US Dollar Index

The dollar index fell below 98.00 on Tuesday, testing its lowest level in more than three years at 97.71, as continued oil supplies from the Middle East eased inflation concerns and supported expectations of multiple rate cuts from the Federal Reserve this year. Earlier, President Trump announced a ceasefire agreement between Iran and Israel, calling the conflict the "12-day war." The market largely ignored Iran's retaliatory attack on a US military base in Qatar, which did not cause casualties, while Tehran's decision to avoid targeting the Strait of Hormuz helped ease concerns about oil supply disruptions. In addition, the dollar's weakness was also due to Federal Reserve Governor Michelle Bowman's statement that she may support a rate cut in July if inflation remains low, echoing the dovish remarks of Governor Christopher Waller. Investors now turn their attention to Fed Chairman Jerome Powell's semi-annual testimony to Congress, and the market will seek further guidance on the central bank's policy trajectory.

The dollar index continued to fall to 98 on Tuesday. The 14-day relative strength index (RSI), a technical indicator on the daily chart, is 39.60, still below the neutral 50 level. However, the MACD indicator has improved its short-term momentum since DIFF crossed the DEA line on June 18. The US dollar index is still under pressure below the 14-day simple moving average of 98.61. Market sentiment is driven by two factors: on the one hand, the US military strike on Iran's nuclear facilities has triggered safe-haven demand; on the other hand, the cautious stance of Fed officials on the July rate cut has suppressed US dollar shorts. The medium- and long-term short-term pattern has not changed. However, if the short-term 14-day simple moving average of 98.61 and 99.00 {integer mark} are broken, it may trigger short-covering to the psychological market mark of 100. Historical data shows that the US dollar usually faces seasonal selling pressure in July and August, so the support below focuses on the 98.00 {integer mark} area. If it breaks, it will continue to test 97.61 {June 12 low}. The short-term point is 97.22 {March 22, 2022 low} and 97.00 {integer mark} area.

Consider shorting the dollar index around 98.10 today, stop loss: 98.25, target: 97.65, 97.55

WTI spot crude oil

WTI crude oil fell more than 4% to $63.72 a barrel, extending the previous session's 7.5% drop and falling below the level when Israel attacked Iran on June 12. Currently trading around $64.70, after U.S. President Trump said Israel and Iran had agreed to a ceasefire, easing concerns about supply disruptions in the Middle East. Trump hinted that the ceasefire would begin later on Monday, with Iran to stop its attacks first and Israel to follow in the next few hours. If both sides remain peaceful, the war will officially end in 24 hours, ending the 12-day conflict. Earlier, Iran fired missiles at U.S. military bases in Qatar in retaliation for the U.S. strike on its nuclear facilities. The U.S. defense system intercepted the missiles and no casualties were reported, which led to prices closing down more than 7% on Monday. The easing of tensions eased concerns that Iran might try to block the Strait of Hormuz, a key thoroughfare through which about 20% of the world's oil passes.

WTI crude oil may retest the 50-day simple moving average of $63.12 per barrel, and the support area of ​​$63.00 {round mark}, a break below which may open the way to the $60.00 {market psychological mark} to $59.40 {May 30 low} range. During the Asian session on Tuesday, WTI oil prices bottomed out and rebounded to below $67.00, having earlier fallen to around $64.13 per barrel. WTI crude oil may retest the support of $68.63 per barrel {14-day simple moving average}, a break below which may open the way to the psychological mark of $70.00. In Monday's report, two scenarios were discussed: the market may consolidate above $70.95 {9-day simple moving average}, or fall sharply to $63.12. With the sharp drop on June 23, the target of $55.04 seems achievable.

