Wall Street Rally as Trump Returns

• Wall Street rallied on “Trump-trade” sentiment after Donald Trump was sworn in as the 47th President of the U.S.

• The dollar seesawed in the last session as the market perceived heightened uncertainty surrounding the Trump administration's policies.

• The crypto market saw renewed optimism as the SEC initiated a crypto-focused task force.

Market Summary

Wall Street surged after reopening from Monday's public holiday, fueled by optimism surrounding Trumps administration, which is anticipated to support equities as in his previous term. The Dow Jones led the rally, gaining over 500 points and marking a 5% recovery from its three-month lows, signaling a potential bullish trend reversal.

Meanwhile, the dollar faced significant volatility, with the dollar index fluctuating by around 100 pips as markets remained cautious over Trumps trade policies. This uncertainty increased demand for safe-haven gold, driving it to its highest level since last November.

In the forex market, the Canadian dollar strengthened briefly following a higher-than-expected CPI reading but remained under pressure, especially against the U.S. dollar, as Trump targeted Canada with potential tariffs. Similarly, the New Zealand dollar rose after upbeat CPI data

The cryptocurrency market saw renewed enthusiasm after the SECs new leadership announced plans for a crypto-focused task force aimed at refining the U.S. legal framework, which is expected to enhance the crypto trading environment.

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 U.S. dollar dipped as investors remained in a wait-and-see mode due to the absence of crucial economic data releases. Market movements were primarily driven by the digestion of Trump‘s inauguration, with uncertainties surrounding potential trade tariffs weighing on sentiment. Traders remain cautious as they assess how Trump’s future policies might impact U.S. inflation and Federal Reserve decisions. As a result, the dollar continued to consolidate within a defined range, finding support and resistance as investors await further policy clarity.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 33, suggesting the index might extend its losses after breakout since the RSI stays below the midline.

Resistance level: 109.00, 110.00

Support level: 107.95, 106.80

XAU/USD, H4

Gold prices broke out of their sideways trading range, reaching new highs in recent sessions and signaling a bullish outlook for the precious metal. The rally is driven by increased demand for gold as a safe-haven asset amid heightened uncertainty surrounding Trump‘s administration. Market sentiment remains cautious, with the dollar index's recent erratic movements reflecting uncertainty about the nature of Trump’s upcoming executive actions, further boosting gold's appeal.

Gold prices gained more than 1% in the last session and broke above their sideways range, suggesting a bullish bias for gold. The RSI has gotten into the overbought zone while the MACD continues to surge, suggesting that the gold remains trading with bullish momentum.

Resistance level: 2789.00, 2830.00

Support level: 2718.35, 2665.00

Dow Jones, H4:

The Dow Jones extended its rally after the financial market reopened following Monday's public holiday, supported by heightened risk-on sentiment fueled by Donald Trump's return to office. The president-elect's initial protectionist executive actions on trade policy have further bolstered investor confidence, creating an encouraging backdrop for the U.S. equity market to sustain its upward momentum.

Dow Jones has gained more than 5% since last week from its 3-month low, suggesting a bullish bias for the Dow. The RSI has reached the overbought zone, while the MACD has broken above the zero line, suggesting bullish momentum is forming.

Resistance level: 45380.00, 47250.00

Support level: 42950.00, 41880.00