Dollar Plummet on Trump’s Treasury Secretary Speculation

• The U.S. dollar plunged on speculation on the U.S. treasury secretary selection.

• All eyes are on tomorrows RBNZ interest rate decision that could hammer the Kiwi lower.

• BTC shy away from breaking the $100k mark.

Market Summary

The U.S. Dollar faced a sell-off during the Asian session as market sentiment shifted with speculation around Donald Trump‘s potential Cabinet appointments. Reports suggest Scott Bessent may be considered for Treasury Secretary, a move viewed as bond-market friendly, leading to lower Treasury yields and pressuring the dollar. Despite this, the dollar's fundamental strength remains intact, with Wednesday’s PCE reading expected to significantly influence its direction.

Elsewhere, the RBNZs interest rate decision tomorrow is in focus, with a 50 bps rate cut anticipated, potentially weighing on the New Zealand dollar.

In commodities, gold continues to trade near recent highs, supported by geopolitical tensions and a weakening dollar. Should the greenback extend its technical correction, golds rally may persist. Oil prices also remain elevated amid intensifying conflicts in Eastern Europe and the Middle East.

Meanwhile, Bitcoin (BTC) is nearing the critical $100,000 milestone, briefly retracing to $99,800 under selling pressure. A renewed risk-on sentiment could propel BTC beyond this psychological barrier.

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 Dollar Index climbed, supported by better-than-expected U.S. PMI data. The Markit Manufacturing PMI rose to 48.8 (previous: 48.5), aligning with expectations, while the S&P Global Services PMI jumped to 57.0 (previous: 55.0), beating the forecast of 55.2. However, the greenback retreated from its highs on technical corrections as traders await key data, including the PCE Price Index—the Federal Reserve's preferred inflation gauge—expected to show a 2.3% annual rise in October.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated diminishing bullish momentum, while RSI is at 53, suggesting the index might extend its losses since the RSI retreated sharply from overbought territory.

Resistance level: 107.80, 108.60

Support level: 106.95, 106.00

XAU/USD, H4

Gold (XAU/USD) extended its rally to a fresh two-week high, trading above $2,700. The metal's safe-haven appeal has been bolstered by geopolitical uncertainties, especially the escalating Russia-Ukraine conflict. Additionally, concerns over U.S. budget deficits tied to President-elect Donald Trump's proposed expansionary policies fueled risk aversion. Traders are closely watching developments in the U.S. and global geopolitical tensions for further cues.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 68, suggesting the commodity might enter overbought territory.

Resistance level: 2710.00, 2746.40

Support level: 2660.00, 2607.15

USD/JPY, H4

USD/JPY is testing a critical support level near 153.50, with a break below signalling potential bearish momentum. The pair is trading in a lower-high pattern and has edged lower recently due to a softer U.S. dollar. Traders should monitor tomorrow's Japanese CPI release, which could influence the yen's strength.

The pair is currency trading in a lower-high price pattern and is poised at its critical support level. The RSI is hovering at below the 50 level while the MACD is breaking below the zero line, suggesting the pair's bearish momentum is forming.

Resistance level: 157.30, 160.00

Support level: 151.20, 148.70