News & analysis
News & analysis

FX Analysis – Dollar dumps, Gold surges on Fed pivot

14 December 2023 By Lachlan Meakin

Share

Wednesdays FOMC meeting was always going to be about whether we’d see a hawkish pushback against market expectations of a dovish Fed in 2024, or a validation of those expectations, from the market reaction to the meeting, traders decided the latter is the conclusion.

Rates were kept on hold at 5.35%-5.5% as expected but the updated dot plot and the language of the accompanying statement and Powell presser confirmed what most market participants were predicting, US rates have peaked, and multiple rate cuts are coming next year.

This saw the USD dump along with yields with the US Dollar Index (DXY) blowing through its 200-day SMA (where it had been finding support) closing at session lows of 102.77. The next minor support to the downside being the November swing low of 102.46.

The Yen was a particular beneficiary of the dump in US yields which saw the rate differential between the US and JP 10 Year tighten significantly. USDJPY dropping to a 142 handle as it played catch up to the yields and now testing a key support level around its 200-day SMA and December lows.

Gold surged over 30 USD an ounce as a falling Dollar and yields emboldened the bulls. XAUUSD retaking the psychological 2000 USD an ounce level after finding strong support at the October Lows – December high 50% Fib level. A retest of the major resistance at 2070 could be on the cards, and is a key level to watch for gold traders.

Central bank action continues today with both the SNB and BoE scheduled to release their latest rate decisions.

Ready to start trading?

The information provided is of general nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information provided, you should consider whether the information is suitable for you and your personal circumstances and if necessary, seek appropriate professional advice. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Past performance is not an indication of future performance. Go Markets Pty Ltd, ABN 85 081 864 039, AFSL 254963 is a CFD issuer, and trading carries significant risks and is not suitable for everyone. You do not own or have any interest in the rights to the underlying assets. You should consider the appropriateness by reviewing our TMD, FSG, PDS and other CFD legal documents to ensure you understand the risks before you invest in CFDs. These documents are available here.

#Forex #ForexAnalysis #ForexBroker #ForexCharts #ForexMarket #ForexNews #ForexSignal #ForexTrading