US Dollar Index

The US Dollar Index rose to 108.15, hitting another recent high, reacting to the expected rate cuts from the Federal Reserve. The market analyzed the new rate forecasts for 2025 and 2026. Traders assessed Powell's cautious but hawkish remarks. Financial markets were mostly on the sidelines before the Fed's monetary policy announcement. As expected, the Fed implemented a hawkish rate cut, causing the US dollar to surge in a risk-averse environment. In early Asia, the US dollar hit weekly highs across the board, maintaining strong positive momentum. After the expected 25 basis point rate cut, investors were surprised by a dot plot that showed only two potential rate cuts in 2025, a rather hawkish turn. Later, Chairman Jerome Powell sounded even more hawkish, saying that the economy is still strong and they may have avoided a recession. Traders weighed marginal revisions and complex underlying details. It stirred some mild concerns among investors that the Fed may not need to adopt an aggressive rate cut strategy after all, especially considering the recent pick-up in inflation indicators.

From the daily chart, the US dollar index rose sharply by about 1% last week and then rose sharply by 1.04% yesterday, hitting a nearly one-year high of 108.15. The index has broken through the strong barriers formed by the 107.00 (round mark); 107.17 (Monday's high); and 107.56 (November 22 high). The 14-day relative strength index (RSI) and MACD indicators of technical indicators show that the US dollar index is in an upward state, reflecting a pause after last week's rebound. But the overall situation is still constructive. If it can stay above 108.00 (market psychological mark), and 108.15 (Wednesday's high), traders may wait for clearer direction signals before pushing the dollar sharply higher amid mixed data and the approaching key Fed decision. The first target is estimated to be 108.50, and the break will look at the 109.00 (round mark) level. On the downside, watch for 108.00 (market psychological level), and 107.56 (November 26 high), followed by 107.00.

Today, consider going long on the US dollar index around 108.00, stop loss: 107.90, target: 108.35, 108.50

WTI crude oil

WTI crude oil traded around $69.50 on Wednesday. WTI oil prices fluctuated lower due to renewed concerns about Chinese demand. Investors remained cautious ahead of the Federal Reserve's interest rate decision on Wednesday. The bearish momentum triggered by Chinese data destroyed speculators' expectations of WTI oil prices breaking out of the two-month range to the upside. Oil traders are waiting for the Federal Reserve to hold its last policy meeting of the year on Wednesday. The market has priced in a 25 basis point rate cut by the Federal Reserve, but the focus will be on the Fed's forward guidance on interest rate policy in 2025 and 2026. Any signal from the Fed that the easing cycle is weakening could help boost the dollar and push down the prices of dollar-denominated commodities.

Crude oil prices are weakening mid-week, and the peak last week may be the current high of $70.96. At this stage, oil prices remain in the range of $67.00-71.50, and this range seems to continue until the end of the year. Looking up, $70.96 (the high of the 13th of this month), and the 100-day simple moving average of $70.94 are firm resistance levels. On Friday, some selling pressure was seen before the same 100-day. If oil traders can break through this resistance level, $72.23 (50.0% Fibonacci rebound level), and $72.54 (November 7 high) will become the next areas. On the downside, the 9-day moving average of $69.24 is the first target price. If it breaks, it will see the $68.50 level (the resistance line of the large descending triangle on the daily chart).

Today, consider going long on crude oil around 69.00, stop loss: 68.80; target: 70.20; 72.40

Spot gold

Gold prices plummeted after Fed Chairman Jerome Powell took a stance after the Fed decided to cut interest rates. Forecasts show that the Fed's attitude is no longer so dovish. Gold is trading below $2,600. Fed Chairman Jerome Powell said that the central bank may take a more cautious approach to future policy adjustments, noting that the current measures are less restrictive. He stressed that inflation risks and uncertainties are still tilted upward, which explains the changes in the dot plot to some extent. Powell also predicted that it may take one to two years for inflation to return to the 2% target, while ensuring that the current situation in the labor market does not cause major concerns about overheating. The Federal Reserve cut interest rates by 25 basis points to a range of 4.25%-4.50%, but the decision was not unanimous as Cleveland Fed President Beth Hammack chose to keep rates unchanged. The statement showed little change compared to the last meeting, although traders focused on the Summary of Economic Projections (SEP).

