The US dollar index fluctuates downward, and the market expects the Federal Reserve to keep interest rates unchanged

On May 7, in the early trading of Asia on Wednesday, Beijing time, the US dollar index hovered around 99.53. On Tuesday, the U.S. dollar index fluctuated downward throughout the day, eventually closing down 0.54% to 99.24 as the U.S. trade deficit widened to a record $140.5 billion in March. The benchmark 10-year U.S. Treasury yield closed at 4.3020%; the two-year U.S. Treasury yield closed at 3.7910%. As the United States may impose tariffs on imported drugs, Asian buyers returned to the gold market after the holiday. Spot gold rose by nearly $100 again on Tuesday, and finally closed up 2.85% to $3431.11/ounce; at the beginning of the Asian session on Wednesday, gold fell nearly 1% during the day, fell nearly $30 in the early trading, hitting $3400/ounce. Spot silver closed up 2.33% on Tuesday at $33.22 per ounce. International oil prices rose sharply due to increased demand in Asia and Europe, decline in U.S. production, and Israel's escalation of the situation again. WTI crude oil finally closed up 3.18% at $58.97 per barrel; Brent crude oil closed up 2.84% at $62.01 per barrel.

Analysis of major currencies

Dollar Index: As of press time, the US dollar index hovers around 99.53. Investors are awaiting details of what the Trump administration says is being negotiated with other countries, including China. Trump said Sunday that some agreements will be announced this week. In addition, the market is paying attention to the Fed's policy decision announced on Wednesday, and the Fed is expected to keep interest rates unchanged at the meeting, but this meeting may be the last meeting with such a clear result. Technically, if the U.S. dollar index closes below the 99.50 level, it will reach the nearest support level of 98.80–99.00 Move.

Euro: As of press time, the euro/dollar hovers around 1.1340. EUR/USD hovered in Tuesday's market action, marking a new short-term consolidation range close to the main threshold of 1.1300 as traders were waiting for reasons for action. The Fed's mid-week interest rate decision is a key data event this week, temporarily locking investor sentiment here. Technically, if the EUR/USD closes 1.1346 above 50MA, it will move towards resistance levels 1.1450–1.1470.

GBP: As of press time, GBP/USD is hovering around 1.3350. The pound/dollar rose on Tuesday, up four basis points in the day, testing the 1.3400 mark as news of a possible U.S.-UK trade deal will allow Britain to avoid the shock of the Trump administration's aggressive pursuit of trade tariffs. The Federal Reserve is about to hold an interest rate meeting on Wednesday, and remains a key event in the market this week. Despite the widespread expectation of the Fed to keep interest rates unchanged, investors will closely follow comments from policymakers, especially the statement from Fed Chairman Jerome Powell, to look for any signs that the Fed may enter a rate cut cycle ahead of schedule. Technically, the closest support level of GBP/USD is in the range of 1.3300–1.3320. Successful testing of this level will push GBP/USD toward the next support level 1.3200–1.3220.

Analysis of gold and crude oil market trends

1) Analysis of gold market trends

Which trading was held in Asian trading, gold trading was around 3376.75. Against the backdrop of rising global economic uncertainty, the Federal Reserve and the Bank of England are taking different policy positions to deal with challenges. The Fed is expected to keep its policy unchanged at its meeting Wednesday, with Powell resistant to pressure from the White House rate cuts, indicating that the Federal Open Market Committee (FOMC) is cautious about further lowering interest rates.

Technical: Technically, on the daily chart, we can see gold rebounding near the $3,200 level and rebounding all the way to the key volatility level of $3,370. From a risk management perspective, near the main trend line, buyers will have a better risk-reward ratio setting, while sellers will seek price downward breakouts to increase bearish bets, and the target is looking to the $2957 level. On the 4-hour chart, gold prices have recently fallen below $3258Support, but eventually rebounded above that support and continued the rally to a critical volatility point, near $3370. Sellers are expected to step in here and set risk above highs in the hope that prices will fall to the main trend line. On the other hand, buyers want to see new highs in price to increase bullish bets and hit all-time highs.

2) Analysis of crude oil market trends

On Wednesday, crude oil trading was around 59.37. International oil prices rebounded strongly by about 4%, after OPEC's decision to increase production caused prices to plummet to four-year lows. After a round of technical oversold market, the market has ushered in multiple positives from improved demand from China and Europe, rising geopolitical tensions in the Middle East and weakening of the US dollar.

Technical: Breakthrough of the $60.00 level will push WTI crude oil toward the nearest resistance level of $62.50 – $63.00.

Forex market trading reminder on May 7, 2025

①To be determined China's April foreign exchange reserves

②09:00 The State Council Information Office held a press conference

③14:45 France March trade account

④17:00 Eurozone March retail sales monthly rate

⑤22:30 EIA crude oil inventories in the week from the United States to May 2

⑥22:30 EIA Cushing crude oil inventories in the week from the United States to May 2< /p>

⑦22:30 The EIA strategic oil reserve inventory in the week from the United States to May 2

⑧The next day, the Federal Reserve FOMC announced the interest rate resolution

⑨The next day, the Federal Reserve Chairman Powell held a press conference

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