US Dollar Index

The US dollar is expected to rise by more than 6.5% by the end of 2024, reaching its best performance since 2015. Monetary policy divergence between the Federal Reserve and other major central banks has been a clear theme this year. The US dollar index continues to fluctuate around the 108.00 mark after closing flat on Monday. However, the index still closed higher for the third consecutive month. The US dollar is the overall winner, gaining against all major rival currencies. In fact, Trump's victory is one of the main reasons for the rise in the US dollar, and the political, financial and monetary consequences of Trump's second term are already evident. The hawkish stance of the Federal Reserve has provided an additional boost to the US dollar in the last trading month of the year. The US economy has outperformed its major rival countries, which further strengthens the bullish outlook for the US dollar.

The year-to-date high (108.55) above the 108.00 mark, recorded shortly after the hawkish Fed rate cut in December last year, is confirmed by the daily RSI, leaving some room for a possible corrective move in the near term. At the upper end of the range, continued bullishness may face immediate resistance at 109.00 (round mark). Beyond this level, resistance is seen at 109.20 (76.4% Fibonacci retracement from 114.78 to 100.16); and 109.29 (July 14, 2022 peak) areas as key resistance levels. If sellers regain control, initial support is seen at 108.08, and 108.00 (round number) at the 20 SMA on the 4-hour chart. A break below this level could lead to a test above 107.47 (50.0% Fibonacci retracement from 114.78 to 100.16) and 107.00 (market psychological level).

Consider shorting the US dollar index around 108.58 today, stop loss: 108.70, target: 108.20, 108.15

WTI spot crude oil

WTI crude oil prices rose for the third consecutive day, trading around $71.50 per barrel during the Tuesday session. Crude oil prices remained higher after the National Bureau of Statistics released the Manufacturing Purchasing Managers' Index (PMI), which showed that China's manufacturing industry expanded in December. China's factory output rose for the third consecutive month, although it fell slightly to 50.1 in December, lower than 50.3 in the previous report and lower than the market's expectations of 50.3. The data show that new stimulus measures are helping to support the economy of the world's largest crude oil importer. On the other hand, the decline in US crude oil inventories may provide short-term support to oil prices, as the market looks ahead, expecting potential turbulence this year due to concerns about oversupply, geopolitical tensions and the possible impact of the incoming Trump administration on oil policy, leading to cautious market sentiment.

Earlier this week, the market fully entered the New Year market quiet period. Because trading is very sparse. Some short-term fluctuations are expected, although any possible rebound lacks fundamentals to continue into 2025. Looking up, $72.50 (134-day EMA) and $72.54 (November 7 high) are nearby firm resistance levels. If more tailwinds emerge to support oil, the next key level will be $73.44 (160-day EMA). On the downside, the first solid support is near the psychological market level of $70.00. If it breaks, WTI oil prices will reach $69.34 (34-day EMA), followed by the low of $68.50 on December 23, 2023.

Consider going long on crude oil near 71.40 today, stop loss: 71.20; target: 72.50; 72.70

Spot gold

Gold prices rebounded about 0.59% to around $2,623 on thin trading volume on the last trading day this year. Gold prices will end the year with an impressive 27% gain, the strongest annual performance since 2010. The rebound was driven by central bank purchases, rising geopolitical tensions, and monetary easing policies implemented by major central banks. Gold prices remained subdued as investors reacted to signs of a hawkish Federal Reserve. This outlook led to a slight decline in non-yielding gold prices in the fourth quarter. However, safe-haven gold may gain some support as potential tariffs and trade policies of the incoming Trump administration may trigger trade conflicts and increase risk aversion.

In the last trading of 2024, the gold price is fluctuating around $2,620.00 per ounce. The daily chart shows that the gold price is in a consolidation phase as the metal is trading sideways around the 9-day (2,919.50) and 14-day (2,621.20) moving averages. The 14-day relative strength index (RSI) is hovering below 50 (latest at 47.50), reflecting a neutral sentiment. On the downside, the gold price may find immediate support near $2,603 ​​(Tuesday's low), and $2,600 (market psychological level). This is followed by the monthly low of $2,583.39 set on December 19. Regarding its resistance, the gold price's initial targets may be set at $2,640.50 (30-day moving average) and $2,639.50 (December 26 high), respectively. A break above these levels could support the pair towards the $2,656.60 (50-day moving average) level.

Consider going long on gold today before 2,620.00, stop loss: 2,617.00; target: 2640.00; 2645.00

AUD/USD

AUD/USD finally broke below the 0.62 mark again after China released mixed data on the National Bureau of Statistics Manufacturing Purchasing Managers' Index (PMI) on Tuesday. As a close trading partner, any fluctuations in the Chinese economy will affect the Australian market. In December, China's official manufacturing PMI fell to 50.1 from 50.3 previously, lower than the market's expectation of 50.3. The minutes of the recent meeting of the Reserve Bank of Australia showed that the board has become more confident about inflation since the last meeting, although risks remain. The board stressed that monetary policy needs to remain "sufficiently restrictive" until inflation is more certain.

