US Dollar Index

The US dollar index, which measures the value of the greenback against a basket of currencies, rose to 107.00 after European Central Bank President Christine Lagarde confirmed rumors of a possible 50 basis point rate cut. Lagarde's comments came after the European Central Bank cut its benchmark interest rate by 25 basis points, the fourth rate cut this year. After the ECB's rate decision, traders preferred the dollar to the euro, causing the dollar index to surge to around 107.00. In addition, US producer price index (PPI) data showed higher-than-expected inflation, which could slow the Federal Reserve's shift to loose monetary policy next year. Midweek, the dollar remained slightly higher. The US inflation rate data remained stable, and traders expected the Federal Reserve to cut interest rates by 25 basis points next week, which led to a sharp rise in the dollar. In the short term, the seasonal weakness of the dollar in December, coupled with the fading impact of political turmoil on the market, is expected to continue to fluctuate in a narrow range. The trend of the dollar mainly depends on the policies of the new US administration, and it is estimated that the dollar still has room to strengthen against many currencies next year.

From the recent trend, the US dollar index is running in the range of 105.50 to 107.50, and it is estimated that this range trend can be maintained until the end of this year. The daily chart shows that the 14-day relative strength index (RSI) of the technical indicator is in the positive area (the latest report is around 62), indicating that the bullish momentum continues. The moving average convergence divergence (MACD) indicator shows a smaller red histogram bar, indicating that the bearish pressure is reduced. At this stage, the US dollar bulls have recovered 106.35 (5-day moving average), followed by 107.00 (integer mark), and 107.50. Looking down, 106.00 is the first target position. Further pointing to the 105.77 (34-day moving average), and 105.72 (daily chart descending triangle support line) area level. If it breaks, the key level of 105.53 (April 11 high) will be seen.

Consider shorting the US dollar index around 107.15 today, stop loss: 107.30, target: 106.70, 107.60

WTI crude oil

Oil prices failed to maintain their winning streak this week. Wednesday's EIA report showed that crude oil supplies at Cushing fell to a seven-year low. The US dollar index strengthened after the ECB's interest rate decision failed to convince the market. WTI oil prices rose sharply mid-week, recording $70 after the Energy Information Administration (EIA) reported that US crude oil reserves fell more than energy traders expected. The Organization of the Petroleum Exporting Countries has lowered its forecast for global crude oil demand growth, but crude oil traders are still pinning their hopes on rising energy demand in China to absorb the additional demand. With the decline in US crude oil reserves, crude oil traders found the buy button under the expectation that US processors will be forced to speed up the pace of market purchases. The Organization of the Petroleum Exporting Countries lowered its forecast for global crude oil demand growth in the coming year, bringing the crude oil consortium's grand expectations closer to the more muted forecast released by the EIA.

The daily chart shows that crude oil has been in an overall "descending wedge" pattern since breaking below $66 per barrel in September. Oil prices have been falling sharply. Although WTI bids have found technical support below $68 per barrel, they have not been able to decisively break through the 100-day moving average at $70.70. At this stage, upside momentum remains limited and crude oil bulls will continue to find themselves shorted as swing highs continue to fall below the $72.55 (38.2% and 50.0% Fibonacci rebound levels of 77.93 to 66.53, respectively), and $72.54 (November 7 high) levels. On the downside, the first major support is located near the $68.60 (9-day EMA). A close below $68.60 could result in a deeper decline. The next major support is the December 6 low of $66.80. Any more declines in the coming days could bring oil prices closer to this year's low of $64.75.

Consider going long on crude oil near $69.50 today, stop loss: 69.30; target: 70.70; 70.90

Spot gold

Oil prices failed to maintain their winning streak this week. Wednesday's EIA report showed that crude oil supplies at Cushing fell to a seven-year low. The U.S. dollar index strengthened after the ECB's interest rate decision failed to convince the market. Gold prices seemed to pause their four-day rally after hitting a five-week high near $2,726 during Asian trading hours on Thursday. Traders assessed the possibility of a rate cut by the Federal Reserve next year, while U.S. Treasury yields continued to rise across cycles. This week, gold prices benefited from China's stimulus expectations, optimism about the Federal Reserve's rate cut, geopolitical tensions in the Middle East, and rising U.S. Treasury yields. Despite the upcoming rate cut by the Federal Reserve next week, U.S. Treasury yields remain firm due to ample supply of long-term U.S. Treasury bonds and a widening budget deficit. Gold prices remain supported and hit a two-week high of $2,726 after mid-week. Uncertainty in the political environment in Syria, stimulus expectations in China, and news of the People's Bank of China (PBOC) increasing its gold reserves have had a positive impact on non-interest bearing gold prices.

