Markets were mostly range-bound last week, with focus on political pressure around U.S. interest rate policy. Reports that the Trump administration’s Justice Department was investigating Federal Reserve Chair Jerome Powell raised concerns about central bank independence, after Trump criticized the Fed for not cutting rates faster. Powell responded publicly, pushing back against the pressure and stating he would defend the Fed’s independence, a stance later supported by several global central bank leaders.
U.S. and Japanese equity markets moved slightly higher and briefly hit record levels, but ended the week little changed. U.S. inflation data came in below expectations, while consumer spending remained strong, with November retail sales rising 0.6%. U.K. GDP also surprised to the upside, growing 0.3%, supporting overall risk sentiment.
U.S. long-term yields rose as markets considered the possibility that the next Fed chair could be less dovish. Meanwhile, ongoing tensions in Iran and the risk of greater U.S. involvement supported safe-haven demand, keeping gold well supported, while geopolitical risks also helped underpin WTI crude oil prices.
Markets This Week
U.S. Stocks
U.S. stocks attempted to move higher last week but repeatedly met resistance near record highs, as rising long-term interest rates made buyers cautious about pushing equities further. The broader uptrend remains intact, with the 10-day moving average continuing to provide support. However, the better short-term trading opportunity may come from a pullback if the Dow breaks below the 10-day moving average in the week ahead. Resistance is seen at 49,500 and 50,000, while support is located at 49,000, 48,000, 47,500, and 47,000.
Japanese Stocks
TThe Nikkei index reached record highs early last week as a weaker yen supported equities. However, the yen later strengthened on rising speculation about possible intervention, leading to some profit-taking and a modest weekly gain for the index. While the broader uptrend remains strong, waiting for pullbacks toward the 10-day moving average looks like the better approach this week. Resistance is seen at 54,000円, 54,500円, and 55,000円, while support is located at 52,500円, 51,500円, and 51,000円.
USD/JPY
USD/JPY surged at the start of the week as long-term Japanese yields rose and there were no signs of intervention from the Bank of Japan above 158. Later in the week, comments from Japanese officials expressing concern over yen weakness triggered profit-taking, leading to a pullback from recent highs. The broader uptrend remains intact, with prices holding above the 10-day moving average and support around 158, keeping the focus on higher levels this week. Resistance is seen at 159, 159.5, and 160, while support is located at 158, 157, and 156.
Gold
Gold had another strong week, reaching new record highs as rising tensions in Iran and the risk of U.S. involvement supported safe-haven demand. Some profit-taking appeared late in the week as U.S. long-term yields rose, with prices testing the 10-day moving average. The uptrend remains intact, favoring buying pullbacks, though a break below the 10-day average could lead to a deeper short-term correction. Resistance is seen at $4,650, $4,700, and $4,750, while support is located at $4,550, $4,450, and $4,400.
Crude Oil
WTI crude broke above the $60 resistance level as unrest in Iran and the risk of U.S. involvement raised concerns over supply disruptions. The breakout ended the recent range-bound trading, with prices now looking to build on recent gains as the 10-day moving average turns higher. Further moves will depend on developments in Iran, with resistance seen at $65, $66.50, $70, and $75, while support is located at $59, $55, and $50.
Bitcoin
Bitcoin extended its recent recovery, moving above resistance at $95,000 as expectations of improved investor protection and regulatory clarity in the U.S. helped support confidence. The market may look to test the $100,000 level in the coming week, while pullbacks toward the $90,000–$92,500 area could offer buying opportunities. Resistance is seen at $100,000 and $105,000, while support is located at $95,000, $90,000, $85,000, and $80,000.
This Week’s Focus
- Monday: Chinese Unemployment Rate, GDP and Industrial Production, Japan Industrial Production, E.U. CPI, U.S. Holiday
- Tuesday: U.K. Unemployment Rate, E.U. ZEW Economic Sentiment
- Wednesday: U.K. CPI and PPI, U.S. Pending Home Sales and Construction Spending
- Thursday: Japan Trade Balance, Australia Unemployment Rate, U.S. GDP, Core PCE Price Index and Personal Spending
- Friday: Japan National CPI, au Jibun Bank Services PMI and BoJ Interest Rate Decision, U.K. Retail Sales and S&P Global Manufacturing PMI, U.S. S&P Global Manufacturing PMI and Michigan Consumer Sentiment
The week may start slowly due to the U.S. holiday on Monday, but volatility could pick up quickly. A U.S. Supreme Court ruling on the legality of tariffs is expected as early as Tuesday, alongside key data releases including U.S. GDP and the Core PCE Price Index. The Bank of Japan is widely expected to keep interest rates unchanged at 0.75%, with the next hike anticipated in April, although continued yen weakness could increase pressure on the BoJ to act sooner.
