USD

The US Dollar Index has retreated from a two-year high, falling below 107.00. There are no significant highlights expected in the US calendar meeting on Monday. Despite recently declining from a two-year peak, the Dollar Index remains bullish. Strong economic data and the Federal Reserve's less dovish stance support the index's upward trajectory. Additionally, geopolitical tensions triggered by the Russia-Ukraine war have also contributed positively.

During Monday's Asian session, after President Donald Trump announced his intention to nominate Scott Bessent as the US Secretary of the Treasury, the dollar weakened and US Treasury yields declined. Last Friday evening, Donald Trump declared his nomination of Scott Bessent for the Treasury Department, which consequently pushed the dollar to its largest decline in over two weeks. However, the market expects the Trump administration to reignite inflation rates and slow the Federal Reserve's rate-cutting path, which may help limit the dollar's decline.

Last week, the Dollar Index even successfully reached a two-year high, breaking through the 108.00 mark. The key factor driving the dollar's significant rise was the Federal Reserve's cautious stance. Federal Reserve Chairman Jerome Powell's recent remarks highlighted this, as he reiterated that the central bank is not in a hurry to further reduce interest rates.

Since mid-September, after hitting a low of 100.16, the Dollar Index has steadily climbed to nearly a two-year high of 108.07 before last weekend. On the technical side, the Average Directional Index (ADX) momentum has strengthened, rising above 50, highlighting the strength of the current uptrend. On the other hand, the 14-day Relative Strength Index (RSI) has sharply fallen from the recent high of 72 to around 64, indicating a possible short-term consolidation. Therefore, on the downside, if a pullback occurs, it will first find support at the key 10-day moving average (currently at 106.65), followed by 106.00 (a market psychological level). Further declines may test 105.52 (20-day moving average) and 105.53 (April 11 high), which should prevent any drop towards 105.00 (a round number level). On the upside, attention can be paid to 107.20 and 107.50.

Today, consider shorting the Dollar Index around 107.05, with a stop loss at 107.15 and targets at 106.60 and 106.50.

WTI Spot Crude Oil

On Monday, crude oil prices retreated to around $70 after a relatively quiet weekend on the geopolitical front and a shortened trading week in the U.S. due to Thanksgiving. Aside from headlines involving Russia, Ukraine, or the Middle East, this week's focus will be on the OPEC+ meeting scheduled for Sunday, December 1. During the Asian session on Monday, WTI crude oil prices paused their two-day rally, trading around $70.80. However, the downside risk for oil prices remains limited due to escalating geopolitical tensions involving major oil producers Russia and Iran, raising concerns about potential supply disruptions.

Last week, oil prices rose as geopolitical tensions intensified following Ukraine's first use of U.S. and U.K. weapons in attacks on Russia, leading to fears of supply disruptions. On Thursday, Iran responded to a resolution passed by the UN nuclear watchdog by initiating measures such as activating advanced uranium enrichment centrifuges. Meanwhile, rising crude oil demand from China and India, the world's largest oil importers, further supported oil prices. Encouraged by low prices, China’s crude imports rebounded in November, while Indian refineries increased crude imports by 3% year-on-year in October to 5.04 million barrels per day, driven by strong fuel export activities.

By the end of last week, oil prices continued to climb, closing at a two-week high as the Ukraine conflict heightened geopolitical risk premiums in the market. From a technical perspective, indicators such as the 14-day Relative Strength Index (RSI) and Stochastic Oscillator are showing signs of recovery, while the MACD has just crossed above its signal line. Additionally, oil prices initially broke through a short-term trendline last Friday, suggesting the upward momentum may continue. The high of $72.88 on November 7 will serve as a neckline, and a breakout above this level would confirm the formation of a small double bottom in recent months. The next targets are Fibonacci retracement levels of 61.8% and 76.4% from the October high of $77.93 to the November low of $66.53, which are $73.57 and $75.24, respectively. Beyond that, the key level to watch is $76.41, the 200-day moving average.

Support levels are estimated at $69.01 (10-day moving average), with a larger support reference at $67.77 (November 14 low) and $67.12 (lows from May and June 2023).

Today, consider going long on crude oil around $68.78, with a stop loss at $68.50 and targets at $70.20 and $70.40.

XAUUSD

After rising to $2,700 during the European trading session, gold prices reversed and fell below $2,650. Despite a decline in U.S. Treasury yields, easing geopolitical tensions prevented gold from finding a foothold. During Monday's Asian session, gold prices jumped above $2,720. The weakening dollar boosted gold prices, which are denominated in the currency. Additionally, escalating geopolitical tensions continued to support safe-haven assets like gold. Investors are closely monitoring developments in the Russia-Ukraine conflict.

