. 

The EUR/USD is trading in a higher-high price pattern; should the pair fail to create another high, the pair might be forming a “head-and-shoulders” pattern, which is a bearish signal for the pair. The RSI remains low while the MACD edges higher, suggesting that the bearish momentum is easing.

Resistance level: 1.0445, 1.0608

Support level: 1.0324, 1.0238

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USD/JPY, H4

The USD/JPY pair rebounded from above the Fair Value Gap (FGV), signaling a bullish bias for the pair. The Japanese Yen’s strength was dampened by the latest BoJ monetary policy minutes, which revealed that most board members maintained a dovish stance regarding rate hike decisions. This shift in expectations has weakened market sentiment for an early rate hike next year, further undermining the Yen’s strength and supporting the USD/JPY pair in its bullish trajectory.

The pair has rebounded from the FVG, suggesting a bullish bias for the pair. The RSI remain elevated while the MACD slides lower, suggesting that the bullish momentum is easing slightly. 

Resistance level:160.05, 163.80

Support level:  154.00, 152.00

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AUD/USD, H4

The AUD/USD pair has been trading in a sideways range after previously following a bearish trend. A break below the current sideways range would be interpreted as a solid bearish signal for the pair. The RBA meeting minutes, released today, indicate that the Reserve Bank of Australia remains confident in taming inflation. However, the central bank also reiterated that it will maintain restrictive interest rates until the targeted inflation level is achieved, suggesting that monetary policy will stay tight for the time being.

The pair has been ranging lately, which has given a neutral signal for the pair. The RSI remains below the 50 level while the MACD is edging higher from the bottom, suggesting an easing in bearish momentum. 

Resistance level: 0.6276, 0.6345

Support level:0.6205, 0.6130

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BTC/USD, H4

Bitcoin (BTC) has traded to a new low in the recent session, signaling a bearish trend for the cryptocurrency. The Trump trade, where crypto traders were hopeful for a more crypto-friendly environment under a potential re-election of Donald Trump, has eased, leading to a selloff in the broader crypto market. Market strategists are now eyeing the $90,000 level as a critical support zone for BTC heading into the new year. A break below this level would likely be seen as a strong bearish signal, potentially driving Bitcoin lower.

BTC has dropped below the liquidity zone, which signally shows a bearish bias for BTC. The RSI remains close to the oversold zone while the MACD flowing flat at below the zero line, suggest that BTC is trading with strong bearish momentum. 

Resistance level: 94,650.00, 98,800.00

Support level: 91,430.00, 87,750.00

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CL OIL, H4

Oil prices experienced a slight rebound but failed to reclaim previous high levels, indicating that the commodity remains within its bearish trajectory. Market sentiment continues to be influenced by global supply dynamics. Reports of Bulgaria purchasing Russian oil, despite sanctions imposed by the U.S. and its allies, have eased supply pressures globally and further weighed on prices.

The oil prices remain trading in a downtrend manner despite a marginal gain witnessed in the last session. The RSI remains kept at below the 50 level while the MACD is flowing flat at below the zero line, suggesting that the oil remains trading with bearish momentum. 

Resistance level: 69.90, 72.30

Support level: 68.25, 67.00

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