On Wednesday (November 13), the dollar index rose to 105.96, while gold prices fell to $2,598. Minneapolis Fed President Neel Kashkari, known as the 'hawk king', warned that any unexpected inflation could lead the Fed to pause rate cuts in December, resulting in a shift in dovish pricing. Billionaire Musk hinted that Congress may pass a dozen bills to curb government power overreach before Trump takes office. The 'Trump trade' is in play, with Bitcoin nearing a breakthrough of $90,000, peaking at $89,929.
Musk: U.S. Congress will pass several bills to curb government power overreach.
Kentucky Congressman Thomas Massie tweeted: 'The new Congress will start on January 3, but President Trump won’t take office until January 20. With the majority in the House and Senate, we should have at least a dozen bills aimed at curbing government power overreach on his desk waiting for his signature on day one.'
Musk subsequently reposted the message, emphasizing: 'Long live the Government Efficiency.'
Trump promised before the election that after winning, he would establish a Government Efficiency Department, led by Musk. As the department's abbreviation is DOGE, similar to the name of Dogecoin (DOGE), it has also boosted the meme coin market.
Dogecoin surged nearly 20% on the news, approaching the breakout of $0.4.
'Hawk King' Kashkari: The Fed may pause rate cuts in December.
Kashkari stated that if inflation unexpectedly rises before December, the Fed may reassess the necessity of a rate cut at the December meeting. He believes that the U.S. labor market is performing strongly, and the economy exhibits robust resilience, but the key factor remains whether inflation will affect the Fed's future policy path. His remarks highlight the Fed's close attention to inflation trends and indicate that the Fed may adjust policy based on data.
He continued to point out that while the Fed has many reasons to be confident about its long-term fight against temporary inflation, it may be too early to declare complete victory now. The key U.S. Consumer Price Index (CPI) data expected to be released mid-week is anticipated to show a slight rise in annual overall inflation figures.
He stated: 'The resilience of the U.S. economy continues to surprise me. The strong labor market and robust economy seem to be here to stay. The Fed will not model its impact until the effects of Trump's policies on the economy become clear. Tariffs are one-time price increases that do not, in themselves, cause inflation. I don’t want to declare that we have conquered inflation, but we have good reason to believe we can cope with it.'
Considering the dynamics of the housing market, it may take a year or two for inflation to drop to 2%. The strong labor market is encouraging, and the economic outlook appears robust. If inflation unexpectedly rises before December, we may pause this plan. In a higher productivity environment, the neutral interest rate is higher, meaning there is less room for the Fed to cut rates.
'Our constraints are moderate. The threshold for stopping the Fed's balance sheet reduction is quite high. The Fed has a long way to go before stopping the reduction of its balance sheet.'
Dollar index continues to rise as Fed easing expectations 'shift'.
Fed easing expectations have shifted, with market expectations for further rate cuts after December now only at 70%.
The swap market indicates a roughly 50% chance of a rate cut in December, a significant change compared to September's pricing.
The market currently expects overall easing policies to be between 75 to 100 basis points within the next 12 months.
Moreover, investors expect the terminal rate to be close to 3.5%, up from 2.5% in September, and Fed officials may reinforce a cautious tone this week.
Dollar Technical Analysis
FXStreet analyst Patricio Martín stated that the dollar index indicators are in a positive range, but the Relative Strength Index (RSI) is close to 70. This index is nearing overbought territory, indicating a possible pullback or consolidation in the short term.
Nevertheless, the overall technical outlook remains bullish, with indicators suggesting further upside potential.
If a correction occurs, the levels of 105.00-105.50 may be used as support to consolidate gains.
Gold Technical Analysis
FXEmpire analyst Bruce Powers stated that gold continued its bearish retracement trend on Tuesday, reaching a new low of $2,590, and then at least encountering short-term support. During the decline, two key price indicators were broken, namely the internal rising trend line and the previous volatility low, which is also the monthly low.
Gold's closing seems to be weak, appearing red and below the trend line. A daily close below the trend line increases the likelihood of a pullback to the previous breakout level around $2,532. Additionally, a daily close below the monthly low of $2,602 would be a bearish signal.
Two weeks ago, gold reached a new high of $2,790. It then quickly pulled back and has continued to do so since. The weekly pattern is evident. That week closed with a bearish reversal doji (not shown), triggering a bearish signal last week. This week marks the second week of decline without any signs of reversal.
Gold is experiencing a waterfall decline and will definitely test lower prices before it ends. Bearish sentiment was recently reflected in the 20-day moving average crossing below the 50-day moving average, while it has been above the 50-day moving average since July 3. Additionally, a daily close below $2,602, the monthly low, may extend the adjustment.
Monthly price patterns are significant as they affect shorter time frames. Today marks the first time in nine months that gold prices have broken below the previous month's low. Since March, gold prices have been on an upward trajectory, with monthly lows and highs continuously rising. Today, this pattern was broken, and if a break below this pattern continues to be confirmed, it could lead to deeper and longer adjustments in gold prices.
If gold prices continue to face downward pressure, they are likely to hit the price range of $2,532. There is also a mid-term price range worth monitoring, around $2,557 to $2,551, including the 20-week moving average and the 127.2% extension target of the intraday descending ABCD pattern. The 20-week moving average is a potential important support area, as it last marked support in early August. Since October 2023, gold trading prices have generally remained above this level.
Bitcoin Technical Analysis
FXEmpire analyst Ibrahim Ajibade stated that MicroStrategy purchased $2 billion worth of Bitcoin on Monday, reigniting bullish optimism and laying the groundwork for Bitcoin to potentially rise to the psychological level of $100,000.
Bitcoin has risen over 33% in the past week, breaking the $90,000 mark on November 12. Technical indicators show that Bitcoin's price still has potential for further increases.
The Bollinger Bands on the chart have widened, reflecting increased volatility, and the daily candlestick chart is above the upper Bollinger Band, indicating that the upward trend will continue.
Meanwhile, the bull-bear power indicator (13) shows a positive trend, indicating strong bullish momentum despite the double-digit gains on the weekly chart.
If this bullish momentum continues, Bitcoin may further rise to the milestone level of $100,000 in the coming days.
On the downside, immediate support is around $85,000, with additional support at $73,117 near the 20-day moving average. However, as there are no signs of weakening demand for Bitcoin, the likelihood of a pullback seems small. As long as these support levels hold, Bitcoin's path towards $100,000 remains solid and intact, attracting buyers hoping to capitalize on the next round of rebounds.
