As the Fed trial day approaches, where will the US dollar and gold run? All transactions cannot avoid this line!

On Monday (September 15), the global market showed a cautious and stable pattern on the eve of the Federal Reserve's policy meeting. The US dollar index fell slightly, while the 10-year U.S. Treasury yield fell further to 4.059%, with an intraday decline of 0.22%. Spot gold fluctuated narrowly around $3643.06/ounce, maintaining relatively stable. Just after hitting a record high of $3673.95/ounce last week, market sentiment remained inclined to risk aversion. U.S. stock futures and European stock markets rose slightly, with the MSCI global index hovering below record highs, but investors have locked in on the Fed's interest rate decision this week.

Signs of softening of the labor market strengthened the 25 basis point interest rate cut expectations, and the capital market has fully valued this extent, bringing the federal funds rate to 4.00%-4.25%. However, the guidance of the dot chart and Chairman Powell's statement will become key variables, and any signal that is biased towards the bond and foreign exchange markets may stir up the trend.

This start reflects the market's digestion of policy shifts: on the one hand, the Bank of Canada also expected a 25 basis point rate cut this week, while the Bank of Japan and the Bank of England remained unchanged; on the other hand, geopolitical factors such as the impact of Ukrainian drone attacks on Russian oil refineries are being transmitted to the www.xm-forex.commodity chain through a slight uptrend oil price (Brent crude rose to $67.143 per barrel). The euro's response to volatility in U.S. Treasury yields was flat, rising slightly to 1.1738, and the lineup of speeches from ECB officials will provide more support despite the downgrade of France's sovereignty rating. Overall, the smooth start of this week masks potential volatility, and the bond market reaction will serve as a touchstone for testing the level of dovish Fed.

BeautyShort-term game of bond yields: a tug-of-war between policy expectations and technical support

From the fundamental point of view, the trend of US bond yields is at the crossroads of the Federal Reserve's resolution. The market has fully priced a 25 basis point interest rate cut, but if the dot chart maintains the median expectation of two interest rate cuts in 2025, it will be in contrast to the loose path of 69 basis points before the end of the year. This pricing bias means that the room for dovish surprises has narrowed. If the statement only acknowledges that the labor market has softened and does not clearly point to a rate cut in October, the bond market will face upward pressure. Economists from well-known institutions pointed out that the Fed statement is expected to acknowledge employment slowdown, but policy guidance will not turn sharply, which may strengthen the resilience of yields. It is more worth noting that inflation has not yet returned to its target, and the potential risk of tariff speech may further push up price expectations, limiting the rate of return to a sustainable decline from the current level.

Looking back on history, when the Fed initiates a loose cycle, U.S. Treasury yields usually follow the downward trend - bond prices rise - excluding the unexpected rebound last year. The focus of this week is to avoid repeating the same mistakes: the capital market has been priced to a cumulative interest rate cut of 125 basis points by the end of 2026, and if the dot chart does not show a more radical path, investors' disappointment may raise the yield curve. Trump's tariff remarks continue to arouse market concerns and amplify inflation uncertainty, which hedges with weaker labor data. Many traders shared their views, believing that the bond market is testing the Fed's "die-eagle balance". A senior analyst emphasized in the post: "If the yield maintains the 4% mark, the probability of a short-term rebound is not low, but we need to be wary of the employment signals in Powell's speech." Another institutional observer added that the energy disturbances in the situation in Russia and Ukraine are indirectly supporting oil prices, but the transmission of the bond market depends more on the Fed's tone.

The technical side further confirms this tug-of-war. On the 240-minute chart, the 10-year US Treasury yield has fallen below the Bollinger Band's middle track by 4.050%, approaching the lower track by 4.001%, indicating that short-term bears dominate. The DIFF line for the MACD indicator is at -0.007 and the DEA line is -0.016, while the MACD columnar line rises slightly to 0.017, suggesting potential signs of bottom divergence, although the overall trend remains downward. The previous high of 4.183% turned into strong resistance, while the recent low of 3.988% provided key support. The focus of the day is concentrated in the support range of 3.98%-4.01%. If it stands firm effectively, it may trigger a rebound to test the resistance band of 4.05%-4.18%; otherwise, breaking through the lower track may accelerate the downward trend, amplifying the market's bet on expectations of easing. www.xm-forex.combined with the first test after last week's CPI data, the 4% level has proven its hub role, and traders need to closely track the popularity changes before and after the Fed's resolution.

The interweaving of this fundamental and technical aspect highlights the short-term uncertainty of US Treasury yields: the subtle deviation of policy signals may drive yields to fluctuate within the range of 4.00%-4.20% within 2-3 days, testing the market's digestibility.

The bond market image of the US dollar trend: yield resilience supports exchange rate stabilization

The life of the US dollarShipping is often a faithful mirror of U.S. Treasury yields, and this link will be more prominent this week. From the perspective of the bond market, the potential upward pressure on yields will become the primary support of the US dollar. If the Fed's dot chart maintains a hawkish tone, the risk of the overlay of inflation targets and tariff rhetoric will curb the downward space of the bond market, thus providing a respite for the US dollar. Currently, the US dollar index fell slightly by 0.17% during the day to 97.4339, but overall it remains stable in the recent high and low range, reflecting the market's wait-and-seeness on the signal of the Federal Reserve's "continuous interest rate cuts". David Mericle, chief economist at a well-known institution, pointed out in his analysis that the core question of this week's meeting is whether the Fed implies that this is the beginning of a series of interest rate cuts, and the statement may emphasize labor softening but not adjusting guidance, which will be transmitted from the bond market to moderate support of the dollar.

