Canadian Dollar Calm After Prime Minister Step-Down

• The Canadian Prime Minister stepped down, and the Canadian dollar remained steady.
• U.S. dollar trade is lower as Donald Trump's aggressive tariff policy on imported goods is reportedly downplayed.
• BTC prices have once again notched the $100,000 mark as the risk appetite in the crypto market improved. 

Market Summary

Canadian Prime Minister Justin Trudeau announced his resignation after nine years in office, leaving the Canadian dollar relatively steady as markets look forward to new leadership. Meanwhile, the U.S. dollar faced downward pressure amid reports that President-elect Donald Trump may ease tariff policies on imported goods, reducing concerns over trade tensions. This softer dollar prompted gains in equity markets, with Nasdaq and S&P 500 closing higher.

In the commodities market, gold prices edged up, supported by a weaker dollar, but traded within a narrow range due to a lack of strong catalysts. Oil prices slipped from their two-month highs, as markets speculated that recent gains may have outpaced fundamentals. The crypto market remained upbeat, with Bitcoin crossing the $100,000 mark, reflecting sustained optimism among traders.

Current rate hike bets on 29th January Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (90.4%) VS -25 bps (9.6%) 

Market Movements

DOLLAR_INDX, H4

The Dollar Index retreated slightly but maintained its position above a two-year high, driven primarily by technical corrections and profit-taking ahead of key risk events later this week. The decline was exacerbated by weaker-than-expected S&P Global Services PMI data from the U.S. Investors remain focused on the upcoming U.S. Nonfarm Payrolls report, which is projected to show an addition of 154,000 jobs in December, while the unemployment rate is anticipated to stay at 4.2%. If confirmed, this would bring the 2024 monthly average job gain to approximately 180,000, reflecting a deceleration in hiring but consistent with labor market resilience.

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 60, suggesting the index might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 109.50, 110.60

Support level: 107.50, 105.75

XAU/USD, H4

Gold prices declined as analysts revised their forecasts for gold in 2025, citing a more cautious outlook for Federal Reserve rate cuts. Economists now expect a 75-basis-point reduction in 2025, down from the previously projected 100 basis points. This slower rate-cut trajectory diminishes the appeal of non-yielding assets like gold. However, geopolitical uncertainties and potential policy risks under President Donald Trump's administration, including the possibility of new tariffs, have limited further losses in the gold market.

Gold prices are trading flat while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 50, suggesting the gold might extend its gains after breakout since the RSI rebounded sharply from oversold territory. 

Resistance level:  2640.00, 2665.00

Support level: 2610.00, 2590.00

GBP/USD，H4

The GBP/USD pair rebounded sharply, surpassing its previous support level and signaling a potential trend reversal. Despite weaker-than-expected UK PMI readings that weighed on the Pound Sterling, the pair found support from a softer U.S. dollar. The greenback faced pressure following speculation about potential changes to Donald Trump’s trade policies, which shifted market sentiment and fueled the pair’s recovery.

The pair has rebounded by more than 1% from its recent low level and has broken above the resistance level at the 1.2505 mark, suggesting a trend reversal signal. The RSI has rose to near the overbought zone, while the MACD has a golden cross and is heading toward the zero line, suggesting that the bearish momentum is vanishing. 

Resistance level: 1.2620, 1.2700

Support level: 1.2405, 1.2310

EUR/USD，H4

The EUR/USD pair erased last week’s losses with a strong rally, gaining over 1.5% recently. The euro’s strength was driven by better-than-expected PMI readings across most eurozone countries, which boosted market sentiment. Meanwhile, the softening U.S. dollar provided additional support, allowing the euro to trade higher.

The pair has now shown a bullish signal, as it has a structural break from its previous bearish trend. The RSI has rebounded sharply from the oversold zone, while the MACD is about to cross above the zero line, suggesting that bullish momentum is forming. 

Resistance level: 1.0450, 1.0608

Support level: 1.0330, 1.0230

AUD/USD, H4:

The AUD/USD pair reversed its bearish trend, supported by bullish divergence signals from momentum indicators. The Australian dollar gained strength following China’s commitment to prioritize economic growth in 2025, which boosted sentiment for the China-proxy currency.

The AUD/USD pair has risen above its previous high level after trading in a downtrend, suggesting a bullish trend reversal. The RSI has risen above the 50 level, while the MACD has broken above the zero line, suggesting that bullish momentum is forming. 

Resistance level: 0.6275, 0.6345

Support level: 0.6205, 0.6130

USD/CAD

The USD/CAD pair has maintained a strong uptrend, rising over 7% since last September. However, it recently entered a sideways trend, signaling a potential reversal. Canadian Prime Minister Justin Trudeau's resignation after nine years in office is seen as a positive development for Canada’s struggling economy. If the pair continues to trade below the 1.435 resistance level, it could indicate a bearish reversal ahead.

The pair has broken below from its sideway trend, suggesting a bearish bias for the pair. The RSI is now hovering at below the 50 level while the MACD has dropped below from the zero line, suggesting that a bearish momentum is forming. 

Resistance level: 1.4350, 1.4440

Support level: 1.4300, 1.4240

CL OIL, H4Oil prices fluctuated on Monday, ultimately easing due to bearish economic indicators from the U.S. and Germany. In the U.S., a decline in new orders for manufactured goods, particularly in commercial aircraft, signaled a slowdown in business spending on equipment during Q4 2024. Germany's inflation data also weighed on oil prices, with higher-than-expected food costs and a slower decline in energy prices adding to bearish sentiment. These factors counterbalanced support from a weaker U.S. dollar and forecasts of increased energy demand driven by an impending winter storm

Oil prices are trading lower following the prior breakout below the previous support level. MACD has illustrated diminishing bearish momentum. However, RSI is at 44, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level: 73.55, 74.65

Support level: 72.75, 71.80