Market round-up: Oil hits 6-month high, US500 rebounds

• Markets cheer cooling US inflation data
  

• US500 rallies almost 2% on Wednesday

• Oil benchmarks ↑ 10% year-to-date
  

• Trump Inauguration next major risk event

Global sentiment has brightened after cooling US inflation revived hopes for Fed rate cuts.

On Wednesday, equities rallied while the dollar initially tumbled thanks to a surprise drop in core CPI inflation.

At the start of the week, traders were pricing in a Fed rate by September 2025. This has now been pulled forward to July, with a 50% chance of a second cut by December.

In the commodities space, Oil benchmarks are on a tear!

• WTI crude has rallied almost 5% this week

• Brent is up nearly 3% since Monday

These gains have come even as Israel and Hamas agreed to a ceasefire deal – easing geopolitical tensions.

Nevertheless, growing risks to global supplies and falling US crude inventories continue to inspire oil bulls. These factors along with cold weather and curbs against Russia have pushed Brent’s year-to-date gains nearly 10%.

Although bulls are in power, the question is for how long?

As highlighted in our 2025 outlook, oil benchmarks could be set for a rocky year if Trump’s proposed tariffs hit China’s economy. This along with a potential OPEC+ output hike and an increase in US oil production under Trump could drag oil lower.

Looking at the charts, Brent is bullish on the daily charts as prices are trading above the 50, 100 and 200-day SMA. However, the Relative Strength Index (RSI) has entered overbought territory.

• A move back below $80 may open a path back toward the 200-day SMA at $78.40 and the 100-day SMA at $74.00.

• Should $80 prove to be reliable support, this may open a path toward $84.00.

US500 soars on cooling inflation

US equity bulls roared to life on Wednesday as investors cheered the soft inflation data.

FXTM’s US500 rallied almost 2%, blasting above the 5900-resistance level thanks to renewed Fed cut bets and solid corporate earnings. The index could be in store for fresh volatility next week due to Trump’s inauguration on 20th January.

Looking at the charts, prices are still respecting a bearish channel despite the recent rally.

• Should 6000 prove reliable resistance, prices may hit the 21-day SMA, 5900 and the 100-day SMA.

• A breakout above 6000 could inspire an incline toward 6055.