Market Pulse Analysis: Asset Allocation Opportunities Under the Federal Reserve's New Policies

Policy Shift Drives Liquidity Return

Last week, the Federal Reserve just stopped its balance sheet reduction operations and immediately launched the Reserve Management Purchase Plan (RMP), which plans to buy $40 billion worth of short-term government bonds over the next month. Although this move is not officially considered traditional quantitative easing (QE), it essentially injects liquidity into the financial markets. Bond yields in major global economies have recently risen across the board, indicating a re-inflation trend worldwide, which has profound implications for various asset classes.

Gold Rebounds Strongly, Potentially Challenging Previous Highs

Gold performed remarkably on December 11, rising 1.22% daily, with prices reaching a high of $4,285.9, the highest in nearly two weeks, successfully breaking through the range upper limit of $3,890 to $4,225. Technically, the AO indicator shows continued accumulation of bullish momentum, suggesting a rebound possibility to challenge the previous high of $4,381.

From the daily chart perspective, if gold prices remain stable above $4,200, further upward movement toward $4,381 is expected. Conversely, if it falls below $4,200, investors should be cautious of a potential retracement toward the support around $3,900.

Key levels to watch:

• Support: $4,200, $4,130, $4,050
• Resistance: $4,300, $4,381, $4,440

AUD/USD: Stabilization Leads to Further Uptrend

Over the past 15 trading days, the Australian dollar against the US dollar has only declined three days, indicating a clear upward bias. The exchange rate has successfully stabilized above 0.6600, with technical indicators favoring continued gains.

If AUD/USD can hold above 0.6600, it may challenge higher levels at 0.6700 and even 0.6800. However, if it drops below 0.6600, caution is warranted for a retracement toward 0.6520.

Key levels to watch:

• Support: 0.6600, 0.6520, 0.6450
• Resistance: 0.6700, 0.6750, 0.6800

US Dollar Index: Critical Moment at 97.9

The US Dollar Index fell 0.3% on December 11, with a low of 98.13 during the session, approaching the 98.0 integer level. Notably, the USD index has been weakening since November 21, forming a series of lower lows, indicating a clear downtrend. The mid-term key support/resistance boundary is at 97.9, which is a critical observation point.

If the USD index can find support above 98.0, a large-range consolidation may persist, with potential for a rebound to challenge the 100 level. However, if it effectively breaks below 97.9, the mid-term downside space opens up, with subsequent support levels at 97.6 and even 95.2.

Key levels to watch:

• Support: 97.9, 97.6, 95.2
• Resistance: 99.0, 99.5, 100.0

Ethereum: $3200 as a Critical Threshold

Ethereum fell 2.64% on December 11, with a low of $3,145.5. More importantly, ETH has again broken below the $3,000 level, entering a critical time window where bulls and bears will soon make decisive moves.

In the short term, $3,400 should be regarded as the dividing line between bullish and bearish. If ETH cannot effectively rebound and recover above $3,400, it risks testing the support at $3,000 again. Currently, ETH fluctuates around $3,200, which is an important reference point for judging the future trend.

Key levels to watch:

• Support: $3,200, $3,000, $2,675
• Resistance: $3,300, $3,400, $3,600

Investment Advice

The introduction of liquidity injection policies by the Federal Reserve creates a favorable environment for risk assets to rebound. Traditional safe-haven and commodity assets like gold and AUD are performing relatively strongly, while the direction of cryptocurrencies will soon become clearer. Investors should closely monitor the above key levels to assess short-term trends across various assets.