USD

Earlier this Tuesday, Russian President Vladimir Putin signed a decree allowing the use of nuclear weapons against non-nuclear states with the backing of nuclear powers, subsequently causing the US dollar to tumble. At the beginning of this week, the dollar was consolidating in relatively calm trading. After the dollar surged following the US elections, investors may step back to assess the outlook as the president-elect assembles his team and outlines policy priorities. Consequently, market sentiment was somewhat subdued. The dollar further declined to test a three-day low, as the market seemed to lose some enthusiasm for the "Trump trade," although this could be temporary. With US Treasury yields falling, the dollar index further lost ground and might challenge the key support level at 106.00. Looking at the past two US presidential elections, the dollar index rose in the initial response to Trump's victory in 2016, and weakened in the reaction to Biden's victory in 2020. In both elections, the immediate post-election response of the dollar began to weaken in mid-to-late December (rising 5.5% in 2016 and falling 4.5% in 2020). So far, the dollar's overall trajectory closely matches the situation in 2016; the dollar index's response to the 2024 results is similar (about a 5% fluctuation), suggesting an initial risk of rising to around 108.50, then consolidating by the end of the year.

From a recent fundamental perspective, the dollar index underwent a market repricing due to President-elect Donald Trump winning the presidential election and securing control of both the House and the Senate. Currently, the trend of the past few weeks seems to have peaked and is beginning to ease back to the levels from two weeks before the US presidential election. After a brief test, with bears resolutely defending last week's highs at the psychological barrier of 107.00 - 107.07, these levels are still in play. A new annual high has been reached at 107.07, once breaking the above static resistance level. Looking further up, if the 2023 high of 107.34 (October 3) is breached by the bulls, it could potentially reach a new two-year high of 108.00. On the downside, a series of new supports are coming into play. The first support level is at 106.00 (a psychological market barrier), and 105.93 (the closing level on November 12). A bit lower is 105.53 (the high on April 11), which should prevent any decline to 105.38 (the 38.2% Fibonacci retracement level from 114.78 to 99.57).

Consider shorting the dollar index around 106.28 today, with a stop loss at 106.40 and targets at 106.00, 105.90.

WTI Spot Crude Oil

Due to a key indicator in the US oil market showing a significant surplus for the first time in nine months, crude oil prices have stabilized after a decline. During the Tuesday Asian session, WTI crude prices expanded gains for the second consecutive trading day, trading near $69.00 per barrel. Oil prices received support due to escalating supply concerns amidst the potential intensification of the Russia-Ukraine conflict. Last Sunday, Russia launched its largest air raid on Ukraine in nearly three months, causing severe damage to Ukrainian power infrastructure. Oil prices were further supported after Norway's Equinor company announced that production at Johan Sverdrup, the largest oil field in Western Europe, had stopped due to a power outage onshore. According to Reuters, the company stated on Monday that efforts to resume production were ongoing, but the timeline for resumption remained uncertain. Last week, a speech by Federal Reserve Chairman Jerome Powell eased expectations for an imminent rate cut, highlighting the economy's resilience, a strong labor market, and ongoing inflation challenges, putting downward pressure on oil prices. Bearish sentiment increased, and concerns over weakened demand from China, the world's largest oil importer, further dragged down oil prices.

Crude oil prices remain in the same pattern, creating lower highs. On the other hand, traders need to look towards the levels maintained in May and June 2023 at $67.12 to find the first support near the psychological barrier of $66.00 - $66.18 (the low on October 1) which provides a fairly stable downside level. If this support zone is breached, prices might quickly fall to a new low in 2024 at $64.38. The 14-day Relative Strength Index (RSI) on the daily chart, being around the negative area of 48.00, indicates that there is still room for further declines in oil prices. On the positive side, the first hurdle to consider before reaching the 50.0% Fibonacci retracement level of $71.34 (from $64.75 to $77.93) are the 55-day simple moving average at $70.06, and the psychological market barrier at $70.00. If geopolitical tensions escalate further, the $72.22 level might be tested.

Consider going long on crude oil near $69.20 today, with a stop loss at $69.00, and targets at $70.50 and $70.70.