Last week, Russian President Vladimir Putin lowered the threshold for a nuclear strike in response to broader conventional attacks. A few days ago, reports emerged that Washington, D.C., had allowed Ukraine to use U.S.-made weapons for attacks deep inside Russia, potentially spurring safe-haven flows and lifting gold prices. This has been a major geopolitical factor influencing the gold market in recent days, with heightened tensions between Ukraine and Russia taking center stage.

On the other hand, several Federal Reserve (Fed) officials remain cautious about rate cuts, which may limit gold’s upside. The market is adjusting expectations for Fed rate cuts next year as inflation continues to be a concern. Rising interest rates reduce the appeal of gold.

From a technical perspective, gold opened the week with a $10 jump to around $2,716, and it is expected to continue rising this week, aiming to challenge the $2,750 level again. Last week, gold broke above the 50-day Simple Moving Average (SMA) at $2,666.50, prompting buyers to push spot prices back above $2,700 early this week. In this context, if gold prices break through $2,750, the next historical high will be $2,790. A break above this level would expose $2,800 and pave the way for a test of $3,000, the next major resistance level.

Conversely, if prices fall below $2,700, the non-yielding metal may begin trading in the $2,600 (psychological support level) to $2,581.70 (89-day SMA) range. Unless bears break below the key psychological low of $2,563.50 (100-day SMA), gold prices are likely to stay above the previous low of $2,536.80 (November 14 level).

Trade Suggestion: Consider going long on gold around $2,615.00, with a stop loss at $2,610.00 and targets at $2,638.00 and $2,642.00.

AUDUSD

The AUD/USD pair recovered from Friday's decline, breaking through the 0.6500 threshold and encountering resistance again near the 0.6550 region amid significant U.S. dollar selling. During Monday's Asian session, AUD/USD attracted some buyers, trading near 0.6540. Despite strong U.S. S&P Purchasing Managers' Index (PMI) data, the Dollar Index pulled back sharply after hitting a two-year high.

Data released last Friday showed that November’s PMI rose to 48.8 from October's 48.5 but remained in contraction territory. However, the Federal Reserve's reluctance to aggressively cut rates may support the dollar. On the Australian side, the flash Judo Bank Composite PMI for November unexpectedly contracted, falling to 49.4 from 50.2 in October, below the 50.0 expansion threshold. The Manufacturing PMI rose from 47.3 in October to 49.4, while the Services PMI slowed from 51.0 to 49.6.

AUD/USD is trading above 0.6500 on Monday, with short-term momentum strengthening. The pair has broken above the nine-day moving average at 0.6496, maintaining an upward bias. However, AUD/USD remains within a descending channel, indicating that the broader downtrend remains intact. Additionally, the 14-day Relative Strength Index (RSI) remains below the neutral 50 level (currently at 44). A clear breakout above 50 would provide a stronger signal of a directional shift, potentially confirming bullish momentum.The first target for AUD/USD could be the upper boundary of the descending channel at 0.6580. A breakout above this resistance might signal a momentum reversal, with potential tests of 0.6600 (psychological level) and 0.6687 (November 7 high).On the downside, AUD/USD could test immediate support at 0.6500 (psychological level). A decisive break below this level might push the pair toward the midline of the descending channel at 0.6470, with further losses targeting 0.6440 (November 14 low).

Consider going long on AUD/USD around 0.6490, with a stop loss at 0.6475, and targets at 0.6540 and 0.6550.

GBPUSD

After a brief pullback, GBP/USD regained traction. With market sentiment improving on Monday, the dollar struggled to maintain resilience against its rivals, allowing the pair to extend its bullish start to the week. GBP/USD opened Monday with a bullish gap, seemingly ending its three-day losing streak that saw it fall below the 1.2500 level, the lowest since May, reached last Friday. During the Asian session, GBP/USD rose above the 1.2600 mark, supported by a weaker dollar.

The U.S. Dollar Index retreated from its two-year high of 108.07, as bulls opted for profit-taking amid a sharp pullback in U.S. Treasury yields. Additionally, the continuation of risk-on sentiment in global stock markets weighed on the safe-haven dollar, providing another boost for GBP/USD. Meanwhile, reduced bets on a Bank of England rate cut next month continued to support the pound, especially after last week’s data showed an acceleration in core price growth in the UK.

However, the dollar’s downside may remain limited due to market expectations that U.S. President-elect Donald Trump's proposed expansionary policies will boost inflation and constrain the Fed's scope for further rate cuts. This is likely to support U.S. Treasury yields and attract dip-buying in the dollar.

