US Dollar Index

The dollar can maintain its gains, but will not add more. US durable goods prices were lower than expected. The US dollar index hit a weekly high of 108.06. The US dollar index rose to around 107.95 during the Asian trading session on Tuesday, ending a three-day losing streak. The new tariff threats from US President Donald Trump provided some support to the dollar. Trump said late Monday that he plans to impose tariffs on imported computer chips, pharmaceuticals and steel to bring production back to the United States, boosting the dollar. In addition, investors will closely monitor the development of tariff policies between the United States and its trading partners. The Federal Reserve's interest rate decision will be the focus on Wednesday, and policymakers are likely to keep the benchmark rate in the current range of 4.25%-4.50%. The US central bank is expected to cut interest rates again at the March and June meetings. The Fed's hawkish stance may boost the dollar, while a dovish stance may drag down the dollar against its competitors.

From a technical perspective, the trend of the US dollar index is currently still affected by multiple technical factors. In the past week, the price of the US dollar index has corrected and fell below the psychological level of 108.00. From the perspective of the upward target, the US dollar index first needs to recover the psychological level of 108.00. If it succeeds in breaking through, it will face the technical pressure levels of 108.25 (10-day moving average) and 108.50 (January 23 high). If this resistance level is broken, the US dollar index is expected to rise back to 109.00 (round mark). This level is considered an important technical target for further gains in the US dollar. The current technical chart shows that the 14-day relative strength index (RSI) of the technical indicator still has some downward potential, which means that the US dollar may face further correction pressure. The key support levels below the US dollar index are at 107.22 (last week's low), then 107.07 (65-day moving average), and 107.00 (round mark) area levels. A breakout points to the target position of 106.41 (80-day moving average).

Consider shorting the US dollar index around 108.00 today, stop loss: 108.15, target: 107.60, 107.50

WTI spot crude oil

WTI may face challenges due to weak Chinese manufacturing data and bleak demand outlook. US weather forecasts expect higher-than-usual temperatures this week, which may reduce demand for heating fuels. Trump may impose tariffs on steel, aluminum and copper, which may have a knock-on effect on global commodity demand. On Tuesday, US WTI crude oil prices traded around $73.20. WTI prices remained defensive due to uncertainty surrounding US President Donald Trump's tariff plan and weak economic data from China. Trump said he would push Saudi Arabia and OPEC to lower oil prices. Trump's proposed tariffs and uncertainty about energy policy may weaken WTI prices in the short term. The US central bank is expected to keep interest rates unchanged at its January meeting due to widespread uncertainty. Oil traders will closely monitor the press conference for guidance on the Fed's outlook. The Fed's hawkish stance may weigh on economic growth and WTI demand expectations. On the other hand, the dovish stance may provide some support for black gold.

From the technical perspective of the daily chart, WTI crude oil prices barely closed above the high of November 7 last year and the low of January 9 this year at 72.88, while the 14-day relative strength index (RSI) of the technical indicator fell to a one-and-a-half-month low and is currently close to 49, increasing the credibility of the bearish potential. It is necessary to pay attention to the resistance of selling on rallies, but if it falls below the support of $72.88, it may fall further to $72.33 (the low of January 9). Then the round number of $72.00 will further trigger a deeper correction to the 100-day moving average of 70.92; on the upside, pay attention to the resistance near the 200-day moving average of 74.238. If it can recover this position, it will weaken the bearish signal in the future market. The next level will point to the level of $75.01 (last Friday's high) and 75.93 (50.0% Fibonacci rebound from 87.12 to 64.75).

Today, you can consider going long on crude oil around 73.40, stop loss: 73.20; target: 74.70; 74.90

Spot gold

Trump's tariff chatter, coupled with the rebound in European stocks and the more optimistic tone of US futures, helped gold prices achieve a solid recovery, partially offsetting the sharp decline on Monday, and climbed above $2,760 on Tuesday. Gold prices fell sharply to $2,740 after a sharp correction from a three-month high of $2,786. Gold Trading In light of the latest tariff talks by U.S. President Donald Trump and his administration, attention turned to medium-term U.S. economic data and Federal Reserve policy announcements. This was despite the safe-haven demand for the U.S. dollar amid rising trade war concerns and a sustained sell-off in global equities. Reports of the White House suspending all federal grants pushed U.S. Treasury yields higher, adding to the bearish tone for gold prices. The Trump administration's ongoing tariff threats continue to dampen risk sentiment.