XAUUSD

Gold prices slightly retreated from a daily high near $2,640 but easily maintained above $2,600. Developments surrounding the Russia-Ukraine conflict and falling U.S. Treasury yields, escalating geopolitical tensions, have helped gold prices stabilize. At the beginning of the week, gold prices rose above $2,600 after falling to a two-month low of $2,536. The escalation of the Russia-Ukraine conflict, coupled with a weakening dollar, has opened the door for gold to rise. Wall Street saw mixed results, with two of the four major U.S. stock indices closing higher, while the others fluctuated. Geopolitical situations continued to drive gold prices after the White House took measures following Russia's large-scale attack on Ukraine. According to CNN, recently disclosed by two officials, President Joe Biden authorized Ukraine to use long-range missiles within Russian territory. This decision was a response to North Korea deploying thousands of troops to support Moscow, putting pressure on the dollar, which fell near 106.20. On the other hand, gold was thus boosted back above $2,600.

From the daily chart, after November 14, gold prices resumed their upward trajectory as expected, once a "hammer" candlestick was formed, paving the way for a rebound. Yesterday, gold/dollar broke above the October 10 swing low of $2,603 and the psychological area of $2,600, triggering buying interest, initially targeting the 14-day moving average at $2,654.50, with further resistance near the 20-day moving average of $2,683. If gold prices re-break below the November 13 high of $2,619 and the 10-day moving average of $2,621.50, a further downward move could retest the psychological level of $2,600, with the next support at the 89-day moving average of $2,570.30.

Consider going long on gold near $2,627.00 today, with a stop loss at $2,623.00; targets at $2,645.00 and $2,650.00.

AUDUSD

The Australian dollar/U.S. dollar pair broke through the key 0.6500 level on Tuesday, climbing higher despite prevailing risk-off sentiment, as the hawkish minutes from the Reserve Bank of Australia seemed to inject new vitality into the Aussie. The Australian dollar rebounded modestly following the release of the November meeting minutes by the Reserve Bank of Australia on Tuesday. The minutes revealed that the RBA's board remains cautious about the potential for further inflation increases, emphasizing the need to maintain restrictive monetary policy. Board members of the RBA also stated there was no "immediate need" to adjust the cash rate but left the door open for future rate adjustments, not ruling out any options. The current forecast is based on the expectation that the cash rate will remain unchanged until mid-2025. The Aussie was supported after RBA Governor Lowe's hawkish remarks last week, where Lowe emphasized that the current interest rates are sufficiently restrictive and will remain unchanged until the central bank is confident about the inflation outlook. Despite recent hawkish statements by Federal Reserve officials, the dollar remains in a downward correction. However, the downside for the dollar may be limited.

From the daily chart, the 14-day Relative Strength Index (RSI) rebounded from 31 to around 41.50, temporarily moving away from oversold conditions. However, if the RSI falls below 31-30 again, it could indicate oversold conditions, suggesting a potential upward adjustment. In the short term, bears still dominate, with the next support level at 0.6500 (a round number), followed by the November low of 0.6440 (on November 14), and then the 2024 low of 0.6348 (on August 5). On the upside, initial resistance levels to watch are at 0.6566 {20-day moving average}, and 0.6600 (psychological market level), followed by a test of the 200-day moving average at 0.6629.

Consider going long on the Australian dollar near 0.6520 today, with a stop loss at 0.6505; targets at 0.6565 and 0.6580.

GBPUSD

After opening on Tuesday, the GBP/USD experienced a technical rebound, halting a six-day decline and reducing recent losses, briefly returning to the 1.2700 level. The rise in the pound was due to a unilateral drop in the dollar rather than intrinsic factors affecting the pound, as traders awaited this week's UK Consumer Price Index (CPI) inflation data. The market has entered a risk appetite recovery mode, reducing the pressure from recent widespread gains in the dollar. The Bank of England will set the stage for volatility in the pound, with traders focusing on the UK October Consumer Price Index to be released on Wednesday. The market forecasts that the annual UK October CPI will rise from the previous value of 1.7% to 2.2%, while the annual core CPI is expected to remain steady at 3.2%. This week the market gets a good respite from impactful US economic data, however, pound traders will closely monitor the latest situation with UK retail sales on Friday.

