USD Weakens as Fed Credibility Questions Lift Gold

Key Takeaways:

*The Fed’s “hawkish cut” failed to convince markets; softening labor data and cooling inflation reinforce expectations of a slowing U.S. economy.

*Trump’s claims that some Fed Governors may be illegitimately appointed raise concerns about legal challenges and leadership instability.

*Gold breaks above $4,200/oz, supported by a lower-for-longer rate outlook and falling real yields.

Market Summary:

The U.S. dollar remains in a delicate balance as markets parse a mix of macroeconomic signals, political developments, and central-bank uncertainty. The recently released JOLTS Job Openings report showed 7.67 million positions in October shows a modest rise from prior months suggesting that the labour market remains relatively resilient, which tends to support dollar strength. At the same time, hiring has softened and layoffs ticked higher, raising doubts about how much underlying labour-market strength can sustain the greenback.

Against this backdrop, market pricing continues to reflect expectations of rate cuts by the Federal Reserve at its December meeting and possibly further easing next year. That dovish anticipation has weighed on the dollar, and the currency’s recent weakening has, in turn, provided some lift to risk assets and commodities, including gold. Spot gold recently rebounded above US$4,200/oz as traders positioned ahead of the Fed meeting, underscoring how sensitive bullion is to both U.S. monetary policy and dollar moves.

Beyond macroeconomic data, political and fiscal developments have added volatility. High-profile interventions such as the recent discussions between Donald Trump and Viktor Orbán on “financial cooperation,” including potential swap lines or credit facilities have drawn investor scrutiny. Such actions could influence the perceived risk of U.S. fiscal obligations and global political exposure, introducing additional uncertainty for the dollar. For gold, the same environment reinforces its role as a safe-haven hedge amid political and macroeconomic uncertainty.

Overall, the near-term trajectory of both the dollar and gold appears closely linked to the Fed. A dovish tilt or confirmation of rate cuts could further lift gold while pressuring the dollar, whereas any unexpectedly hawkish nuance or upward pressure on yields could support the greenback and trigger short-term retracement in bullion. Traders and investors are now looking intently at tomorrow’s FOMC for clarity on both policy direction and tone.

Technical Analysis 

DXY, H4: 

The DXY has extended its decline after failing to reclaim the broken ascending trendline and the key horizontal level at 99.70, reinforcing a clear shift in structure toward a bearish near-term outlook. The latest candle shows a decisive breakdown beneath 99.00, a level that had previously acted as a reaction zone throughout late November. This bearish continuation signals mounting selling pressure and opens the path toward the next support at 98.10.

Momentum indicators echo this weakening environment. The RSI has slipped to around 31, approaching oversold territory but still reflecting strong bearish momentum rather than exhaustion. A potential pause or minor corrective bounce is possible near 98.10, but there is no evidence yet of any meaningful bullish reversal. The MACD has flipped bearish again, with both signal lines crossing below the zero boundary and the histogram expanding into negative territory, signs that downside momentum is still strengthening rather than fading.

Resistance Levels: 99.00, 99.70
Support Levels: 98.70, 98.10

GOLD, H4: 

Gold has pushed higher on the chart after defending the 4,215  support cluster, reclaiming near-term bullish momentum and breaking above the short-term neckline around 4,260. This move invalidates the small head-and-shoulders pattern that had been developing over the past sessions, and instead reinforces the idea that buyers remain firmly positioned above the broader structural support zone.

Momentum indicators are aligning with the improving price action. The RSI has climbed back to roughly 59, reflecting a positive shift without entering overbought territory, which leaves room for continuation. The MACD has turned constructive as well as both lines have crossed back above the signal threshold, supported by rising histogram bars, indicating early bullish acceleration.

Resistance Levels: 4260.00, 4315.00
Support Levels: 4210.00, 4180.00