The daily chart shows that the short-term technical outlook for gold prices remains constructive despite the long-term correction. Gold prices failed to close above the symmetrical triangle target of $2,785, and buyers need to be cautious. However, the 14-day relative strength index (RSI), a technical indicator, remained comfortably above the midline and is currently close to 55, keeping gold buyers hopeful. Adding credibility to the bullish potential, the 50-day moving average closed above the 100-day moving average last Thursday, confirming a "golden cross" bullish pattern. Gold prices must close above $2,786 (last week's high) to set a new all-time high above $2,790. Buyers will target the psychological $2,850 mark. On the downside, immediate support will be seen at the previous day's low of $2,731, and $2,732 (10-day moving average). Then $2,710-2,700 (lower line of the ascending channel, round number mark) and $2,695 (20-day simple moving average).

Consider going long on gold before 2,759.00 today, stop loss: 2,755.00; target: 2,778.00; 2,780.00

AUD/USD

AUD/USD continued its negative start this week, falling to a five-day low near 0.6235, thanks to a strong recovery in US dollar buying pressure and increased US tariff threats. The Australian dollar fell against the US dollar for the second consecutive day on Tuesday. The weakness in AUD/USD is related to the tariff threats of US President Donald Trump. The risk-sensitive Australian dollar is also facing challenges as risk aversion increases due to the plan of Trump advisers to impose 25% tariffs on Mexico and Canada as early as February 1. President Trump announced plans to impose tariffs on imported computer chips, pharmaceuticals, steel, aluminium and copper on Monday night. The goal is to move production to the United States to promote domestic manufacturing. The US dollar has strengthened due to uncertainty about the impact of US President Donald Trump's trade and immigration policies. This backdrop may prompt the Federal Reserve to maintain a cautious stance on rate cuts this year. In addition, the Australian dollar has failed to gain support from China's new stimulus measures aimed at promoting the development of its index investment products, which is its latest effort to revive its weak stock market.

On Tuesday, AUD/USD traded near 0.6260, constrained by an ascending channel on the daily chart, suggesting a potential bullish bias. The 14-day relative strength index (RSI) is around 50, indicating neutral market sentiment. AUD/USD tested the immediate support of the 20-day moving average at 0.6229.  Stronger additional support is located near the psychological level of 0.6200. On the resistance side, AUD/USD could test the key psychological level of 0.6300. A break above the latter could strengthen the bullish bias and allow the pair to test the 55-day daily moving average at 0.6330.

Consider going long on AUD before 0.6240 today, Stop Loss: 0.6225; Target: 0.6280; 0.6290.

GBP/USD

On Tuesday, fresh tariff headlines provided an additional boost to the US dollar, fueling its rebound and weighing on risk-sensitive currencies. As a result, GBP/USD fell to the lower limit of its weekly range near 1.2415, which has been well supported so far. GBP/USD ended a three-day winning streak as expectations grew that the Bank of England would almost certainly cut interest rates to 4.5% at its upcoming meeting. The pair traded around 1.2440 during Tuesday's Asian session. Weak economic data from the UK – including weaker inflation, retail sales, labor market data and weak GDP growth in December – strengthened the case for the Bank of England to cut interest rates by 25 basis points in February. Meanwhile, the dollar index, which measures the greenback against six major currencies, hovered around 108.00. The greenback gained momentum after President Trump announced tariffs late Monday.

