Fed Rate Cut & AI's Next Wave: How Lower Rates Will Fuel the Tech Boom - 12.8

​Fed rate cut put the live dollar index under pressure, causing it to retreat from a key support area. Traders are actively pricing in dollar weakness, although the downward momentum has been contained as the market awaits the official Fed announcement and forward guidance.
​EUR/USD and GBP/USD: Both pairs showed strength against the softer US Dollar. GBP/USD was highlighted by analysts as the preferred market for dollar-weakness, demonstrating a clearer pattern of higher highs and higher lows, breaking out toward a major resistance zone around 1.3350. EUR/USD also showed bullish signs, holding above a key level, though its trend was less decisive than the British Pound's.
​USD/JPY: The pair pulled back this week, primarily due to rising speculation that the Bank of Japan (BoJ) might signal a rate hike later this month. This has led to the Japanese Yen gaining strength, breaking its typical correlation with U.S. interest rates. The pair is now entering a critical week with the focus split between the Fed's decision and the BoJ's potential policy shift.
​AUD/USD: The Australian Dollar has been ripping higher toward resistance, benefiting from the generally weaker US Dollar, but analysts caution that exhaustion risk might be building after the sharp move.

​Global stock markets had a strong week, based on  optimism for lower interest rates and the resurgence of the AI theme.
​Dow Jones Index, Nasdaq Index, and S&P 500 Index: U.S. stock benchmarks traded consistently near their all-time highs. The S&P 500 Index and the Nasdaq Index led the charge, with tech stocks seeing a bounce back, confirming the strong interest in AI-related companies. The Dow Jones Index also posted solid gains, reflecting broad market confidence.
​Nikkei rallied significantly, climbing over 2% and nearing its own all-time high. This was driven by the global rate-cut expectations, even as the possibility of a domestic rate hike by the Bank of Japan created some uncertainty.
​Hang Seng index reversed earlier losses to end the week in positive territory, with gains largely concentrated in the technology and consumer sectors.
​Australian Stock Index ended the week with minor gains, recovering from earlier slumps. Sector performance was mixed, with materials and energy stocks leading the gainers, while real estate and consumer staples lagged.

Both Brent Crude and WTI gained, with WTI settling above the key $60 per barrel mark. This upward move was largely attributed to a "risk premium" persisting in the market due to the murky outlook for a cease-fire in the Russia-Ukraine conflict, which includes attacks on key Russian infrastructure. Analysts also noted that the move was technically driven by algorithmic traders covering bearish positions, as WTI closed above its 50-day moving average. Despite the short-term gains, the broader outlook for 2026 suggests global oil inventories will continue to rise, potentially putting downward pressure on prices, with analysts forecasting a drop toward the mid-$50s per barrel range.

Bitcoin soared toward the $90,000 level, with some analysts from major investment banks issuing "enormous" price predictions, suggesting a potential rocket to $170,000 in the coming months, primarily based on structural factors like institutional adoption. However, not all analysts share this view, with some calling the surge a "tulip bulb of our time". Ether traded lower last week, decreasing slightly but remaining above the $3,000 level, consolidating after a period of volatility.