Wall Street Continue to Slides On Hawkish Fed Expectation

• Wall Street ends the last session of 2024 lower, weighing on Hawkish Fed speculation.

• The dollar regained strength in the last session.

• Oil remained on an uptrend in the last session despite the fact that it concluded the year with a drop of 3%.

Market Summary

Wall Street continued its downward trend, pressured by expectations of a more hawkish Fed policy in the near term. However, traders are anticipating a potential “Trump Trade” rally, as Donald Trumps upcoming inauguration in January may boost sentiment in the equity markets. Meanwhile, the U.S. dollar found support and rebounded in the final session of 2024, bolstered by climbing U.S. long-term Treasury yields and nearing its next resistance level. Traders are also advised to monitor the UK PMI reading for insights into the Pound Sterling, which has struggled in recent sessions. In the commodity market, both gold and oil saw slight gains, but both remain vulnerable to the strengthening dollar and a pessimistic economic outlook for 2025, suggesting potential downside pressure ahead.

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

Source: CME Fedwatch Tool

0 bps (90.4%) VS -25 bps (9.6%)

Market Movements

DOLLAR_INDX, H4

The dollar rebounded from its short-term support at 107.85, climbing 0.4% in the last session and maintaining its bullish trajectory. Gains in U.S. Treasury yields and persistent hawkish Fed expectations supported the greenback. A breakout above the next resistance at 108.60 could signal further upside momentum for the dollar.

The Dollar Index successfully found its support at the 107.85 mark and performed a technical rebound, suggesting a bullish bias for the index. The RSI has recovered from above the 50 levels, while the MACD shows signs of rebounding from above the zero line, suggesting bullish momentum is forming.

Resistance level: 108.60, 109.50

Support level: 107.60, 106.75

XAU/USD, H4

Gold prices edged higher in the last session but failed to reclaim previous highs, indicating that the metal remains within its bearish trajectory. With no clear catalyst, gold's movement continues to be dictated by dollar strength, which has recently exerted downward pressure on the precious metal.

Gold prices have been sideways in a wider range lately but are forming a bearish trend. If gold prices were kept below their previous high at $2625, it may be seen as a bearish signal for gold. The RSI has rebounded slightly while the MACD is hovering closely toward the zero line, which gives a neutral signal for gold.

Resistance level: 2635.00, 2656.00

Support level: 2612.00, 2588.00

GBP/USD，H4

The GBP/USD pair has slid and is now testing its support level at 1.2505. A break below this level would signal a bearish outlook for the pair. The Pound Sterling has been lacklustre in recent sessions, with the Pound Sterling Index (BXY) falling to its lowest level since May. Traders should keep an eye on Thursday's UK Manufacturing PMI reading, as it will provide insight into the strength of the Sterling.

The pair is traded sideways in a wide range. A break below its next support level shall be seen as a bearish signal for the pair. The RSI has been kept below the 50 level while the MACD failed to break above the zero line, suggesting that the pair remains trading with bearish momentum.

Resistance level: 1.2620, 1.2700

Support level: 1.2505, 1.2408