From the daily chart, despite the recent pullback, the 14-day relative strength index of GBP/USD technical indicator remains above the 50 positive zone, indicating that the bullish bias remains. At this stage, GBP/USD is trading around 1.2445, which is the 50% Fibonacci retracement level of the latest downtrend and the 34-day simple moving average. Technical buyers may get hurt if the pair fails to stabilize above this level and starts using it as resistance. In this case, 1.2400 (round number) may be considered as the next support level, followed by 1.2339 (20-day simple moving average) and 1.2300 (market psychological level). Once GBP/USD confirms 1.2450 as support, 1.2500 (round mark), and 1.2502 (last week's high) may be seen as the next resistance level, followed by 1.2576 (January 7 high)

Today's recommendation is to go long GBP before 1.2428, stop loss: 1.2415, target: 1.2480, 1.2490

USD/JPY

USD/JPY built on the rebound from the six-week low overnight and recovered to 155.50 in Asian trading on Tuesday. Weak Japanese service inflation data provided additional support for the currency pair's recovery. In addition, US President Donald Trump's tariff plan led the dollar to strengthen, supporting USD/JPY. The yen attracted a lot of selling in the Asian session on Tuesday, moving away from the six-week high hit the previous day. Investors remain concerned about the possible economic impact of US President Donald Trump's trade policies, which in turn is believed to have weakened the yen. Apart from this, a nice rebound in US Treasury yields acted as another factor to divert funds away from the low-yielding Japanese yen. This, along with the strong rebound in the US dollar from its lowest level since December 18 hit on Monday, pushed USD/JPY back to around the mid-155.00 level. However, any meaningful depreciation in the yen seems difficult to achieve given the market betting on further rate hikes by the Bank of Japan. In contrast, the Federal Reserve is expected to cut interest rates twice this year, which in turn may pose a headwind for US Treasury yields, the US dollar and the pair.

From a technical perspective, the sustained break below the multi-month ascending trend channel support overnight is seen as a key trigger for bearish traders. Moreover, the oscillators on the daily chart have just started to gain negative momentum. This in turn suggests that the path of least resistance for USD/JPY is to the downside. Therefore, any subsequent gains may be seen as selling opportunities around the trend channel support breakout point, now turned into resistance, around the 156.00 mark, which should limit the spot price around the 156.60-156.70 supply zone. On the other hand, the 155.00 psychological level now seems to protect the upcoming downside, ahead of the 154.55-154.50 horizontal range, the 154.00 round number level and the 153.70 area of ​​the overnight low. Further follow-through selling will confirm the short-term negative outlook and drag USD/JPY further towards the 153.30 intermediate support level and ultimately the 153.00 level.

Today's recommendation is to short USD before 155.70, stop loss: 155.90; target: 154.80, 154.60

EUR/USD

EUR/USD is trading significantly lower and adding to Monday's retracement after a notable rebound in the US dollar, all in response to tariff chatter and caution ahead of the FOMC event. EUR/USD extended its mild pullback from 1.0533 (or its highest level since December 17) overnight and attracted heavy follow-through selling during Tuesday's Asian session. Spot prices are currently trading around the 1.0430 area and appear at risk of further weakness amid a strong pick-up in demand for the dollar. Investors remain concerned that U.S. President Donald Trump's trade tariffs will reignite inflation concerns, leading to a modest rise in U.S. Treasury yields. This in turn helped the dollar index, which tracks the greenback against a basket of currencies, rebound strongly from a more than one-month low hit on Monday and put downward pressure on EUR/USD. Meanwhile, Trump threatened to impose tariffs on Mexico, Canada, China and the European Union earlier this month. This, along with rising bets on a sharp ECB rate cut on Thursday, weakened the euro and led to a fall in EUR/USD.

Uncertainty surrounding potential U.S. trade tariffs continues to cloud the outlook for EUR/USD. The Fed may be forced to adopt a more hawkish stance, further strengthening the dollar and putting pressure on the euro. On the upside, initial resistance is at 1.0500 (round number), followed by the 2025 high of 1.0532 (January 27), and a break above 1.0610 (89-day moving average). Currently, as long as the pair is trading below the 100-day moving average of 1.0666, the overall bearish trend remains intact. Short-term indicators show mixed signals. The RSI hovers around 53.50, indicating some bullish bias, showing a weakening trend strength. Therefore, on the downside, the 1.0379 (34-day moving average) and the 1.0356 (23.6% Fibonacci rebound from 1.0937 to 1.0177) levels can be watched, respectively. If selling pressure reappears, traders will pay close attention to these levels, and a breakout points to 1.0300 (market psychological level).

Today, it is recommended to go long on the euro before 1.0416, with a stop loss of 1.0405 and a target of 1.0470 and 1.0480.

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