US Dollar Index

The US dollar turned positive again after a brief period of flatness on Tuesday this week. The formation of a new French government is likely to be concluded on Wednesday, which is good for the euro. The US dollar index retreated to 106.00 as traders were nervous ahead of JOLTS. The US dollar bid increased strongly and rose to a three-day high, supported by Trump's threat of further tariffs (the news that Donald Trump plans to impose tariffs on countries intending to join the BRICS currency), as well as French political concerns. The US dollar index rose above the 106.70 level in an environment of mixed US Treasury yields and a general decline in safe-haven assets. The US dollar index, which measures the value of the US dollar against a basket of currencies, surged above 106.70 on Monday, the first trading day in December. The rise was driven by several factors, including the news that US President-elect Donald Trump favored tariffs on goods from Brazil, Russia, India, China and South Africa, as well as other countries interested in joining the future BRICS currency. Strong ISM PMI data for November also helped the US dollar index rise.

Technical indicators on the daily chart, including the 14-day relative strength index (RSI) and the moving average convergence divergence (MACD), indicate that the recent downward consolidation period of the US dollar may be coming to an end. In this sense, the US dollar index may restart a new round of upward waves this month, with initial targets of 106.92 (last Wednesday's high), and 107.00 (round mark). If it successfully breaks through the above areas, the next target will point to 107.56 (December 26 high), while the 108.00 level may be retested. In addition, the 21-day simple moving average (106.08), and 106.00 (market psychological mark) may be the first key support area for the US dollar index in the short term. Because breaking below this level may trigger further declines to 105.62 (last week's low), and 105.45 (upward channel lower line) levels.

Consider shorting the dollar index near 106.48 today, stop loss: 106.60, target: 106.05, 105.90

WTI crude oil

On Tuesday, the United States imposed more sanctions on Iranian crude oil shipments and OPEC+ made progress on extending production cuts, pushing oil prices to their biggest gain in more than two weeks. WTI crude oil rose 2.7% to close just below $70 a barrel, the biggest one-day gain since November 18. It fluctuated below the $68.00 mark during the Asian session. Israel reached a ceasefire agreement with the Lebanon-based Hezbollah militant group, easing market concerns about supply disruptions in the Middle East. This was therefore seen as a key factor in pushing WTI oil prices near the two-week low hit on Monday. In addition, the recent strength of the US dollar is believed to have suppressed demand for crude oil prices denominated in US dollars. Nevertheless, the worsening conflict between Russia and Ukraine has put the geopolitical risk premium into play, boosting WTI oil prices. In addition, the market continues to worry about the slowdown in crude oil demand growth, and it is expected that the Organization of Petroleum Exporting Countries (OPEC+) will further postpone its production increase plan, which also limits the downward space of crude oil prices.

WTI crude oil prices are currently in a narrow range as the OPEC+ pattern seems to be beginning to collapse. Therefore, the possibility of further decline in oil prices is greater than the possibility of rise. On the positive side, $69.80 (uranium line in the horizontal channel) is the first target, and a breakout will lead to the key resistance level of $70.00 (market psychological level). The next level is $71.15 (89-day moving average) and $71.28 (last week's high), and further create a higher high of $72.54 (November 7 high). On the other hand, the downside needs to look to $68.93 (14-day moving average) to find the first support. If broken, it would point to lows of $67.12 (a level that held prices in May and June 2023), and $66.53 (the low of November 18).

Consider going long on crude oil around 69.65 today, stop loss: 69.50; target: 71.00; 71.20

Spot gold

Gold prices stabilized after a pullback on Monday, trading in a narrow range below $2,650. The benchmark 10-year U.S. Treasury yield remained around 4.2% ahead of the Fed's speech, making it difficult for gold prices to gain directional momentum. During the Asian trading session on Tuesday, gold prices held at $2,640, although still within the recent range, awaiting key U.S. employment data for further trading guidance. And ahead of the release of Friday's non-farm payrolls (NFP), the focus seems to have shifted to sentiment on the Fed's policy outlook. The revival of safe-haven demand for the dollar in early trading on Tuesday put gold buyers at a disadvantage. Ongoing concerns about the Chinese economy and Trump's global tariff threats remain a drag on investor sentiment. The next direction of gold prices may depend on the upcoming US employment data and its impact on expectations of a rate cut by the Federal Reserve. Meanwhile, gold traders are also wary of geopolitical tensions between Russia and Ukraine, as well as Israel and Iran, which could have a strong impact on the price of gold, a traditional safe-haven asset.

