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22 July 2025,05:43

Daily Market Analysis

Dollar Slips on Fed Rate Cut Bets and Political Uncertainty; Gold Hits Five-Week High

22 July 2025, 05:43

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Key Takeaways:

*U.S. Treasury yields extend declines; 10-year near weekly lows

*CME FedWatch Tool signals 59% probability of July rate cut

*Political risk builds as Trump escalates pressure on Powell

Market Summary:

The yellow metal appears to be regaining its luster as a perfect storm of political uncertainty and eWith the conclusion of Japan’s snap election, market attention shifts back to the U.S., where geopolitical and monetary policy uncertainties are weighing on sentiment. Focus now turns to high-stakes U.S. trade talks ahead of the August 1 tariff deadline, while political risks mount as President Trump continues his public criticism of Fed Chair Jerome Powell’s performance.

The 10-year U.S. Treasury yield has dropped to its lowest level in more than a week, driven by speculation that Trump’s pressure could tilt the Fed toward a more dovish stance. The CME FedWatch Tool shows a 59% chance of a rate cut, reflecting rising market conviction that further easing is imminent.

As yields fall and interest rate expectations shift, the U.S. dollar has come under renewed selling pressure. Traders are also booking profits ahead of the key trade developments. Meanwhile, gold has surged to a five-week high, supported by a softer dollar, lower bond yields, and a flight to safety as risk appetite fades amid ongoing political uncertainty and monetary speculation.

Looking ahead, all eyes remain on Jerome Powell and future Fed guidance, as markets await clarity on the central bank’s policy direction.

Technical Analysis 

A graph of stock market

AI-generated content may be incorrect.

DXY H4: 

The U.S. Dollar Index is under pressure, retreating from the 98.55 resistance zone and slipping below both the 20-period and 50-period moving averages, signaling weakening momentum. The index is currently testing key support at 97.80.

A decisive break below 97.80 could open the door toward the next support at 97.20. That said, the MACD indicates waning bearish momentum, while the RSI has rebounded from oversold territory to 40, suggesting a potential short-term correction if support holds. Should the index rebound, immediate resistance lies near the red-line MA and previous high at 98.55.

Resistance Levels: 98.55, 99.25

Support Levels: 97.80, 97.20

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