Wall Street Cheers Trade Progress, Eyes Fed Signals

*Wall Street rallied as trade deal hopes with Japan, China, and Iran lifted sentiment.

*Fed policy doubts boosted inflation expectations, keeping the dollar supported.

*Gold and yen stayed firm amid persistent geopolitical risks.

Market Summary

U.S. equities extended their rally overnight, with the Dow Jones reclaiming the 40,000 mark and the Nasdaq outperforming, supported by renewed optimism around global trade developments. President Trumps comments that the U.S. is “very close” to a deal with Japan, alongside ongoing negotiations with China and potential interim agreements with Iran, lifted sentiment, particularly in the tech and industrial sectors. The advance helped erase prior session losses and reinforced positive market momentum.

Adding to the bullish tone, former Federal Reserve Governor Kevin Warsh‘s criticism of the Fed’s transparency sparked speculation of a potential shift toward a more cautious policy approach. Inflation expectations edged higher, with traders increasingly betting that the Fed will delay rate cuts until clearer signs of disinflation emerge. Upcoming PCE and jobs data are expected to be critical for shaping policy expectations.

In currency markets, the U.S. dollar remained flat as investors awaited key catalysts later this week, including the PCE report and jobs data. Safe-haven demand persisted despite the risk rally, with gold prices holding near elevated levels on ongoing political and policy risks.

Moving forward, geopolitical tensions remained in focus, with President Trumps efforts to negotiate a Ukraine-Russia peace deal keeping markets cautious, alongside continued concerns over global trade headwinds and warnings from the IMF about tariff-driven growth risks.

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

0 bps (95.2%) VS -25 bps (4.8%)

Source: CME Fedwatch Tool

Market Movements

DOLLAR_INDX, H4

The Dollar Index, which tracks the greenback against a basket of six major currencies, remained flat as investors awaited key catalysts later this week. On the trade war front, President Trump mentioned that tariff negotiations with China were underway, though Beijing denied active talks were taking place. Despite the mixed signals, both sides have expressed willingness to engage, which investors are closely monitoring for future dollar direction. Attention is also turning to the upcoming U.S. Nonfarm Payrolls and Unemployment Rate report on Friday, expected to be another critical driver for the dollar.

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 31, suggesting the index might enter oversold territory.

Resistance level: 105.80, 110.00

Support level: 99.40, 96.15

XAU/USD, H4

Gold prices remained within a tight range, struggling for a clear direction amid conflicting developments. Uncertainty over US-China trade talks kept some safe-haven demand intact, while progress in ceasefire negotiations between Israel and Hamas slightly eased geopolitical tensions. UAE Foreign Minister Sheikh Mohammed noted some progress but highlighted that major disagreements remain. With mixed sentiment from both fronts, gold traders are advised to monitor upcoming headlines closely for trading signals.

Gold prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 46, suggesting the commodity might extend its gains since the RSI rebounded from oversold territory.

Resistance level: 3375.00, 3495.00

Support level: 3275.00, 3200.00

XRP

XRP has climbed to its highest level in April, buoyed by the improved risk sentiment that has supported the broader crypto market over the past week. Traders are increasingly focused on the potential launch of an XRP-ETF, which could be listed later this month. The growing optimism surrounding the ETF launch, combined with the Crypto Fear and Greed Index rising above the 50 mark, signals an improving risk appetite that could propel XRP prices to new highs in April.

XRP has been trading in a higher low price pattern, suggesting a bullish bias; however, both the RSI and MACD are flowing in a lower-high pattern, suggesting an easing in bullish momentum that could result in a bearish trend reversal for XRP.

Resistance level: 2.3370, 2.5115

Support level: 2.2025, 2.0440