Consider going long on WTI crude oil near 64.70 today, stop loss: 64.50, target: 66.00, 66.0

Spot gold

Gold fell to $3,325, a two-week low, on Tuesday, as the market assesses the sustainability of the ceasefire between Iran and Israel. Gold fell to $3,295, a two-week low, on Tuesday, as the market assesses the sustainability of the ceasefire between Iran and Israel. Tehran and Tel Aviv agreed to a temporary ceasefire after exchanging strikes last week, but reports of new missile launches and strike orders raised doubts about the effectiveness of the ceasefire and supported concerns that the conflict will resume soon. The exchange of controlled strikes between Iran and the United States, which reduced collateral damage and foreshadowed a period of significant de-escalation, reduced the appeal of gold's safety and prevented the metal from retesting the all-time high of $3,500 in late April. Meanwhile, key Fed FOMC members noted that they were not opposed to cutting interest rates at the upcoming Federal Reserve meeting in July, as signs of volatility in the labor market and consumer price deflation appeared.

The daily chart shows that gold prices are consolidating below the key resistance zone of $3.397 {Monday high} and $3,400 {round mark} after a strong rise. Gold prices are currently above the 50-day simple moving average, which provides dynamic support near $3,323.50. The psychological mark of $3,300 is also a key support level. A break will point to $3,271.70 {May 30 low}. The 14-day relative strength index (RSI) indicator on the daily chart fell back to 50 before indicating that the upward trend has weakened slightly. Therefore, on the upside, a daily closing price above $3,360 will mark the bullish momentum. The first resistance position is near $3,379.90 {9-day simple moving average}, and the recent highs of $3.397 {Monday high} and $3,400 {round mark} are obvious.

Consider going long on gold near 3,318 today, stop loss: 3,314, target: 3,345, 3,350

AUD/USD

The Australian dollar broke through $0.6480 on Tuesday, reaching as high as $0.6520, extending the previous session's gains, supported by a weaker dollar, while the situation of the Israel-Iran ceasefire is complicated. US President Trump announced a "complete and comprehensive" ceasefire to end the twelve-day conflict, scheduled to start on Monday evening, with Iran to stop attacks first, followed by Israel. However, Iranian Foreign Minister Abbas Araghchi denied reaching any ceasefire agreement or stopping military operations. Dovish comments from Federal Reserve policymakers Michelle Bowman and Christopher Waller also provided resistance to the US dollar. In Australia, investors are now turning their attention to the Consumer Price Index (CPI) indicator for May, which is expected to slow slightly after remaining unchanged for three consecutive months. The market is currently pricing in an 80% chance of a 25bp rate cut by the Reserve Bank of Australia (RBA) in July, with a cumulative 73bp cut expected between now and the end of the year.

AUD/USD traded around 0.6500 on Tuesday. Technical analysis on the daily chart shows a revival of the bullish bias as the pair has rebounded into an ascending channel pattern. Moreover, the 14-day relative strength index (RSI) of the technical indicator has slightly risen above 50, reinforcing the bearish bias. However, the pair remains below 0.6537 (June 18 high), suggesting weak short-term price momentum. The pair is primarily testing 0.6500 {market psychological barrier}. A successful break above this level would strengthen bullish sentiment and take the pair closer to the seven-month high of 0.6552 set on June 16, followed by the upper boundary of the ascending channel around 0.6600. On the downside, immediate support is seen near the lower boundary of the ascending channel at 0.6440, which coincides with the 50-day moving average at 0.6445. A break below this critical support zone will contribute to the strengthening of the bearish bias and exert downward pressure on the pair to test the psychological level of "pullback support" near 0.6400.

Consider going long on AUD near 0.6474 today, Stop Loss: 0.6460, Target: 0.6520 , 0.6530

GBP/USD

GBP/USD rose on Tuesday, with prices rising sharply after the United States chose to directly intervene in the recently escalated Israeli-Iranian conflict. Following Iran's retaliatory attack on US Air Force facilities in Qatar early Monday, the parties tentatively agreed to a ceasefire, and negotiations between Iran and Israel are expected to begin. The volatile evolution of the conflict in the Middle East has triggered a bearish turn in the US dollar market, with investors betting on a slowdown in retaliatory missile attacks. The global turn towards the US dollar has brought buying of GBP/USD back above 1.3550. Federal Reserve Chairman Jerome Powell will speak at a government hearing to kick off two days of speeches to Congress and Senate economic committees. Market attention will be more focused on Fed Chairman Powell, as investors look to see how the Fed will respond to US President Trump's continued taunting of the Fed's reluctance to cut interest rates.