From the daily chart, the pound rebounded slightly by 0.55% at the beginning of the week, breaking the six-day losing streak and reducing recent losses to just below 1.2700, but the cumulative recent drop still leaves the pound in a bearish zone below the 200-day moving average near 1.2819. GBP/USD hit a multi-month low of 1.2597 last Friday, completely reversing after reaching a multi-year high in September of this year. GBP/USD has fallen about 6.25% from the September high of 1.3434. Due to potential short-covering rallies recently, a short-term rebound to the resistance area between 1.2770 (10-day moving average) and 1.2800 (psychological market level) cannot be ruled out. On the other hand, the recent formation of a "death cross" bearish pattern by the 10-day and 200-day moving averages, if the pair falls back below 1.2600 and 1.2597 (the low on November 15th), this could pave the way for further declines. The next support levels will be near 1.2509 {the low of May 9th}, and 1.2500 {psychological level}.

Today, it is suggested to go long on GBP at 1.2670, with a stop loss at 1.2655, and targets at 1.2730 and 1.2740.

USDJPY

Due to the uncertainty of an interest rate hike by the Bank of Japan, the yen failed to capitalize on its modest intraday gains. Reduced bets on significant interest rate cuts by the Federal Reserve have revived demand for the dollar, providing support for USD/JPY. Concerns about intervention and geopolitical risks may help limit further declines in the yen, a safe-haven currency. The yen trimmed some of its gains against the dollar from Asia, as bulls seemed hesitant amidst uncertainty over when the Bank of Japan would raise interest rates again. Additionally, expectations that inflationary policies touted by U.S. President-elect Trump will limit further easing by the Fed continue to support a rise in U.S. Treasury yields. This, coupled with a positive risk tone, helps limit the lower-yielding yen. That said, speculation that Japanese authorities might intervene in the forex market to support the currency seems to limit significant depreciation of the yen. Moreover, geopolitical risks may continue to provide some support for the yen, combined with a weak trend in the dollar price, which should act as a headwind for the USD/JPY pair.

From a recent technical perspective, the USD/JPY pair failed to sustain above the 155.00 psychological level at the start of the week, followed by a pullback, prompting bullish traders to remain cautious. However, under the support of the 14-day Relative Strength Index (RSI) on the daily chart, the spot price may continue to find support near 153.85. Some subsequent selling should pave the way for further declines to the 153.25 area, which would fall to the 153.00 round figure and form the next relevant support near 152.50. On the other hand, the 155.00 psychological level now appears to be a direct resistance, breaking through this area, followed by the high near 155.35 on Monday. A sustained move beyond the latter will reaffirm the recent positive outlook, allowing the USD/JPY pair to break through the 155.70 intermediate barrier and potentially reclaim the high at 156.00 (the midline of the ascending channel on the daily chart).

Today, it is suggested to go short on the dollar near 154.80, with a stop loss at 155.00; targets at 154.10 and 153.90.

EURUSD

The EUR/USD pair rebounded for two consecutive days, further narrowing its decline, and momentarily rose slightly above 1.0600 as the market relaxed its pursuit of the dollar, giving the euro a chance to breathe. Apart from ECB President Lagarde's speech on Wednesday, economic data remains tepid ahead of the global Purchasing Managers' Index (PMI) data this Friday. Until then, the Eurozone market will diverge from the mainstream market trends. The European Central Bank is currently in a dilemma as inflation in Europe remains more persistent than European policymakers initially expected, while the European economy is unilaterally tilted. This week's economic data in Europe and America remains tepid, but on Friday, the S&P PMI business activity forecast will be published during the European and American market sessions, at which time euro traders will remain cautious.

From the recent weekly trend, EUR/USD rebounded from a yearly low of 1.0496 at the beginning of the week, reaching just above 1.0600 after rising to around 1.0500 in the latter half of last week. EUR/USD still maintains a bearish outlook, while the 14-day Relative Strength Index (RSI) is seeking a bottom in the negative area (35.60). Currently, the pair is far below the 200-day moving average at 1.0863. EUR/USD has rebounded from its lowest level in a year at 1.0496, having fallen nearly 6.5% from the high point slightly above 1.1200 in September. If EUR/USD continues to rebound, it may encounter technical resistance between 1.0700 and 1.0800. On the downside, focus on the 1.0500 (round number) and 1.0496 (support area on November 14), with the next level being the 2023 low at 1.0448 (on October 3).

Today, it is suggested to go long on the euro before 1.0580, with a stop loss at 1.0565, and targets at 1.0650 and 1.0670.

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