Gold buyers seemed reluctant to step in after a close below the key short-term 21-day simple moving average support at $2,641. The 14-day relative strength index (RSI) on the daily chart is below the 50 level (latest at 48.20), proving a cautious attitude. Last week's death cross is also still in play, increasing downside risks for gold prices. Gold sellers need to break through the early-week support at $2,621.80 to challenge last week's low of $2,605. A sustained break below this level could expose the 100-day moving average at $2,577.80. Conversely, retaking the 21-day MA support-turned-resistance at $2,641 is crucial to resume the recent rally. The next relevant resistance is at the 25-day MA at $2,658.50, $2,666.40 (November 29 high), and $2,700 will be a target for buyers after a breakout of this level.

Consider going long on gold before 2,640.00 today, stop loss: 2,635; target: 2,655.00; 2,660.00

AUD/USD

AUD/USD managed to regain momentum and challenged the key 0.6500 mark ahead of the release of key Australian and US labor market data on the back of a knee-jerk rebound in the US dollar. The Australian dollar extended its decline to around 0.6470 in early Asian trading on Tuesday. The US dollar strengthened to a three-day high, weighing on AUD/USD. The Australian Bureau of Statistics announced that Australia's retail sales rose 0.6% month-on-month in October, up 0.1% in September. The indicator was 0.3% higher than expected. The US ISM Manufacturing Purchasing Managers' Index rose to 48.4 in November, from 46.5 in the previous month. The data was higher than the market's expectation of 47.5. In addition, the outbreak of a global trade war after the administration of US President-elect Trump may put some selling pressure on the Australian dollar. However, a hawkish speech by Reserve Bank of Australia Governor Bullock may help limit the decline of the Australian dollar. Reserve Bank of Australia Governor Bullock said last week that core inflation is still too high to consider a near-term interest rate cut, which has increased demand for the Australian dollar. Australia's third-quarter gross domestic product (GDP) will be closely watched on Wednesday.

From the daily chart, the Australian dollar weakened during the day. AUD/USD remains in a downtrend, characterized by resistance at the key 100-day (0.6655) moving average. In addition, the 14-day relative strength index is below the mid-line of 50, which favors the bears in the short term. A bearish move below 0.6400 (round mark) may attract AUD shorts and push AUD/USD down close to the low of 0.6434 on November 26, and 0.6430 (midline of the downward channel on the daily chart). On the other hand, if AUD/USD continues to stay above the 25-day moving average of 0.653, it may approach the high of 0.6587 on November 7. If bullish candles are formed above this level, it may pave the way for a test of the psychological level of 0.6600.

Today, consider going long on AUD before 0.6470, stop loss: 0.6460; target: 0.6515; 0.6525.

GBP/USD

After rising to 1.2700 earlier in the day, GBP/USD lost its recovery momentum and fell back to the 1.2650 area. The dollar remained resilient against its rivals due to the optimistic JOLTS employment data, which made it difficult for the currency pair to regain traction. In early trading on Tuesday, US stock index futures were mixed, indicating a cautious attitude. Nevertheless, the pound managed to limit its losses against the US dollar. EUR/GBP rebounded on Tuesday after falling for four consecutive trading days on Monday, indicating that the pound captured some capital outflows from the euro. At the beginning of the week, Atlanta Fed President Bostic said that he has not yet decided whether a rate cut is needed in December. Similarly, New York Fed President John Williams believes that "a case can be made to skip the December rate cut and will closely monitor the data to make a decision". If Fed policymakers continue to be cautious about a December rate cut, the US dollar may maintain its bullish momentum.