On Tuesday, AUD/USD hit another low of 0.6179, the lowest since October 2022. The daily chart shows that there is a persistent bearish bias as the pair remains in a descending channel pattern. The 14-day relative strength index (RSI) of the technical indicator is hovering at the low 25 level, suggesting that the potential upward correction in the near term will dissipate. From the downside, 0.6120 (March 6, 2020 low) and the psychological support level of 0.6000 are in the way. On the other hand, the psychological market level of 0.6200 will be the first resistance level, followed by the 0.6274 (December 20 high) level.

Today, consider going long on AUD before 0.6175, stop loss: 0.6160; target: 0.6230; 0.6240.

GBP/USD

On Tuesday, GBP/USD retreated to near its recent lows of 1.2510. The Federal Reserve signaled a more cautious outlook for further rate cuts in 2025, marking a shift in its monetary policy stance. The development highlights the uncertainty of future policy adjustments under the expected economic strategy of the incoming Trump administration. The risk-sensitive pound may face challenges due to the protracted Russia-Ukraine conflict and continued tensions in the Middle East. In addition, the pound came under pressure as traders slightly increased their dovish bets on the Bank of England's policy stance in 2025.

The daily chart analysis shows that the 14-day relative strength index (RSI) of the technical indicator remains below the 40 level, indicating continued bearishness. In addition, GBP/USD is below its 9-day (1.2542), and 14-day (1.2569) moving averages, indicating weak short-term price momentum. A break above these moving averages could indicate a shift from bearish to bullish. On the downside, GBP/USD tested the early week lows near 1.2500. A break below 1.25 would reverse and strengthen the bearish bias, potentially pushing the pair towards the "double bottom" of 1.2485 (November 22) and 1.2475 (December 20). A break below that could exacerbate the bearish momentum, potentially pushing the GBP/USD pair down to 1.2400 (round number). On the upside, the GBP/USD pair tested the immediate barrier at 1.2569 of the 14-day exponential moving average, before opening the way to 1.2700 (market barrier).

Today's recommendation is to go long GBP before 1.2500, stop loss: 1.2485, target: 1.2550, 1.2560

USD/JPY

USD/JPY rebounded slightly on New Year's Eve, and the yen will fall by more than 10% in 2024, marking its fourth consecutive year of weakness against the US dollar (USD). The decline in the USD/JPY pair was attributed to the improvement in the Japanese Yen (JPY) as traders continued to assess market sentiment that the Bank of Japan is likely to hike interest rates in January following the release of Tokyo Consumer Price Index (CPI) inflation data last week. Moreover, the USD/JPY pair faced challenges as the US dollar fell amid falling Treasury yields. The US Dollar Index, which tracks the greenback against six major currencies, remained weak around 108.00 as US Treasury yields fell by around 2% on Monday. The 2-year and 10-year Treasury yields were 4.24% and 4.53%, respectively.

The last trading day of 2024 saw the USD/JPY pair trading around 157.00, maintaining bullish momentum within an ascending channel on the daily chart. The 14-day Relative Strength Index (RSI) hovered below 65 points, supporting the bullish trend. However, if the RSI crosses the 70 mark, it could indicate overbought conditions that could trigger a downward correction. On the upside, USD/JPY could retest the monthly high of 158.08 reached on December 26. A break above this level could pave the way for further gains, with the pair likely to target 160.00 (market psychological level), and the upper line of the ascending channel near 160.30. Immediate support is located at the 14-day moving average at 156.32. The next level would point to the market psychological level of 156.00.

Today, it is recommended to short the US dollar before 157.40, stop loss: 157.65; target: 156.60, 156.50

EUR/USD

EUR/USD finally closed below 1.0400 in 2024, trading in a fairly limited range on the last day of 2024. The US dollar was the overall winner, gaining against all major rival currencies. The euro was not the worst performing rival currency, but it fell about 6% against the dollar. In fact, Trump's victory was one of the main reasons driving the dollar higher, and although he has not yet taken office, the political, financial and monetary consequences of Trump's second term are already evident. First, his promise to impose heavy tariffs on imports from China, Canada and Mexico has raised concerns about rising inflationary pressures again. The Fed's hawkish stance below 1.04 again in the last trading month of the year provided an additional boost to the dollar. The US economy has outperformed its major rival countries, which further strengthened the bullish outlook for the dollar.

EUR/USD fell below 1.0400 (market psychological level) again on the last trading day of 2024. The overall stance is bearish as the daily chart shows that the 20-day simple moving average (1.0457) is bearish, gaining downside traction and providing psychological resistance around 1.0400. At the same time, if the pair rebounds to the 20-day EMA at 1.0457, it will attract dominant selling interest. Meanwhile, technical indicators have lost directional strength but remain in negative territory. The short-term outlook is neutral to bearish. The 4-hour chart shows that the pair fluctuated around a flat 20-hour, while the longer moving averages maintain a downward slope above the current level. Finally, technical indicators are slightly downward and lack directional strength. On the downside, watch out for 1.0332 (two-year low), and 1.0300 (market psychological barrier) may be considered as the next support level.

Today, it is recommended to go long on EUR before 1.0340, stop loss: 1.0325, target: 1.0380, 1.0390.

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