Dow Jones Reach New High on Trump Victory

• The dollar extended its rally to its highest level in 4-months in the last session.

• Dow Jones climbed to new high at 44,484.00 mark as Wall Street rallied on Trump victory.

• Gold declined to a new low as the safe-haven asset is pressured by the strengthening dollar.

Market Summary

The U.S. dollar extended its rally, reaching a four-month high after Trump‘s presidential election victory. However, a pivotal test awaits on Wednesday with the release of U.S. CPI data, which could significantly impact the dollar’s trajectory. Wall Street remained robust, with the Dow Jones hitting an all-time high of 44,484 in yesterday‘s session. Reflecting the trend seen post-Trump’s 2016 win, when Wall Street rallied for a year, optimism in the equity markets is notably high.

The digital asset market is also riding a wave of optimism, with Bitcoin surging nearly 10% in the last session and approaching the $90,000 mark. Conversely, safe-haven gold continues to face selling pressure, approaching its October low around $2,605. 

Current rate hike bets on 18th December Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (32.2%) VS -25 bps (67.8%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index, which measures the dollar against six major currencies, is continuing its upward trajectory as market participants digest the new Trump presidency. Investors are anticipating that Trump's tariff and immigration policies, coupled with a series of stimulus plans, could heighten inflationary pressures. This, in turn, may lead the Federal Reserve to proceed with rate cuts at a slower pace. With U.S. CPI data on the horizon, investors should closely analyze inflation trends to anticipate the dollar's future movement, which could see continued strength if inflation expectations are realized.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 66, suggesting the index might extend its gains since the RSI stays above the midline.

Resistance level: 106.05, 107.15

Support level: 104.35, 103.45

XAU/USD, H4

Gold prices remain stable after a sharp drop, as rising U.S. Treasury yields prompt a sell-off in non-yielding assets like gold. Investors appear hesitant, eyeing upcoming events like the U.S. CPI report and Fed statements to gauge gold's longer-term direction. Although near-term pressures on gold are likely, Trumps tariff policies, if implemented, could renew demand for the precious metal as safe haven, especially if they lead to heightened geopolitical tensions.

Gold prices are trading flat while currently near the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 26, suggesting the commodity might enter oversold territory.

Resistance level: 2660.00, 2705.00

Support level: 2610.00, 2555.00

Dow Jones, H4

The Dow Jones surged to a new high of 44,484 in yesterday's session, signalling robust bullish momentum in the index. The rally was fueled by a surge in optimism following Trump's re-election, as investors anticipate pro-growth policies reminiscent of his first term, which saw strong Wall Street gains. This renewed confidence has sparked a buying spree, further driving the index upward.

The Dow surged by nearly 10% in yesterday's session, suggesting the index remains bullish. The RSI has broken into the overbought zone while the MACD is diverging after it has broken above the zero line, suggesting the bullish momentum is gaining.

Resistance level: 45000.00, 47195.00

Support level: 43830.00, 42820.00