Market Analysis: Powell's Speech Weakens USD

<img src="https://fxopen.com/blog/en/content/images/2023/12/sp500-2.jpg" alt="Market Analysis: Powell's Speech Weakens USD" /><p>Yesterday, the Federal Reserve published a unanimous decision to leave the base rate unchanged for the third time in a row, which coincided with the expectations of most market participants. At the conference that followed, Powell&apos;s rhetoric was not as harsh as before. According to him:</p><p>→ economic activity is slowing, but the labor market remains strong;</p><p>→ inflation is still high, the Fed is committed to achieving the 2% target;</p><p>→ rates may rise if the US economy grows above expectations;</p><p>→ during discussions within the Fed, the topic of lowering rates becomes more relevant.</p><p>As a result, the increasingly clear prospect of rate cuts weakened the dollar greatly:</p><p>→ increased currency price relative to USD. The pound rose in price from the important support of 1.25, which we wrote about <a href="https://fxopen.com/blog/en/oa-gbp-usd-analysis-price-approaches-important-support/">yesterday</a>.</p><p>→ gold rose in price, again rising above the psychological level of $2,000 per ounce, as we expected in the analysis of <a href="https://fxopen.com/blog/en/oa-market-analysis-gold-falls-from-record-high-by-100-in-1-day/">December 5</a>;</p><p>→ US stock indices rose in price.</p><figure><img src="https://fxopen.com/blog/en/content/images/2023/12/141–2-.png" alt="Market Analysis: Powell's Speech Weakens USD" loading="lazy" width="2000" height="1099" srcset="https://fxopen.com/blog/en/content/images/size/w600/2023/12/141–2-.png 600w, https://fxopen.com/blog/en/content/images/size/w1000/2023/12/141–2-.png 1000w, https://fxopen.com/blog/en/content/images/size/w1600/2023/12/141–2-.png 1600w, https://fxopen.com/blog/en/content/images/size/w2400/2023/12/141–2-.png 2400w" sizes="(min-width: 720px) 720px" /></figure><p>In particular, the Dow Jones index set a historical maximum, and the S&amp;P 500 is close to it. The graph shows that:</p><p>→ the price of the S&amp;P 500 forms an ascending channel (shown in blue). The bearish breakout at the end of October turned out to be false;</p><p>→ after yesterday’s events, the price rose to the upper half of the channel, indicating positive sentiment in the market;</p><p>→ if the trend continues, the price may reach the upper boundary of the channel —  while setting a historical maximum;</p><p>→ the resistance at 4,600 has been confidently broken, in the future it can serve as support;</p><p>→ RSI is in the overbought zone – the highest this year on the daily time frame;</p><p>→ it is possible that after a stormy week the S&amp;P 500 will cool down – that is, consolidate, with the probability of testing the level of 4,700.</p>