Eye on Today’s PCE

• U.S. GDP came short yesterday, failing to catalyse the dollar's strength.

• Gold surged to a record high on the back of the soft U.S. dollar.

• Eye on today's PCE reading with a chance to spur the dollar.

Market Summary

The market‘s attention was on the U.S. GDP release, as Wednesday’s FOMC decision failed to provide a clear catalyst for the dollar. However, weaker-than-expected GDP data reinforced expectations that the Federal Reserve may proceed with rate cuts in the near term, weighing on the dollar‘s strength. Despite concerns over slowing economic growth, President Trump’s tariff threats on Canada and Mexico—set to take effect on February 1—have helped buoy the greenback.

Today, traders will be closely watching the PCE inflation reading, with expectations of a higher print that could provide much-needed support for the dollar.

Meanwhile, the euro weakened in the previous session as the ECB cut interest rates by 25 bps, while disappointing eurozone GDP data added further downside pressure. In contrast, the Japanese yen strengthened after markets digested comments from the BoJ Deputy Governor, who reaffirmed the likelihood of continuous rate hikes in the near term, with economic conditions supporting the move.

In the commodity market, gold stole the spotlight, surging more than 1% in the last session. The safe-haven asset reached record highs as heightened uncertainty across global markets continued to drive demand.

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

Source: CME Fedwatch Tool

0 bps (100.0%) VS -25 bps (0%)

Market Movements

DOLLAR_INDX, H4

The U.S. dollar experienced a choppy session yesterday, influenced by conflicting market forces. Initially, the greenback came under pressure after weaker-than-expected GDP data fueled concerns over slowing economic growth, causing the dollar index to break below its recent consolidation range. However, losses were quickly reversed after President Trump reaffirmed plans to impose a 25% tariff on Canadian and Mexican imports starting February 1, which helped buoy the dollar. Looking ahead, all eyes are on todays PCE inflation reading, which could serve as a key catalyst.

The Dollar Index remains flat and is trading within its consolidation range. The RSI has found support above the 50 level, while the MACD is about to break above the zero line, suggesting bullish momentum may be forming.

Resistance level:109.80, 111.60

Support level: 106.80, 105.75

XAU/USD, H4

Gold has decisively broken above its resistance level and remains elevated near record highs, reinforcing its strong bullish momentum. The precious metal capitalized on a softer U.S. dollar following weaker-than-expected GDP data, while President Trumps recent protectionist stance, including proposed tariffs on Canada and Mexico, has fueled uncertainty in global markets. This, in turn, has intensified demand for safe-haven assets like gold.

Gold prices remain supported at above their long-term support level and have reached a record high, suggesting a strong bullish bias for gold. The RSI is about to break into the overbought zone while the MACD has rebounded and is diverging, suggesting that the bullish momentum is gaining.

Resistance level: 2830.00, 2884.50

Support level: 2754.70, 2718.10

EUR/USD，H4

The EUR/USD pair has broken below the short-term support level at the 1.0400 mark, signaling a bearish bias for the pair. The euro faced pressure from weaker-than-expected GDP data and the ECB's recent rate cut decision, which further undermined its strength. The 25 bps interest rate cut by the ECB is likely to weigh on the euro in the near term, as it signals continued dovish monetary policy, keeping the pair under downward pressure.

The EUR/USD has declined to below its short-term support level and its lowest level in two weeks, suggesting a bearish bias for the pair. The RSI is easing while the MACD is about to break below the zero line, suggesting that bearish momentum may be forming.

Resistance level: 1.0458, 1.0530

Support level: 1.0345, 1.0230