The 14-hour relative strength index (RSI) indicator on the 4-hour chart is trading sideways around 52, indicating a lack of bearish momentum. Moreover, GBP/USD is trading slightly below the 120-hour SMA (1.2706) after remaining below it at the beginning of the week. On the upside, the area formed by 1.2700 (round number); 1.2701 (38.2% Fibonacci retracement from 1.3048 to 1.2487); and 1.2706 (120-hour SMA) is the first resistance, followed by 1.2767 (50% Fibonacci retracement) and 1.2800 (market psychological level). Technical sellers are likely to show interest if GBP/USD breaks below 1.2660 (100-period SMA) and confirms this level as resistance. In this case, 1.2619 (23.6% Fibonacci retracement), and 1.2622 (55-hour SMA) may be considered as the next support levels. Ultimately pointing to the 1.2600 (market psychological level) level.

Today, it is recommended to go long on GBP before 1.2660, stop loss: 1.2650, target: 1.2720, 1.2730

USD/JPY

On Tuesday, USD/JPY rebounded above 150.00 in the Asian session. The return of safe-haven flows and the recovery of demand for the US dollar supported the currency pair. However, as bets on another rate hike by the Bank of Japan later this month increase, any meaningful gains seem limited and return to below 150. During the Asian session on Tuesday, the yen fluctuated lower against the US dollar and boosted the rebound of USD/JPY from its lowest level since October 16, which was hit the day before. However, speculation that the Bank of Japan may raise interest rates again in December should prevent the yen from falling sharply. In addition, US President-elect Trump's threat to launch a trade tariff policy and continued geopolitical risks may support the yen's risk aversion. Meanwhile, the recent decline in US Treasury bond yields has failed to boost the dollar after rebounding from multi-month lows overnight and may further boost the low-yielding yen.

From a technical perspective, USD/JPY has now once again fallen below the psychological market barrier of 150, which may be seen as a new trigger by bears. Moreover, the daily oscillator is deeply in negative territory and still far from oversold territory, suggesting that the path of least resistance for USD/JPY is still to the downside. That said, USD/JPY's modest rebound from the current 150 level suggests caution before establishing positions for further declines. A clear break below the above support level will lead to a drop towards the 149.08 (Monday's low) and then to the 148.00 (50% retracement level of the September-November rally) level. Some follow-up selling may test the next relevant support around 147.60-147.55. On the other hand, further strength above the psychological 150.00 level looks likely to encounter strong resistance around the overnight swing highs of 150.75, and 150.82 (50-day moving average), followed by the 151.00 round number. Sustained strength above this level could trigger short-covering and boost USD/JPY to 151.98, where the important 200-day moving average is located.

Today's recommendation is to short before 149.75, stop loss: 149.95; target: 148.70, 148.60

EUR/USD

Despite Tuesday's acceptable gains, EUR/USD is expected to remain in focus given the political enthusiasm in France, the upcoming key results in the US fundamentals, and Chairman Powell's speech. EUR/USD retreated to around 1.0480 in early European trading on Tuesday. EUR/USD weakened as the budget impasse in France heightened concerns about the eurozone's second-largest economy. French Prime Minister Michel Barnier's plan to pass a social security bill without a parliamentary vote prompted the opposition to announce its intention to vote in favor of a no-confidence motion against Barnier. The move is likely to lead to the collapse of the French government this week. The political uncertainty in France exerted some selling pressure on the euro. The collapse of political sentiment in France and another loss in US activity data set the euro in a bad situation in December. The dollar was boosted by US economic data released on Monday showing an improvement in US manufacturing activity in November, indicating that the US economy remains strong.

From the daily chart, EUR/USD fell below 1.0500 (market psychological level) and 1.0475 (23.6% Fibonacci rebound level from 1.0937 to 1.0332) at the beginning of the week. The lowest level was 1.0460. The 14-day relative strength index (RSI) of the technical indicator is still below the 40 level (latest at 39.60). Despite the recent rebound, the downside risk of GBP/USD will not change. As long as 1.0475 - 1.0460 turns from support to resistance, technical sellers may enter the market again. On the downside, support levels may be at 1.0400 (round number) and 1.0332 (previous low). If EUR/USD holds steady at 1.0500 - 1.0520, the next obstacle is at 1.0563 (38.2% Fibonacci rebound level), and the next level is 1.0600 (market psychological barrier).

Today, it is recommended to go long on the euro before 1.0495, stop loss: 1.0480, target: 1.0530, 1.0540.

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