The recent Fed decision triggered a sharp decline in the US dollar, prompting a rebound in gold. However, the market's core focus remains on whether this dollar downturn is sustainable. The dollar index is currently approaching a key technical level, and gold is entering a resistance testing phase. The subsequent movements of both commodities will depend entirely on the performance of subsequent US economic data. The overall tone of this Federal Open Market Committee (FOMC) meeting was slightly less hawkish than market expectations, causing the dollar to experience its worst single-day performance in three months. Currently, federal funds rate futures are still pricing in a 25 basis point rate hike by the Fed in September, but market expectations for further rate hikes have been pushed back from December to March of the following year. Despite three committee members supporting a rate hike at this meeting, it did not change market interest rate expectations after September. Amid a weakening dollar, gold and WTI crude oil prices rose in tandem. However, Federal Reserve official Kevin Warsh clearly stated that the Fed will continue to strictly control inflation. If US employment data remains strong and inflation rebounds, the Fed may restart hawkish rate hikes next month. Recent geopolitical tensions in the Middle East have pushed up international oil prices, which is likely to further exacerbate inflationary pressures, providing support for the Fed to restart rate hikes. Against this backdrop, the downside potential of the dollar index has become crucial for the market. The extent of the subsequent decline in the dollar will directly determine the upside potential of this gold rebound, having a decisive impact on gold's price movement. Dollar Index Technical Analysis Recently, market bullish sentiment towards the dollar has approached its peak. The latest Commitment of Traders (COT) report shows that net long positions in the dollar have climbed to $42.6 billion, a ten-year high. At the same time, asset management institutions have begun to reduce their total long positions in dollar index futures, and net long positions in the dollar have also slightly declined from last week's 18-month high. Although futures positioning data shows that there is a large number of dollar bulls and the sentiment is overheated, overall, as long as the US economic data does not show a significant weakening, the downside for the dollar is relatively limited. (US Dollar Index Weekly Chart Source: FX678) From a weekly chart perspective, the US Dollar Index has formed a potential bullish flag pattern, suggesting a likely slight pullback before a renewed upward breakout. However, if the index breaks below the 100 level, this bullish pattern will become invalid, indicating a deeper correction for the dollar. The 100 level has become a critical level for dollar bulls and bears . The daily chart shows that after forming a double top pattern at the June high, the downward momentum of the US Dollar Index has continued to strengthen. The current core target for the bears is to retest the 100 level, and even attempt to break down further. The highs of April and November can provide short-term support for the US Dollar Index; if the price breaks below the 50-day exponential moving average (EMA), the probability of the index testing the 100 level will increase significantly. This trend will continue to benefit gold prices in the short term, but overall, gold does not yet have the conditions for a one-sided surge. As long as the US Dollar Index holds above the 100 level, the overall bullish pattern remains unchanged, with the upside target still at 102. If the price breaks below the 100 level, the index will likely target the 200-day exponential moving average and the upward trendline support formed in January. (Gold Futures Technical Analysis) (COMEX Gold Futures Daily Chart Source: EasyForex) The overall trend for gold remains downward, but seasonal factors have become more favorable for gold bulls in August. The daily chart clearly shows that the $4,000 level provides solid support for gold. Influenced by the weakening dollar triggered by the Fed's decision, gold opened with a gap up of $2.20 today. Although gold retraced some of its gains after the opening, this rebound confirms that gold is likely to retest the recent highs near $4,200. If the dollar index continues to pull back and approaches the 50-day moving average, the gold rebound will continue; however, once gold reaches these recent highs, the risk of a deeper correction will also increase. Based on market analysis, the dollar index is likely to fall back to the 100 level, and given the strong rebound in gold at key support levels, a breakout above the $4,200 resistance level should be closely monitored.