GBP/USD rebounded back above 1.3500 at the beginning of the week after failing to break through recent technical resistance last week. The pair's sharp decline once gave GBP/USD a technical rebound at the key 1.3400 level, pushing the exchange rate to continue to rise in early trading this week. The upward trend in GBP/USD remains, but it faces strong resistance. Buyers need to push the exchange rate above 1.3600 {market psychological mark}. This will pave the way for a challenge of the year's high of 1.3632 and the 1.3700 round mark. Conversely, a daily close below 1.3535 {10-day SMA} would expose the pair to a correction, with sellers eyeing the 1.3500 mark, as well as the 1.1464 {20-day SMA} level.

Consider going long GBP around 1.3600 today, Stop Loss: 1.3590, Target: 1.3645 , 1.3600

USD/JPY

The yen appreciated to around 144.60 against the dollar on Tuesday, rebounding from multi-week lows as the greenback weakened after U.S. President Donald Trump announced a ceasefire between Israel and Iran. Trump called the war the "12-day war." Markets also shrugged off Iran's retaliatory attack on a U.S. military base in Qatar, which caused no casualties, while Tehran's decision to avoid targeting the key Strait of Hormuz helped ease concerns about wider supply disruptions. Domestically, investors continued to assess the Bank of Japan's policy stance. The central bank recently kept its benchmark rate unchanged at 0.5% at its June meeting, but indicated a willingness to hike further, citing persistent core inflation driven by businesses converting wage growth into prices.

From a technical perspective, the decline in USD/JPY dragged it below the 146.00 round number mark. Moreover, the mixed oscillators on the daily chart make it prudent to wait for positioning for further losses before a sustained break below the 145.00 {round number mark}, and 144.86 {14-day moving average} areas. The latter should act as a short-term support level, which if decisively breached could shift the bias of bearish traders and prompt some technical selling towards the 144.18 {50-day moving average}, and 144.00 mark. On the other hand, the 146.00 round number mark now appears to be an immediate strong resistance level, and if breached, USD/JPY could climb to the 146.70-146.75 area (23.6% Fibonacci retracement). Some follow-through buying, leading to a subsequent strong performance above the 147.00 mark, could push the spot price to reach 148.03 {early week high}.

Consider shorting USD around 145.20 today, Stop Loss: 145.50, Target: 144.00, 143.80

EUR/USD

The euro rose against the dollar on Tuesday despite the Middle East crisis dampening sentiment. The Eurozone HCOB flash Purchasing Managers Index (PMI) missed expectations and had little impact on the shared currency, while the German PMI improved slightly, although it remained in contraction territory. Geopolitics was the main driver at the beginning of the week. Last Saturday, the United States launched an attack on three key Iranian nuclear facilities after the White House failed to reach an agreement with Tehran. Now, the attention of EUR/USD traders turns to the testimony of Federal Reserve Chairman Jerome Powell before the US Congress and the Fed spokesperson. In the eurozone, the schedule will include the release of Germany's June IFO business climate index, as well as speeches by ECB Vice President De Gindos and Chief Economist Philip Lane.

EUR/USD has an upside bias, holding above 1.1500 amid risk aversion. However, with improved sentiment and Fed Governor Bowman's dovish turn, the pair recaptured 1.1600 and extended gains above Tuesday's high of 1.1642. The 14-day relative strength index (RSI) on the daily chart resumed its upward trend {latest around 64.50}, suggesting that buyers are gathering strength. That said, the path of least resistance for EUR/USD is tilted to the upside. The first resistance would be the yearly high of 1.1631 on June 12. In the event of further strength, the pair could target 1.1650 and 1.1700 round-number marks on the contrary, and a break below 1.1540 {9-day simple moving average} would pave the way for a test of 1.1500. Once broken, the next support level is the 20-day simple moving average level of 1.1463.

Today, you can consider going long on the euro around 1.1598, stop loss: 1.1585, target: 1.1630, 1.1650

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.