Powell Hawkish Statement Bolsters Dollar’s Strength

• Fed's Hawkish stance on FOMC interest rate remark bolstered the dollar's strength.

• The Bank of Canada cut the rate by 25 bps as expected weighing on the Canadian dollar.

• Fed's hawkish stance hammered oil prices at 2 weeks low.

Market Summary

The U.S. dollar remained firm at its weekly high after the Fed‘s decision to hold interest rates unchanged, aligning with market expectations. However, Jerome Powell’s hawkish post-FOMC statement signaled that the central bank is in no rush to cut rates until inflation declines and the job market softens. This stance exerted pressure on Wall Street amid concerns over prolonged high borrowing costs. In contrast, the Bank of Canada (BoC) cut rates by 25 basis points to 3%, weighing on the Canadian dollar.

In the commodity market, gold remains volatile as the Fed‘s hawkish stance looms, while oil prices hold near recent highs. However, the long-term outlook for oil remains bearish, with Trump’s administration pushing for increased supply alongside the Feds restrictive policy. Meanwhile, Bitcoin has rebounded above $103,000 after briefly dipping below $100,000, supported by strong trading volume, suggesting a bullish short-term outlook.

Current rate hike bets on 19th March Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (77.0%) VS -25 bps (23%)

Market Movements

DOLLAR_INDX, H4

The U.S. dollar held firm after the FOMC‘s decision to keep interest rates unchanged, in line with market expectations. Additionally, Fed Chair Jerome Powell’s hawkish remarks following the announcement reinforced the dollars strength, signalling that rate cuts are unlikely until inflation shows a clear decline and the labour market softens.

The Dollar Index has returned to the critical liquidity zone at near 10.8 after dipping to its one-month low. The RSI has climbed to above the 50 level, while the MACD is poised to break above the zero line, suggesting that the bearish momentum has vanished.

Resistance level:109.80, 111.60

Support level: 106.80, 105.75

XAU/USD, H4

Gold prices have been trading sideways, pressured by the Fed‘s hawkish stance on future monetary policy, which has added volatility to the precious metal. However, gold remains firm near recent highs as market uncertainty persists, driven not only by Trump’s policy agenda but also by concerns over Chinas DeepSeek AI development, which has unsettled Wall Street and fueled demand for safe-haven assets.

Gold prices remain supported at above their long-term support level, suggesting a bullish bias for gold. The RSI remains above the 50 level, while the MACD has been sideways lately, suggesting a neutral signal for gold.

Resistance level: 2788.00, 2830.00

Support level: 2720.00, 2689.00

Nasdaq, H4:

Nasdaq has managed to recover from the sharp decline caused by the "DeepSeek threat," but the tech-heavy index continues to face headwinds. The recovery paused in the last session, with the index negatively impacted by the Fed's hawkish stance, as it remains determined to keep interest rates high to tackle inflation. Additionally, disappointing earnings from both Microsoft and Meta Platforms have further hindered the index, stopping its previous technical rebound.

Nasdaq has yet to reach its previous high after its sharp decline in the earlier session, suggesting a bearish bias for the index. The RSI remains low, while the MACD is moving toward the zero line from above, suggesting that the bullish momentum is vanishing.

Resistance level: 21810.00, 22140.00

Support level: 21200.00, 20765.00