What You Need to Know

The US CPI, which has cooled to its lowest since January, triggered a rally that extended to the Asian markets. The Dow Jones was up by 3.7%, and S&P 500 was up by 5.5% last night. The better-than-expected CPI report released yesterday overshadowed concerns over the stability of the cryptocurrency market with BTC rebounding over 5%. With the single-day gains of the Dow at the most since May 2020, investors believe the Dow Jones signals the beginning of the bull-market cycle. It is also believed that the Fed will slow down its future interest rate hikes as the inflation rate was softer than expected last month.

Look Out For

Current rate hike bets on 14th December Fed interest rate decision: 

75 bps (19.4%) VS 50 bps (80.6%)

Market Movements

DXY

The Dollar Index, which measures its value against a basket of six major currencies, has faced relentless selling pressures, hammered by downbeat inflation data in October, which bolsters hopes of an early end to the current aggressive rate hikes cycles. According to the US Bureau of Labor Statistics, Consumer Price Index notched up by 7.7% from a year earlier, down from the previous reading of 8.2% in September and below the market forecast at 8.0%. The headline rate of inflation has dipped for four months from a peak of 9.1% in June. The pessimistic inflation data continue to be a headwind for the US Dollar.

The Dollar Index is trading lower while currently testing the support level at 107.75. MACD has illustrated increasing bearish momentum, while RSI is at 32, suggesting that the bears are in control as the RSI stood below the midline.

Resistance level: 111.95, 113.45

Support level: 109.65, 107.75

XAU/USD

The gold market surged into an 11-week high following yesterday’s weaker-than-expected inflation data diminished hopes of the aggressive rate hike expectations. The Federal Reserve, which executed four back-to-back rate hikes of 75 basis points from June through November, is contemplating a more modest 50-basis point increase in December.

The gold market is trading higher while currently testing the resistance level. Nevertheless, MACD has illustrated diminishing bullish momentum, while RSI is at 76, indicating the commodity was going into overbought territory.

Resistance level: 1762.45, 1801.30

Support level: 1727.20, 1681.85

EUR/USD

The euro surged significantly against the weakening dollar on Thursday after the release of US CPI data, which was lower than expected. It would slow down the pace of the Fed to interest rate hikes. New bulls pushed the pair to a two-month high, trading at 1.0180 at the time of writing.

EUR/USD is trading higher while currently testing the resistance level at 1.0200. In addition, MACD has illustrated diminishing bearish momentum, while RSI is at 65, suggesting the pair still traded in a bullish zone but almost reached its overbought zone.

Resistance level: 1.0200,1.0370

Support level: 1.0008, 0.9879

BTC/USD

Bitcoin had a technical rebound on Thursday as the market took a break from its continuous two days sell-off. The coin held above $17,000 as investors digested U.S. CPI data and FTX’s drama. U.S. CPI data showed a lower-than-expected reading, which could give investors the hope that the Fed would slow down the pace of interest rate hikes. As markets are still monitoring the situation at FTX, it is still unclear on the extent of the damage that has hit or will hit the rest of the market. Suggest that there would have a wave of redemptions, which might cause a third wave of selling pressure.

Although MACD is hovering at the bearish zone, it shows a diminishing bearish momentum ahead. RSI is hovering at 37 as of writing,  suggesting the pair is also trading in a bearish momentum.

Resistance level: 18352, 20461

Support level: 15830, 14000

DJ30

US Treasury yields tumbled across the board following the October Consumer Price Index data; key inflation measures came in weaker than market expectations, signalling that the inflation rate possibly peaked. The benchmark 10-year US Treasury yield plunged by more than 32 basis points to 3.816%, dipping below the psychological level of 4%. The US equity market reacted positively to the news. Apple Inc, Alphabet, and Microsoft Corporation were up about 7%, respectively, while Meta Platforms gained more than 10% despite the recent layoff turmoil.

Dow Jones is trading higher following the prior breakout above the previous resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 70, indicating the product is going into overbought territory.

Resistance level: 34320, 35720

Support level: 33065, 31045

GBP/USD

Cable hit its nearly 2 months high at 1.1731 before it retraced back a little last night. A softer-than-expected U.S. inflation rate has improved the investor’s risk appetite toward a more risky asset and pushed the DXY index to its 2-month low. The sterling could take advantage of a softer approach from the Fed rate hikes since the CPI report favours the market.

The pound has broken through its strong resistance line at 1.161 which suppressed the pair for 2 months. However, the momentum seems to ease after the resistance is broken and there is another psychological resistance level at 1.2000. The MACD shows a positive sign to Cable where the MACD line flows above the zero line and the gap between the signal lines widens. RSI continues to stay in the region above 50 which indicates that there is still buyer power for the Sterling.

Resistance：1.200

Support： 1.1604, 1.1128

USD/JPY

According to the pool held by the CME FedWatch tool, 80% of bettors believe the Fed will raise the rate by 50 bps instead of 75 bps, boosting the market confidence to trade on riskier assets. As a result, the DXY index has dropped to its 2-month low and indirectly strengthened the Yen.

The pair dropped to its 2-month low and is testing to break its psychological support line at 140. The MACD line is widening its gap between the signal line and the RSI has dropped to the oversold region, both signalling bearish momentum for the pair.

Resistance level: 142.996, 145.819

Support level: 140.08  138.634

CL OIL

Crude oil prices edged higher yesterday amid weaker-than-expected US inflation data offset concerns regarding the renewed Covid-19 restrictions in China. Lower inflation data has also spurred further risk appetite in the global financial market, prompting investors to shift their portfolio to other riskier assets, including oil. Meanwhile, a weakening US Dollar will also make US-denominated oil less expensive for other currency holders. However, the gains experienced by crude oil prices are still limited by the Covid-19 restrictions In China. Worries about additional mobility restrictions have continued to weigh on this black commodity’s market demand.

Crude oil prices are trading lower while testing the support level at 85.75. However, MACD has illustrated diminishing bearish momentum, while RSI is at 37, suggesting the commodity might be traded higher as the RSI rebounded sharply from the oversold territory.

Resistance level: 89.65, 92.60

Support level: 85.75, 83.05