Market Drivers: US Session, September 20

US Dollar Strengthens Amidst Fed Rate Cut and Economic Optimism
The US Dollar gained momentum following the Federal Reserve’s interest rate cut, reflecting growing market optimism about the US economy. The New York Fed’s Nowcast model projects robust economic growth in the third and fourth quarters, suggesting a resilient outlook.

The US Dollar has strengthened on the back of positive economic indicators and the Federal Reserve’s rate cut. Bitcoin has also experienced a significant rally. However, technical indicators suggest that the US Dollar may continue its downward trend, and macroeconomic factors could impact Bitcoin’s future price movement.

Key Market Drivers:

• Fed Rate Cut: The Federal Reserve’s 50-basis-point rate cut has boosted market sentiment.
• Economic Optimism: The New York Fed’s Nowcast model forecasts strong economic growth.
• Loose Financial Conditions: The Fed’s policies are aimed at maintaining loose financial conditions, supporting economic activity.

US Dollar Technical Outlook

While the US Dollar has shown some upward movement, technical indicators remain bearish. The Relative Strength Index (RSI) is near oversold levels, and the Moving Average Convergence Divergence (MACD) indicates weak buying pressure. These factors suggest that the downward trend may continue.

Bitcoin Surges on Fed Rate Cut and ETF Inflows

Bitcoin experienced a significant rally this week, driven by the Fed’s rate cut and inflows into US spot Bitcoin ETFs. The price surge broke through key technical resistance levels, indicating a potential continuation of the upward trend.
Factors Supporting Bitcoin’s Rally:

The Federal Reserve’s rate cut has historically influenced Bitcoin’s price. During the COVID-19 crisis, low interest rates led to a significant rally in Bitcoin. Conversely, rate hikes in 2022 negatively impacted the cryptocurrency. While the current rate cut could have a positive effect on Bitcoin, it may be less pronounced compared to the 2020 rate cut. Economist Peter Schiff has cautioned against the potential negative consequences of the rate cut, including increased inflation and a deeper recession.

Key Market Developments

• EUR/USD: The Euro gained against the US Dollar, supported by bullish momentum and market risk appetite.

• Gold: Gold prices surged to new all-time highs, driven by safe-haven demand and expectations of further Fed rate cuts.

• USD/JPY: The US Dollar strengthened against the Japanese Yen, but remains below key resistance levels.

• WTI Crude Oil: Oil prices were mixed, influenced by geopolitical tensions in the Middle East and concerns about global economic growth.

Also Read:
Dow Rallies Cautiously in Celebration Following Rate Cut

Trump slams Fed’s rate cut decision

What Signal Does FedEx’s Earnings Miss Convey About US Economy?

EUR/GBP Price Analysis: Sellers Dominate as Pair Plummets

Gold Prices Soar: A Strategic Analysis

Mercedes-Benz Shares Plummet Following Profit Warning