The USD extended its bullish momentum on Wednesday, climbing above the 200-day moving average (DMA) as expectations of a December Federal Reserve (Fed) rate cut sharply declined. Following the release of the October FOMC meeting minutes, market participants reduced their odds of a 25bps cut from over 40% to just 27%, signaling a clear shift in market sentiment.
This technical breakout reflects growing demand for the USD as a safe-haven currency amid mixed labor-market data and robust equity performance. Nvidia’s blockbuster Q3 revenue report has contributed to risk-on optimism while the USD remained resilient, highlighting that macroeconomic fundamentals are currently the primary driver of currency flows.
The October 28–29 FOMC meeting minutes revealed that while several participants viewed a December rate cut as potentially appropriate, a larger number of officials advocated maintaining the current policy rate through the end of the year. Officials cautioned that premature easing could entrench inflation expectations or signal a reduced commitment to the Fed’s 2% target.
The hawkish tone has strengthened the USD, providing a fundamental foundation to support its technical breakout above the 200-DMA. Investors are now positioning for a scenario where the Fed keeps rates steady, which has bolstered demand for the Dollar across global markets.
The US Bureau of Labor Statistics (BLS) confirmed that the October Nonfarm Payrolls (NFP) report has been canceled and the November print postponed to December 16, after the Fed’s December 10 policy decision. This elevates the importance of the September NFP and the October JOLTS report, which now serve as the key indicators for guiding the Fed’s upcoming decisions.
Labor-market signals are mixed. ADP private employment declined by 29k, while Revelio Labs total employment increased by 33k. A weaker-than-expected NFP print could trigger a USD pullback and weigh on short-term Treasury yields. Conversely, strong job gains would reinforce the USD’s breakout above the 200-DMA and support further bullish momentum.
The USD has outperformed most major currencies this week, reflecting both strong fundamentals and technical alignment:
The breakout above the 200-DMA now acts as a critical support level, signaling potential for further USD appreciation if upcoming economic data aligns with expectations. Traders are closely monitoring technical levels to determine whether the current trend will continue.
XAU/USD (Gold) briefly surged above $4,100 early Wednesday before reversing as the USD’s strength pressured the non-yielding metal. Gold now trades near $4,050, highlighting the inverse relationship between the Dollar and precious metals.
Equity markets have also demonstrated resilience, buoyed by Nvidia’s strong earnings. Despite the positive risk sentiment, the USD remains strong, confirming that macroeconomic fundamentals and Fed policy expectations are the main drivers of currency movements in the near term.
Traders are closely watching two major upcoming events:
A strong NFP report could reinforce the USD’s breakout above the 200-DMA, while weaker-than-expected employment data may trigger a corrective pullback. Technical support now aligns with the 200-DMA, while resistance near previous weekly highs provides a target for bullish traders.
With the combination of solid USD technicals, hawkish Fed signals, and mixed labor-market data, near-term volatility is expected to remain elevated, making the USD a key focus for forex traders and global markets alike.
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