Dollar Extend Gain ahead if PCE

• The U.S. dollar extended its gain after the Atlanta Fed president suggested only one rate cut is needed this year for a potential inflation rebound.

• Wall Street continues to rally on the back of Trumps tariff policy, which will take effect next week.

• The yen continued to slide as the BoJ meeting minutes showed a dovish stance.

Market Summary

The U.S. PMI data came in stronger than expected in the last session, reinforcing the resilience of the U.S. economy. Notably, Atlanta Fed President Raphael Bostic signaled a more cautious stance on rate cuts, stating that he now foresees only one rate cut this year, citing the need to account for potential inflationary pressures from Trumps tariff hikes.

Following these developments, the dollar index surged to a two-week high after breaking out of its consolidation range, signaling a potential bullish trend reversal for the greenback. Meanwhile, Wall Street showed signs of stabilizing, with all three major indices closing higher, suggesting that the recent selloff may be losing steam.

In the commodities market, oil prices continued their uppward momentum, with WTI approaching the $70 mark. Market sentiment was further fueled by reports that President Trump plans to impose tariffs on countries purchasing oil from Venezuela, raising concerns over tighter global supply. Conversely, gold prices have remained under pressure as the stronger dollar weighed on the precious metal. If gold fails to hold above the $3,005 support level, further downside could be expected.

Additionally, the Bank of Japan's (BoJ) meeting minutes were released earlier, revealing that board members suggested keeping real interest rates in negative territory. This dovish stance weighed on the Japanese yen, causing it to extend its decline against its peers. The yen's weakness further reinforced the bullish momentum in USD/JPY, which is now maintained at above the key 150.00 level. A breakout above this resistance could signal further upside for the pair.

Current rate hike bets on 7th May Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (86.4%) VS -25 bps (13.6%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index rebounded slightly after US President Donald Trump hinted at a softer stance on tariffs, easing investor concerns. He also suggested possible exemptions for certain countries, which could help reduce global trade tensions and support the US economic outlook. Meanwhile, the US continued to release strong economic data. The US S&P Global Services PMI increased from 51.0 to 54.3, surpassing market expectations of 51.2. However, the dollars gains were limited by weaker-than-expected manufacturing PMI data, which came in at 49.8, falling short of the expected 51.9.

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 53, suggesting the index might experience technical correction since the RSI retraced from overbought territory.

Resistance level: 104.40, 104.85

Support level: 103.85, 103.30

XAU/USD, H4

Gold prices retreated as risk-on sentiment gained traction, reducing demand for safe-haven assets. Additionally, ongoing Russia-Ukraine ceasefire discussions further dampened golds appeal. However, uncertainty remains as the US tariff strategy continues to shift, contributing to market volatility. Investors will closely watch trade developments and ceasefire negotiations to gauge potential market movements.

Gold prices are trading flat while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 50, suggesting the commodity might extend its gains after breakout since the RSI rebounded sharply from oversold territory.

Resistance level: 3025.00, 3070.00

Support level: 3015.00, 3005.00

NASDAQ, H4:

Nasdaq surged 2.3%, reversing losses as Trump signaled tariff exemptions, easing pressure on semiconductors and autos. Tesla jumped 12% on delayed auto tariff hopes, while Ant Groups AI chip cuts pressured Nvidia but lifted tech. Still, policy risks loom. Tariff uncertainty and AI-driven earnings revisions could stall gains, with PCE inflation data on March 29 set to shape Fed expectations. Nasdaq eyes 18,000, but 16,800 remains key support amid trade risks.

NASDAQ is now testing resistance at 20,745; a breakout above this level could signal further bullish momentum toward 21,890. Both the RSI and MACD have been trending upward, indicating strengthening bullish momentum, which aligns with the current uptrend. However, with RSI approaching overbought territory, a potential pullback or consolidation should not be ruled out.

Resistance level: 20308.00, 20704.00

Support level: 19935.00, 19395.00