Trump’s Tariff Policies Push Dollar Higher

• The dollar regained strength after Donald Trump said to post higher import tariffs on multiple countries.

• Gold extended losses after the dollar strengthened.

• Keep an eye on RBNZs interest rate decision, which is due tomorrow.

Market Summary

In commodities, gold extended losses, sliding 3% as the stronger dollar and reduced safe-haven demand pressured prices. Oil prices also declined amid fears that Trump's policies may weaken global crude demand.

In forex, focus shifts to Japan's inflation data today, which could strengthen the yen, and the RBNZ's interest rate decision tomorrow, with an expected 50 bps rate cut likely to weigh on the Kiwi.

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 edged lower, pressured by falling U.S. Treasury yields after Donald Trump named Wall Street veteran Scott Bessent as his Treasury Secretary pick. Market sentiment suggests Bessent may moderate aggressive trade and economic policy proposals, fueling expectations for a more dovish policy stance. Adding to this outlook, Chicago Fed President Austan Goolsbee projected further rate cuts to align with neutral economic conditions, contributing to lower yields and dampened dollar demand.

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 also experienced a sharp retreat as the improving geopolitical outlook reduced demand for safe-haven assets. The potential ceasefire between Israel and Hezbollah, coupled with Israel's anticipation of a truce decision within days, improved market risk sentiment. The decreased geopolitical uncertainty reduced golds appeal as a hedge against instability, leading to a pullback in prices. Investors are now focusing on the ongoing diplomatic developments to gauge further movements in the gold market.

Gold prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 38, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline.

Resistance level: 2660.00, 2705.00

Support level: 2605.00, 2555.00

GBP/USD，H4

The GBP/USD pair failed to breach its previous high and plunged in the last session, signaling a bearish outlook. If the pair breaks below its critical support at 1.2505, further downside may be expected. The pair's decline was primarily driven by a strengthening dollar, bolstered by President-elect Trump's proposed tariff policies targeting other countries.

The GBP/USD remains trading in an extreme bearish momentum, with the pair testing its support level at the 1.2505 mark. The RSI remains below the 50 level while the MACD is hovering below the zero level, suggesting that the pair remain trading with bearish momentum.

Resistance level: 1.2625, 1.2700

Support level: 1.2505, 1.2407

EUR/USD，H4

The EUR/USD pair hovers near recent lows but has formed a higher-low pattern, signaling easing bearish momentum. Momentum indicators suggest a potential trend reversal. Traders should closely monitor Wednesday's U.S. PCE reading, which could be a key driver for the pair's movement.

EUR/USD failed to break above from its previous high, suggesting the pair remain trading in its bearish trajectory. The RSI has rebounded while the MACD edged higher, suggesting that the bearish momentum is easing.

Resistance level: 1.0525, 1.0607

Support level: 1.0440, 1.0321

USD/JPY, H4

The USD/JPY is testing its support level at 153.65 mark and is forming a lower-high price pattern, suggesting a bearish bias for the pair; a break below from the support level shall be seen as a bearish signal for the pair. The Japanese CPI reading was released but came short which hindering the strength of the Yen. Traders are advised to monitor the PCE reading that is due tomorrow as it may have a direct impact on the pairs price movement.

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