The daily chart shows that gold prices, along with the 14-day relative strength index (RSI), a technical indicator, have turned lower so far on Thursday. The leading indicator is moving towards 50.00 while remaining above it. If the pullback from the multi-week high continues, gold prices may find initial demand at the 50-day simple moving average at $2,671. The next relevant downside targets are $2,663.40 (61.8% Fibonacci rebound from 2790.00 to 2536.80), and $2,663.00 (9-day SMA). However, if buyers regain their footing, gold prices could retest the multi-week high of $2,726, above which $2,750 (the confluence of the psychological barrier and the November 5 high) will become a difficult barrier to break. A sustained move above the latter could open up new buying opportunities and test the all-time high of $2,790.

Consider going long on gold today before 2,670.00, stop loss: 2,665.00; target: 2,690.00; 2,695.00

AUD/USD

AUD/USD rose and then gave up on Thursday, boosted by a weak report on the US labor market. The number of first-time jobless claims in the United States hit a two-month high, fueling speculation that the Federal Reserve will continue to ease policy. On Thursday, AUD/USD interrupted a two-day losing streak and re-entered above 0.6400. The Australian dollar remained strong following mixed domestic employment data in Australia. The seasonally adjusted change in employment increased by 35,600, bringing the total number of employed people in November to 14,535,500. It was 12,100 before and 25,000 expected. Meanwhile, the unemployment rate fell to 3.9%, the lowest since March and below the expected value of 4.2%. In addition, the US Producer Price Index (PPI) data showed that inflation was higher than expected, which may slow the pace of the Federal Reserve's shift to loose monetary policy next year. However, the latest US inflation rate report does not seem to be enough for the Fed to abandon interest rate cuts at its December meeting next week.

AUD/USD traded above 0.6400 in early trading on Thursday. Technical analysis of the daily chart shows that the bearish bias of AUD/USD has increased due to the fact that AUD/USD is in a descending channel pattern. In addition, the 14-day relative strength index (RSI) of the technical indicator is still below the 50 level (latest at 40.00), indicating that the momentum continues to be negative. On the downside, the intraday low of 0.6367 currently constitutes an immediate support level. However, a break below this level could reinforce the bearish bias and push AUD/USD towards 0.6348 (this year's low). The bearish bias will then strengthen and the AUD/USD pair will face downward pressure and will find support around the psychological level of 0.6300. AUD/USD faces initial resistance around the 9-day moving average of 0.6422, followed by the upper line of the descending channel at 0.6440. A decisive breakout from the channel could pave the way for a move to 0.6500 (round mark).

Today, consider going long on AUD before 0.6355, stop loss: 0.6342; target: 0.6400; 0.6410.

GBP/USD

Market sentiment turned sour after dismal US employment and inflation-related data, and GBP/USD finally fell below the 1.2700 mark. Poor stock market performance and rising Treasury yields boosted demand for the US dollar. In Asian trading on Thursday, GBP/USD recovered recent losses recorded in the previous trading day and traded around 1.2760. The reason is that the US dollar interrupted its four-day winning streak and consolidated downward after rising US Treasury yields. The US dollar index, which measures the US dollar against six major peers, traded at a high of around 107.00, but the US dollar faces some challenges as the recent US consumer price index report does not seem to be enough to prevent the Federal Reserve from cutting interest rates in December. GBP/USD fell below the 1.27 mark and hovered below it. In the short term, it is expected that the weak economic data will still have an impact on the pound.

GBP/USD is repeatedly challenging the resistance areas around 1.2800 (psychological mark), and 1.2811 (December 6 high). GBP has traded at the lower end of the trading range over the past week and has found solid support in the 1.2670 - 1.2650 low area. However, the daily chart does look a bit weak for the pair, and following last week's failure to challenge the 200-day moving average at $1.2821, a close below 1.2800 - 1.2811 would signal more downside risk in the week ahead. In fact, after bottoming out around 1.2500 in late November, price action has recovered slowly and hard, but bullish momentum has run into trouble, and another leg of decline could be on the cards on the chart if the 200-day moving average is no longer a target and becomes a hard technical barrier. Targets would be 1.2617 (Dec. 2 low), and 1.2600 (round number), respectively. In addition, once GBP/USD can stabilize above 1.2700 in recent weeks and wait for the opportunity to test the 1.2800-1.2811 level, it is expected to look towards the 200-day moving average near 1.2821.

