Market Trade Cautiously Amid U.S. Political Uncertainty

• Wall Street and the Dollar tumbled as President Trump pummeled the Fed chair, and market uncertainties arose.

• Gold prices continue to rise and reach fresh record highs as risk-off sentiment prevails.

• BTC saw signs of recovery in the recent session, as it reached the highest level in April.

Market Summary

Global financial markets remained on edge as political tensions in the U.S. intensified, with President Donald Trump renewing pressure on the Federal Reserve to cut interest rates. Trump‘s calls for policy easing come amid his assertion that inflation shows no signs of rebounding — a stance at odds with the Fed’s own assessment, as the central bank's preferred inflation gauge remains short of its 2% target.

The divergence between political expectations and monetary policy outlook has spooked investors, triggering a sharp sell-off on Wall Street, with major indices retreating from recent highs. Meanwhile, the U.S. dollar remained under pressure, with the Dollar Index (DXY) hovering below the 99.00 mark, reflecting fading confidence in the greenback.

In contrast, safe-haven assets continued to shine. Gold prices surged to a fresh all-time high, now edging closer to the critical $3,500 level, driven by risk aversion and declining real yields. The Japanese Yen and Swiss Franc also strengthened, underscoring investors flight to safety.

Adding to the momentum, Bitcoin (BTC) extended its rally, reaching its highest level in April. The weakening dollar, combined with the equity market rout, has redirected capital toward decentralized digital assets, with BTC increasingly viewed as an alternative hedge amid macroeconomic instability.

As markets await further clarity on Fed policy and political developments in Washington, volatility is likely to remain elevated, with safe-havens and digital assets continuing to draw inflows.

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

0 bps (90.9%) VS -25 bps (9.1%)

Source: CME Fedwatch Tool

Market Movements

DOLLAR_INDX, H4

The US Dollar Index, which measures the greenback against a basket of six major currencies, continued to decline as President Donald Trump ramped up pressure on Federal Reserve Chair Jerome Powell to cut interest rates immediately. Trump warned that the US economy could slow down unless rates are lowered soon, while Powell maintained that rate adjustments should be based on inflation and economic data. Lower interest rates typically weigh on the dollar, as they reduce the currencys yield appeal to global investors.

The Dollar Index is trading lower following the prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 27, suggesting the index might enter oversold territory.

Resistance level: 100.00, 102.65

Support level: 96.70, 92.95

XAU/USD, H4

Amid ongoing global economic uncertainty and trade war risks, gold prices surged to another record high. Fears that tariffs could lead to higher inflation have strengthened gold's appeal as a safe-haven asset. Additionally, the Feds potential shift towards expansionary monetary policy—under political pressure from Trump—has triggered aggressive dollar selloffs, further boosting gold prices. With the current macroeconomic backdrop, gold could continue its bullish momentum.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 85, suggesting the commodity might enter overbought territory.

Resistance level: 3475.00, 3525.00

Support level: 3365.00, 3280.00

USD/JPY, H4:

The USD/JPY pair extended its downward slide, hitting fresh lows and is now testing the critical psychological support at the 140.00 mark. A confirmed break below this level would likely serve as a strong bearish signal, potentially driving the pair lower in the near term. The pair‘s movement is largely driven by the prevailing risk-off sentiment across global markets, prompting investors to rotate into traditional safe-haven assets such as the Japanese Yen. Adding to the Yen’s appeal, the upcoming Japanese CPI data, scheduled for release later today, is expected to show a rise in inflation compared to the previous reading. A hot CPI print could further bolster expectations of policy normalization from the Bank of Japan, providing additional fuel for Yen's strength and reinforcing the downward bias for USD/JPY.

USD/JPY is testing its critical support level at 140.00. A break below this level could be a solid bearish signal for the pair. The RSI has broken into the oversold zone, while the MACD has been hovering below the zero line, suggesting that bearish momentum is prevailing.

Resistance level: 143.95, 147.15

Support level: 137.45, 135.00