Morning Note: How Trump's Policy Speculation is Shaping the Dollar, Gold, and Bitcoin Markets

Dollar Fluctuates on Trump Policy Speculation

The U.S. dollar fluctuated against the major currencies as traders prepared for a series of announcements regarding policy changes following Donald Trump's inauguration as president. The market is watching to see if he will raise tariffs, restrict immigration, cut taxes, and deregulate, all of which would be expected to have inflationary consequences. Trading volumes were expected to be limited for the rest of the session because U.S. markets were closed for the Martin Luther King Jr. holiday.

(U.S dollar Index 4H Chart, Source: Markets.com)

From a technical analysis perspective, the overall trend of the U.S. dollar remains bullish, as indicated by the higher highs and higher lows forming in the ascending channel. The price has recently retested the channel support and rebounded with minor bullish momentum. However, the price opened with a downward gap, with a high likelihood of retesting the support of ascending channel.

How Trump's Inauguration Will Impact Gold

Market participants are keenly awaiting Trump's initiation later in the day, with expectations of exorbitant trade tariff levies propelling inflation and inciting trade wars, which would, in turn, enhance the safe-haven allure of bullion. Interest in gold, traditionally viewed as an anti-inflation benchmark, may wane as interest rates are raised. Future U.S. interest-rate movements will rest increasingly on how aggressively the incoming administration pursues Trump's policy pledges. The U.S.-Federal Reserve is expected to keep rates unchanged on January 29, with clearer signals of a return to cuts perhaps in March.

(XAUUSD 4H Chart, Source: Markets.com)

From a technical analysis perspective, the overall trend of gold remains bullish, as indicated by the higher highs and higher lows forming in the ascending channel. The price has recently retested the channel support and has rebounded with minor bullish momentum. However, if the price successfully breaks through the channel downwards, it might shift to a bearish trend.

Will Bitcoin Continue the Bullish Run?

On January 19, Michael Saylor, co-founder of MicroStrategy, shared a Bitcoin chart for the 11th week in a row, with future BTC purchases anticipated. He hinted at how great the next day would be, probably referring to the inauguration of the president-elect Trump. On January 13, the firm bought 2,530 BTC worth $243 million, increasing the total BTC held to 450,000. MicroStrategy is still accumulating Bitcoin as the first one to take on the ambitious 21/21 plan- an endeavour to increase its capital stockpile to $42 billion to facilitate future acquisitions- which has now legitimised it as the biggest corporate holder of BTC.

(Bitcoin 4H Chart, Source: Markets.com)

From a technical analysis perspective, the overall trend of Bitcoin remains bullish, as indicated by the higher highs and higher lows forming in the ascending channel. It was rejected around the 106,000 level with significant bearish momentum, as indicated by a large bearish candle. However, it found support and is currently continuing its bullish movement. If it can break through the rectangular resistance zone above successfully, it is highly likely to drive the price further upwards.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.