Today, it is recommended to go long on GBP before 1.2655, stop loss: 1.2645, target: 1.2720, 1.2730

USD/JPY

The recovery of the USD/JPY pair reversed, and the long position stopped at around 152.60-152.70. Dovish comments from Bank of Japan officials and strong US data support the pair. The current trend remains positive, and the upper limit of shorts is above 153.00. The yen gained some bullish momentum in the Asian session on Thursday, and USD/JPY interrupted a three-day winning streak and hit a two-week high of 152.87 the previous day. A slight weakening in the US dollar, driven by firm expectations of a rate cut by the Federal Reserve next week, seems to have provided some support to the yen. Apart from this, the yen's strength lacks any obvious fundamental catalysts and is more likely to be limited amid diminishing prospects of another rate hike by the Bank of Japan in December. In addition, the recent rebound in US Treasury bond yields has gained momentum and the market has maintained risk appetite, which should help to prevent risk aversion in the yen. That said, yen bears may avoid aggressive bets and instead choose to wait for the Bank of Japan to hold its last policy meeting of the year next week. This, coupled with geopolitical risks and the uncertain policy outlook of US President-elect Donald Trump, may provide some support for the safe-haven yen.

From a technical perspective, the mid-week breakout of the 200-day moving average, near the 152.00 mark, was seen as a new trigger by bullish traders. Moreover, the daily oscillator is in positive territory, but still far from overbought territory, suggesting that the path of least resistance for USD/JPY is still to the upside. However, the subsequent upside was blocked at 152.70 (23.6% Fibonacci retracement of 139.58 to 156.75), which is a level that converges with the 200-hour SMA (127.75) on the 4-hour chart. The aforementioned area may continue to act as a short-term resistance and USD/JPY may break above the 153.00 mark and attempt to test the next relevant resistance of 61.8% Fibonacci retracement around 153.70 area. On the downside, a break below the 152.00 mark may currently be seen as a buying opportunity in the 151.55-151.50 area and find suitable support around the 151.00 mark. Eventually falling to the 150.00 psychological mark.

Today's recommendation is to short the US dollar before 152.85, stop loss: 153.00; target: 151.90, 151.80

EUR/USD

EUR/USD turned bearish as Wall Street gave up and major indices fell. The pair traded near a fresh weekly low in the 1.0460 price zone. Earlier in the day, the European Central Bank cut interest rates as expected and the US released dismal employment and inflation-related data. EUR/USD moved higher during the Asian session on Thursday and now appears to have snapped a four-day losing streak to a more than one-week low hit the previous day. Spot prices are currently trading near the psychological 1.0500 mark. With the ECB almost certain to cut rates again amid concerns that the Eurozone economy is teetering, investors will be looking for signals regarding further easing in 2025, which in turn will play a key role in influencing the euro and provide some meaningful impetus to EUR/USD. The near-term bias for the US dollar remains in favor of the bulls as there is a growing belief that the policies of US President-elect Trump will boost inflation and force the Fed to pause its rate-cutting cycle.

The US dollar saw mixed early gains in the FX market, with EUR/USD hovering in the 1.0500 - 1.0520 zone during the Asian session. However, the bullish potential seems limited. On the daily chart, the pair remains below the bearish 25-day simple moving average (1.0546), while the 100-day and 200-day SMAs are gaining downside traction above the short-term MAs. Meanwhile, technical indicators are providing mixed signals as the momentum indicator aims to trade slightly above its 100 line, while the relative strength index (RSI) remains weak around 37.80. In the short term, a clear downward breakout of 1.0500 (round mark) should be conducive to a downward extension to 1.0460 (December 2 low, and then to the 1.0400 area. As for the upside, the first resistance can be focused on 1.0546 (25-day simple moving average), and a breakout points to 1.0593 (30-day simple moving average), and 1.0600 (market psychological level) area levels.

Today, it is recommended to go long on the euro before 1.0450, stop loss: 1.0440, target: 1.0520, 1.0530.

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