The trading www.xm-forex.community has paid a lot of attention to this transmission mechanism. A foreign exchange strategist posted: "If the U.S. Treasury yield rebounds after the resolution, the U.S. dollar index will test the 97.65 middle track to avoid a deeper pullback." Another user quoted options market data and pointed out that traders are preparing for a 1% volatility space for Wednesday's decision, which is closely related to Powell's response to pressure on the housing market. The strengthening of the yen and Norwegian krone – the dollar fell to 147.42 against the yen, with the krone hitting a 2023 high – further highlighting the relative weakness of the dollar, but this stems more from regional policy expectations than bond market dominance.

At the technical level, the US dollar index hovers over the Bollinger band lower track 97.4018 on the 240-minute chart, showing instant support. The middle rail 97.6719 turns into potential resistance, the DIFF and DEA lines of MACD are at -0.0610 and -0.0463 respectively, and the columnar line flattens, implying that the bear force dynamics are weakened. The price fluctuated between the low point of 97.1463 and the high point of 97.9375, forming a consolidation pattern. If the support range 97.15-97.40 is lost, it may trigger further downward; on the contrary, breaking through the resistance of 97.65-97.95 will confirm the reversal signal. Day traders can pay attention to signs of rebound at the 97.40 mark, especially on the eve of the Federal Reserve, where fine adjustments in bond market yields often guide the direction of the dollar first.

Overall, the resilience of bond market yields will dominate the short-term path of the US dollar: if 4% support remains stable, the US dollar index is expected to bottom out in the range of 97.40-97.95, benefiting from the buffering of policy deviations; otherwise, the strengthening of loose pricing may drag down the lower edge of the exchange rate test.

The risk-averse spillover of gold's bond market: upward action energy under the downward trend of yields

The trend of spot gold will rely heavily on the risk-averse effect transmitted by the bond market this week. As U.S. Treasury yields approach the 4% lower edge, the potential rise in bond prices often stimulates bullish allocations in gold and strengthens its attractiveness as a non-interest asset. Driven by fundamentals, after the historical high of $3,673.95 per ounce last week, gold remained stable at 3,643.06 during the day, with limited fluctuations, but geopolitical disturbances such as Ukrainian drones attacking Russian oil refineries, which are indirectly supporting safe-haven demand through oil price transmission. FedIf the resolution is biased, the downward trend in yields will amplify this effect; on the contrary, although hawkish signals suppress gold in the short term, the hidden worries of inflation and tariff rhetoric will limit the decline. A www.xm-forex.commodity trader shared: "If the bond market continues to decline, gold will take advantage of the risk aversion to retest its high point and pay attention to the Fed's statement on inflation." Institutional views also echoed, emphasizing that under the background of labor softening, the allocation value of gold is spilling out of the bond market.

The logic of this hedging transmission is clear: lower yields reduce the opportunity cost of holding gold, while market concerns about policy uncertainty, including Powell's response to the housing market, further boost demand. Although the eurozone's stable interest rate outlook supports the euro, it has limited impact on gold's global safe-haven role; on the contrary, although Asian data shows that some indicators are lower than expected, it has not weakened investors' optimism about stimulus expectations, which indirectly favors gold as a hedge tool.

The technical aspect strengthens the expectations of upward action energy. On the 240-minute chart, the gold price is close to the bottom of the middle rail of the Bollinger band 3641.54, and the upper rail 3659.82 provides an instant upper limit, and the overall trajectory is tilted upward. The MACD indicator is strongly bullish, the DIFF line is 8.71 higher than the DEA line 11.80, and the columnar line -6.17 shows a positive divergence, confirming that the bulls dominate. The previous high of 3674 is the key resistance, and the recent low of 3611 is turned into support. If the support range 3623-3641 stabilizes, it will be regarded as a buying window; if the resistance breaks through 3659-3674, an upward breakthrough will be opened. The focus of the day is at the 3641 mark. If the bond market yield continues to fall, this level is easy to defend and expand upward, and geopolitical and inflation factors will become catalysts.

The amplification of the hedging effect of the bond market makes gold more flexible in the short term: every drop in yield will strengthen the spillover profit of gold.

2-3 bond-to-return gold linkage outlook: Find an anchor in volatility

Looking forward in the next 2-3 days, US Treasury yields are expected to be held in a tug-of-war range of 4.00%-4.20% under the anchor of the Federal Reserve's resolution. If the dot chart does not exceed expectations, the downward space will be limited, and the test of 4% support will become the focus. The US dollar index will mirror this dynamic, and the stability of the lower 97.40 may push the consolidation upward, benefiting from the buffering of bond market resilience, but we need to be wary of 1% fluctuations caused by policy disappointment. Spot gold is going downward to avoid risk, continuing last week's momentum. The probability of running above the 3641 middle track is relatively high, and the potential test is 3674 high, but hawks may surprise and briefly pull back to 3623 support. Under the overall linkage, the bond market signal will www.xm-forex.come first, and the short-term path of Huijin Asset will revolve around the digestion of resolutions, and the fine adjustment of market sentiment will determine the final direction.

The above content is about "[XM Forex Platform]: The Fed Trial Day is approaching, where does the US dollar and gold go? All transactions cannot avoid this line!", which is carefully www.xm-forex.compiled and edited by the XM Forex editor. I hope it will be helpful to your transactions! Thanks for the support!

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