From a technical perspective, gold prices fell to a near-par low of $2,587 yesterday, and the daily chart of gold suggests an extension of its decline. It met buyers around the now-flattened 20-day simple moving average, providing dynamic resistance around $2,655. The 100-day and 200-day moving averages continue to rise below the current levels, with the 100-day at the $2,605 area. Finally, technical indicators have turned bearish. The momentum indicator remains at neutral levels, but the 14-day Relative Strength Index (RSI) indicator is pointing to 39, reflecting increased selling pressure. The short-term outlook is bearish. Therefore, on the downside, the first to consider is $2,570 (120-day moving average), followed by $2,636 (November 14 low). The last line of defense for gold buyers is at the $2,500 (round mark) level. As for the upside, the focus can be on $2,600 (market heart mark), and a break will further look to $2,615.50 (November 25 low).

Today, you can consider shorting gold before 2592.00, stop loss: 2,597.00; target: 2575.00; 2,570.00

AUD/USD

The Australian dollar hovered around 0.6200 after the Federal Reserve cut interest rates and new forecasts indicated a more cautious policy path. Although the Federal Reserve cut interest rates by 25 basis points as expected, the latest Summary of Economic Projections hinted that the situation will be more severe in the future. China's economic slowdown and tariff concerns continue to limit the rise of the Australian dollar. The Australian dollar extended its decline against the U.S. dollar for the second consecutive session on Wednesday. The AUD also faced challenges as traders increased bets that the Reserve Bank of Australia will cut interest rates earlier and more aggressively. However, future decisions will be data-driven and the RBA's policy will be adjusted as risk assessments change. The U.S. dollar remained firm. In addition, traders will closely monitor the press conference and summary of economic projections (dot plot) from Federal Reserve Chairman Jerome Powell.

On Wednesday, the AUD/USD pair fell 1.55% to 0.6215, marking a new low since October 2022. The relative strength index (RSI) hovered around 25, indicating oversold conditions, as it continued to fall sharply. Meanwhile, the moving average convergence divergence (MACD) histogram showed rising red bars, highlighting the continued bearish pressure. Although these indicators suggest a potential corrective rebound, lingering uncertainties around the Fed's cautious outlook and China's economic slowdown may limit any meaningful recovery. On the downside, AUD/USD has managed to break below the 2023 year low of 0.6270, which could exert downward pressure on it to the 0.6200 (market psychological level), and 0.6170 (October 7, 2022 low) area levels. On the other hand, AUD/USD may find initial resistance around 0.6270, followed by 0.6300 (round number level).

Consider going long on AUD before 0.6210 today, stop loss: 0.6200; target: 0.6240; 0.6250.

GBP/USD

The British pound found short-term support earlier in the day, leading to an intraday high of 1.2725 against the US dollar. The trigger was data released by the Office for National Statistics (ONS) on Wednesday, which showed that the UK Consumer Price Index (CPI) rose 2.6% year-on-year in November after announcing a growth rate of 2.3% in October. Core CPI (excluding volatile food and energy items) rose 3.5% year-on-year in November, compared to 3.3% in October, but below the consensus forecast of 3.6%. Services inflation remained unchanged in November, up 5.0% year-on-year. Subsequently, the pair held above 1.2700 before plummeting to a new intraday low in the 1.2560 price zone after the US Federal Reserve (Fed) announced a 25 basis point cut in the policy rate, the federal funds rate, to a range of 4.25%-4.5%. Financial markets rushed to buy the US dollar ahead of the Bank of England's monetary policy decision on Thursday.