GBP/USD’s 14-day Relative Strength Index (RSI) remains in negative territory at 34. If the pair attempts a technical correction, 1.2600 (previous support, now a static resistance level) could act as the first resistance, followed by 1.2643 (10-day Simple Moving Average). A break above the 10-day SMA could open the door to 1.2700 (psychological level) and the previous week’s high of 1.2714.

On the downside, 1.2530 (last Friday's closing level) serves as the initial support, followed by 1.2500 (psychological level) and last week’s low of 1.2487. A break below this area could push the pair to test the year-to-date low of 1.2299 (April 22 low).

Trade Suggestion: Consider going long on GBP/USD around 1.2555, with a stop loss at 1.2545, and targets at 1.2605 and 1.2615.

USDJPY

After rising during intraday trading, the Japanese yen faces new supply pressures, pushing USD/JPY closer to the 154.00 mark, or its daily high observed upon entering the European market on Monday. At the start of Monday’s session, the Japanese yen strengthened, causing USD/JPY to drop back below the 154.00 level to 153.55 during the Asian session. U.S. Treasury yields sharply fell after Scott Bentsen was nominated as U.S. Treasury Secretary. This prompted traders to reduce their bullish bets on the dollar after it recently surged to a two-year high, leading some funds to flow into the low-yielding yen.

Despite this, the unclear outlook for any rate hikes by the Bank of Japan, along with a generally risk-on market sentiment, may limit any significant rebound in the yen. Additionally, U.S. President-elect Donald Trump’s policies may reignite inflation concerns and restrict the Federal Reserve’s ability to lower rates at a faster pace, which could support U.S. Treasury yields. This is likely to continue supporting the bullish outlook for the U.S. dollar and provide support for USD/JPY.

USD/JPY seems to have support above the 34-day moving average at 152.52. The 14-day Relative Strength Index (RSI) on the daily chart remains in positive territory (currently at 55.90), confirming the recent bullish outlook for USD/JPY. This suggests that if USD/JPY returns to its upward trend and rises above 154.00 (psychological level) and 154.45 (lower boundary of the upward channel), further bullish momentum could follow. If buying pressure continues, USD/JPY could reclaim the 155.00 psychological level and extend its rise to the resistance zone at 155.40–155.50. A sustained rally could lead to a break above 156.00, testing the multi-month high of 156.75 touched on November 15.

On the downside, if the pair breaks below Monday's low at 153.55, it could fall further and find support around the 153.00 psychological level. A clear break below this level would likely trigger further selling, opening the door for USD/JPY to accelerate its decline toward the next key support level at 152.52 (200-day simple moving average).

Consider going short on USD/JPY near 154.50, with a stop loss at 154.70, and targets at 153.50 and 153.30.

EURUSD

The significant decline in the U.S. dollar has allowed EUR/USD to regain some composure and reclaim the 1.0500 level at the start of this week, ahead of the release of key data from both sides. On Monday during the Asian session, EUR/USD rebounded from the two-year low of 1.0332 recorded on Friday, briefly rising above 1.0500. This rebound may be attributed to the U.S. dollar's consolidation, even though the S&P Global U.S. PMI data released in the previous session was strong.

Meanwhile, the U.S. Dollar Index, which tracks the performance of the dollar against six major currencies, retreated to below 107.00 after touching a two-year high of 108.07 last Friday. However, the downside risk for the dollar remains limited as recent economic data have fueled expectations that the Federal Reserve may slow down its pace of interest rate cuts. Last week, European Central Bank (ECB) Chief Economist Philip Lane warned that potential global trade wars, triggered by U.S. President-elect Donald Trump's expected tariff hikes, could cause significant global economic losses. Lane emphasized that "trade fragmentation would bring substantial output losses." Following weaker-than-expected PMI data from the Eurozone, the probability of aggressive ECB rate cuts surged.

EUR/USD rebounded from last Friday’s two-year low of 1.0332, approaching 1.0480, and briefly exceeded the 1.0500 psychological level. On the daily chart, the 14-day Relative Strength Index (RSI) is showing a rebound, but the bearish trend has not yet been reversed, which increases the likelihood of further weakness in the short term. If EUR/USD continues to decline, it could fall to the early-week low of 1.0418, and if this level is broken, it may drop to 1.0332 (November 22), and the next support at 1.0290 (November 30, 2022).

Upside potential: The 10-day moving average at 1.0533 (November 18) acts as the first resistance, followed by the critical levels at 1.0600 (psychological level) and 1.0590 (14-day moving average). A breakout above these levels could target 1.0705 (the 61.8% Fibonacci retracement from 1.0936 to 1.0332). It is important to note that as long as EUR/USD remains below these levels, the short-term outlook will remain bearish.

Trade suggestion: Consider going long on EUR/USD before 1.0480, with a stop loss at 1.0470 and targets at 1.0550 and 1.0560.

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