All Eye on U.S. CPI Today

• The U.S. dollar remains calm ahead of the U.S. CPI that is due today.

• The pound Sterling is looking for a catalyst from the UK's CPI to boost its strength.

• BTC continued to rally after it performed a strong rebound from the $90,000 mark.

Market Summary

The market remains steady as traders await the release of the highly anticipated U.S. CPI data today, a crucial gauge for inflation trends and potential monetary policy moves. Recent U.S. economic indicators suggest that the Federal Reserve may keep interest rates unchanged through the first quarter of 2025, making todays CPI reading pivotal for confirming these expectations. Simultaneously, attention is also on the UK CPI data, where a higher-than-expected reading could provide a boost to the Pound Sterling.

In the commodities market, gold has found support above the $2,670 mark following a sharp decline in previous sessions. However, progress in the ceasefire negotiations between Israel and Gaza could cap further gains, as reduced geopolitical risks often dampen demand for safe-haven assets. Meanwhile, oil prices remain in a bullish trend despite a recent technical pullback, supported by U.S. EIA forecasts of continued crude stockpile drawdowns and the impact of U.S. sanctions on Russian oil exports.

In the cryptocurrency market, sentiment is recovering, with major tokens regaining much of their recent losses. Enthusiasm is building ahead of President-elect Donald Trump‘s inauguration on January 20th, with speculations that his administration’s potential crypto-friendly policies could spark a rally in cryptocurrency prices.

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

Source: CME Fedwatch Tool

0 bps (97.9%) VS -25 bps (2.1%)

Market Movements

DOLLAR_INDX, H4

The dollar eased slightly following disappointing U.S. PPI data, which dropped from 0.40% to 0.20%, missing market expectations. The downbeat data added modest pressure on the dollar as markets now turn their focus to the U.S. CPI report due later today, which could provide clearer signals on inflation and Federal Reserve policy.

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 64, suggesting the index might experience technical correction since the RSI retreated from overbought territory.

Resistance level: 110.00, 111.75

Support level: 106.30, 103.70

XAU/USD, H4

Gold continued to gain traction, supported by its safe-haven appeal amidst rising trade tensions. Bloomberg reported that the Trump administration is considering phased tariff hikes, potentially ranging from 10% to 60% on imports. If implemented, these tariffs could escalate trade uncertainties, further underpinning gold prices as a geopolitical hedge.

Gold prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 52, suggesting the commodity might extend its gains since the RSI stays above the midline.

Resistance level: 2690.00, 2720.00

Support level: 2660.00, 2635.00

GBP/USD，H4

The GBP/USD pair gained support from a softened U.S. dollar in the recent session, as market sentiment shifted amid diminishing concerns over Trump's tariff policies. Traders are now focused on the upcoming UK CPI data, which is expected to show a higher reading compared to the previous release. If the data aligns with market expectations, it could provide a catalyst for the Pound Sterling to strengthen further, potentially driving the pair higher in the near term.

The pair has formed a higher-low price pattern after a drastic plunge previously, suggesting a potential trend reversal. The RSI has gotten out from the oversold zone, while the MACD has a golden cross at the bottom, suggesting that the bearish momentum is easing.

Resistance level: 1.2310, 1.2410

Support level: 1.2140, 1.2060