GBP/USD rose for the second consecutive day, breaking through the strong resistance of 1.2700, but has not yet effectively broken through. Monday's rebound formed an initial bullish signal after completing a "feet-through-head" pattern on the daily chart, and today it extended higher again, seeking to sustain above the 1.2700 (round mark), and 1.2709 (14-day moving average) pivot points to confirm the signal and open up space for further rebound. The broader technical picture is mainly bearish, while the 40/200 day moving averages have formed a bearish death cross pattern. Together with the technical indicator 14 day relative strength index (RSI) hovering below 40, it shows that the recovery may be stalled and the continued bearish momentum is active. Therefore, on the downside, the 1.2500 (market psychological level), and 1.2490 (150 day moving average) areas can be watched respectively. On the other hand, if GBP/USD can effectively break through 1.2600 (market psychological level), and last week's low of 1.2608, 1.2680 (89 day moving average) will be tested.

Today, we recommend shorting GBP before 1.2595, stop loss: 1.2610, target: 1.2530, 1.2520

USD/JPY

The USD/JPY exchange rate is well above the 154.00 to 154.87 mark after the Federal Reserve announced a hawkish 25 basis point rate cut. Although the possibility of a rate hike cannot be ruled out, the Bank of Japan is expected to remain unchanged. The yen struggled to maintain the slight momentum of the yen against the dollar in the previous day and attracted new sellers during the Asian session on Wednesday. Data released earlier today showed that Japan's trade account unexpectedly improved in November due to strong export growth, although a decline in imports pointed to weak local demand. Coupled with market concerns about the uncertain economic outlook due to US President-elect Trump's tariff plan, this reaffirmed expectations that the Bank of Japan will keep interest rates stable later this week and weighed on the yen. At the same time, the less dovish outlook of the Federal Reserve's policy and expectations that Trump's policies may lead to increased government borrowing and boost inflation still support the rise in US Treasury yields. This became another factor suppressing the low-yielding yen, although the easing risk tone helped limit further declines.

From a technical perspective, some dip buying on Wednesday came after the recent breakout of the very important 200-day moving average (152.16), which favors bulls. Also, daily oscillators maintain bullish momentum and are still far from entering overbought territory, which suggests that the path of least resistance for the USD/JPY pair is to the upside. However, any further upside move for USD/JPY is likely to face resistance around the 155.00 mark and then the 155.80 area, which is the top of November 20. If sustained, it will pave the way for the recapture of 156.75 (November 15 high). On the other hand, the $154.00 area seems to be providing support for now. Some follow-through selling below the 154.00 mark could push USD/JPY back to yesterday's lows, which are around the 153.35 area. Failure to hold the above support levels could change the trend in favor of the bears and accelerate the decline of USD/JPY towards the 153.00 round number mark.

Today, we recommend shorting before 155.00, stop loss: 155.20; target: 154.20, 154.00

EUR/USD

The EUR/USD fell sharply after the Fed cut interest rates, but also took a slightly hawkish stance as the central bank expects to ease 100 basis points over the next two years. At the time of writing, the pair was trading below 1.0347 and fluctuated widely. Powell said in a press conference that the central bank may be more cautious when considering further adjustments and acknowledged that the policy is less restrictive. He added that the risks and uncertainties around inflation are tilted upward, adding that higher inflation is one of the reasons for adjusting the dot plot. Jerome Powell added that it may take one to two years for inflation to reach the 2% target, adding that the labor market is not cooling in a worrying way. The Fed cut interest rates by 25 basis points to a range of 4.25%-4.50%, but the decision was not unanimous as Cleveland Fed President Beth Hammack voted to keep rates unchanged.

EUR/USD fell sharply, breaking through the psychological level of 1.0450, extending the decline to a low of 1.0347. The pair will continue to fluctuate as Fed Chairman Powell takes a stance. The 14-day relative strength index (RSI) among technical indicators hovers below 30, indicating a warning that the recovery may stagnate, and the continued bearish momentum is active. The current resistance is 1.0400 (market psychological level), and the low of December 13, 1.0452, and the support is at the low of the year to date, 1.0332. If cleared, the next support will be the low of the year to date, 1.0300.

Today, it is recommended to short the euro before 1.0365, stop loss: 1.0380, target: 1.0320, 1.0300.

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