Fed Policy Expectations Drive Dollar Weakness, Gold Holds Ground

Key Takeaways:

*Dollar under pressure – Softer U.S. macro data and falling yields have reinforced expectations of a near-term Fed rate cut, keeping the dollar on the defensive.

*Interest-rate differentials matter – Capital flows are tilting toward higher-beta currencies, limiting any short-term upside for the greenback.

*Gold supported by dollar weakness – Lower yields, Fed easing expectations, and geopolitical/fiscal uncertainty are maintaining gold’s appeal as a safe haven.

Market Summary:

The U.S. dollar remains under pressure as markets increasingly price in a near-term Federal Reserve rate cut, following a series of softer U.S. macro readings and declining Treasury yields. Cooling consumer activity, weaker business sentiment, and persistent inflation concerns have reinforced the view that the Fed’s tightening cycle has likely peaked. With December rate-cut expectations building, interest-rate differentials are tilted against the greenback, nudging capital flows toward higher-beta currencies.

Price action last week reflected these dynamics, with the dollar experiencing sharp intraday drops before partially rebounding as traders repositioned ahead of key U.S. inflation releases and Fed communications. Range-bound trading suggests market caution and indecision, while intermittent safe-haven flows from political headlines and geopolitical developments have provided temporary support without reversing the broader downward trend.

Gold has benefited from the weaker dollar, falling Treasury yields, and expectations of near-term Fed easing. Soft U.S. economic data and lingering geopolitical uncertainty have bolstered gold’s appeal as a non-yielding safe haven. Central bank purchases and structural concerns over U.S. fiscal imbalances further support the metal, even amid tactical profit-taking and short-term consolidation.

Looking ahead, both the dollar and gold remain sensitive to U.S. macro surprises, Fed messaging, and geopolitical developments. Gold could regain momentum if inflation surprises to the downside or monetary accommodation signals strengthen, while any hawkish Fed commentary or rebound in yields may limit near-term gains. Overall, the interplay of dollar weakness and persistent uncertainty underpins continued interest in gold, while the greenback’s direction hinges on policy and data cues.

Technical Analysis 

DXY, H4: 

The DXY is currently trading below the broken ascending trendline, confirming a shift from a previously strong bullish structure into a corrective or early bearish phase. After breaking beneath the trendline and failing to reclaim the 99.55 resistance, price is now hovering around the 99.00 region, where it appears to be consolidating. The market attempted a minor bounce, but the recovery lacks momentum, suggesting that sellers still maintain control unless price can decisively push back above 99.55.

From a momentum standpoint, the RSI sits around 44, which is below the midpoint (50). This indicates weak bullish conviction and aligns more with a neutral-to-bearish momentum environment. It is not in oversold territory, meaning there is still room for further downside without triggering exhaustion signals. The MACD shows the lines curling upward, hinting at early bullish momentum recovery, but the histogram remains small and mixed, showing that the move is weak and not yet a confirmed bullish reversal. The MACD is not giving a strong buy signal at this stage that more of an early attempt at stabilization.

Resistance Levels: 99.00, 99.55
Support Levels: 98.50, 98.00

GOLD, H4: 

Gold’s chart shows a market losing bullish steam after retesting the 4235 resistance level, which has repeatedly acted as a ceiling. The double-top zone remains intact, and multiple candle rejections indicate sellers defending this region aggressively. Price has now pulled back toward the rising trendline, which is an important dynamic support connected to previous higher lows. 

The RSI around the 49 level suggests a neutral but slightly weakening momentum, with no oversold conditions present. The MACD has turned bearish again showing the signal line crossed below the MACD line and the histogram has flipped red showing momentum is shifting away from the bulls. This reinforces the idea that upside movement is struggling unless gold can reclaim the 4235 level. For now, gold is at risk of losing trendline support; if the trendline holds, a rebound back toward the resistance is possible, but if it breaks, momentum may shift sharply downward.

Resistance Levels: 4235.00, 4370.00
Support Levels: 4150.00, 4040.00