Dollar Weakness Meets Gold Strength as Fed Cut Bets Surge

Key Takeaways:

*Dollar under pressure – Market-implied odds of a December Fed rate cut and falling Treasury yields are weighing on the U.S. Dollar Index. Softer U.S. economic data reinforces the dovish narrative.

*Fiscal concerns linger – Rising U.S. public debt and deficit sustainability questions add caution to dollar positioning, limiting safe-haven demand.

*Gold supported – Declining real yields, a softer dollar, and persistent macro uncertainty underpin bullion, despite ongoing equity risk appetite.

Market Summary:

The U.S. Dollar Index extended its decline as traders doubled down on expectations of an imminent Federal Reserve rate cut, reinforced by falling Treasury yields and increasingly dovish market pricing. With Fed officials signaling firmer progress on disinflation, markets have raised the probability of a December cut, keeping the greenback on the back foot. Softer U.S. data and fading momentum in labor and manufacturing sectors have strengthened the case for earlier easing, deepening dollar weakness.

Broader macro concerns are also shaping currency flows. Persistent doubts over the sustainability of U.S. fiscal deficits and rapidly rising public debt have unsettled sentiment, while improving global risk appetite supported by geopolitical calm and equity gains across Asia and the U.S.—has reduced safe-haven demand. Still, renewed softness in China’s latest PMI readings keeps global growth uncertainty elevated and remains a potential headwind for dollar stability.

Gold has capitalized on the same conditions pressuring the dollar. The metal extended its advance as declining yields and rising Fed-cut expectations boosted the appeal of non-yielding assets, while a weaker dollar added further support. Despite firm risk appetite, gold remains underpinned by concerns over U.S. fiscal health, political noise, and slowing global momentum, with China’s weak PMIs reinforcing safe-haven demand.

Geopolitics remain a secondary but steady driver: easing Middle East tensions have tempered risk aversion, yet investors remain cautious about renewed escalation, helping gold maintain a strong floor and limiting defensive flows into the dollar.

Looking ahead, the trajectory for both assets will hinge on upcoming inflation data, real-yield developments, and the Fed’s communication. Any hawkish surprise or stronger U.S. data could spark a rebound in the dollar and cap gold’s upside, while sustained yield compression and softer prints would keep current trends intact.

Technical Analysis 

DXY, H4: 

DXY on the chart has shifted into a softer phase after breaking below the rising trendline that previously supported the broader upswing. Price is now trading under both the broken trendline and the 100.00 psychological level, signaling a weakening bullish structure as sellers begin to gain traction. 

Momentum has cooled notably, with RSI drifting around the mid-40s, showing a loss of upward strength without entering oversold conditions. MACD remains bearish, with the MACD line sitting below the signal line and histogram bars holding in negative territory, reflecting sustained downside pressure. 

Key support now sits around 99.00–99.45, and a decisive break beneath this zone would open the door toward deeper levels around 98.50. Unless DXY can reclaim the broken trendline and recover above 100.00, the near-term outlook stays tilted toward continued corrective weakness.

Resistance Levels:100.25, 100.90
Support Levels: 99.45,99.00

GOLD, H4: 

Gold on the chart is pushing into a key resistance zone after an extended rebound, but the broader structure still shows mixed signals. Price is currently testing the upper boundary of the recent consolidation range, an area that previously triggered multiple pullbacks, making it an important region to watch for potential rejection. Despite this, the overall uptrend from the ascending trendline underneath remains intact, showing that buyers continue to defend higher lows and maintain the medium-term bullish structure.

Momentum indicators are supportive but not yet screaming strong continuation. RSI has climbed into the 60 region, reflecting improving bullish momentum, though it remains below overbought territory and slightly shy of the stronger breakout levels seen in previous rallies. This suggests that while buyers are in control, momentum is still moderate rather than aggressive. The MACD has also crossed bullishly above the signal line, indicating fresh upward momentum, and the histogram turning positive shows another early sign of trend continuation. However, the MACD lines are still near the zero axis, implying that the bullish impulse is still in its early stages and requires follow-through to confirm strength.

Resistance Levels: 4280.00, 4370.00
Support Levels: 4220.00, 4040.00