Dollar Index

The dollar retreated from a two-year high after the Federal Reserve signalled fewer rate cuts in the future. Federal Open Market Committee members are concerned about inflation throughout 2025 and factor in the Trump effect. The dollar index traded as high as 108.37, finding support at the 108 level. The dollar index, which measures the value of the dollar against a basket of currencies, remained around 108.00 in the second half of Wednesday. In early Asian trading, the dollar was stable across the board, hitting a new high for the year and maintaining strong momentum. Following the Federal Reserve's expected 25 basis point rate cut, investors were surprised to find that the dot plot showed only two rate cuts in 2025, a rather hawkish shift. Subsequently, Fed Chairman Powell sounded a more hawkish tone, saying that the economy remains strong and the United States has likely avoided a recession. The dollar index rose to 108.28, a near one-year high earlier. Despite economic uncertainties, including a weak labor market and persistent inflation, the central bank's gradual policy adjustments suggest a careful balance between controlling price pressures and supporting growth.

From the daily chart, the 14-day relative strength index (RSI) and MACD of the technical indicators of the US dollar index show that the US dollar index is showing a clear upward trend, reflecting the pause after the rebound last week. It has rebounded sharply since this week, but the index still needs to stay above the 107.50-108.00 range. If the US dollar index remains in this range, it may continue to rise to 108.50 and 108.45 (highs on November 11, 2022), and break through to 109.00 (round mark), otherwise it may retest the 107.56 (high on November 26), and 107.42 (5-day moving average) area levels.

Consider shorting the US dollar index near 108.45 today, stop loss: 108.60, target: 108.00, 107.90

WTI crude oil

WTI crude oil once again traded near $70.00 on Thursday. Due to the decline in US crude oil inventories and the Federal Reserve's 25 basis point cut in key interest rates on Wednesday, WTI crude oil prices retreated to $69.00 before stabilizing. However, signals that the US central bank will slow the pace of interest rate cuts may limit the upside of oil prices. Federal Reserve officials said that there may be only two more rate cuts in 2025. This in turn raised the US dollar and exerted some selling pressure on dollar-denominated commodity prices because it makes oil more expensive in other countries, which will reduce demand. In addition, concerns about weak consumer spending in China, the world's largest oil importer, will also put pressure on WTI crude oil prices. In addition, the decline in US crude oil inventories last week may provide some support for WTI crude oil.

Crude oil prices can’t seem to move in any direction from $70.00 as they have been pushed back to this level for nearly six consecutive trading days. As liquidity begins to dwindle, it looks increasingly likely that this will be a stable level for the last few trading days of 2024. Looking up, $70.96 (the 13th high of this month), and the 100-day simple moving average of $70.87 are firm resistance levels. If oil traders can break through this level, $72.23 (50.0% Fibonacci rebound level), and $72.54 (November 7 high) will become the next key levels, but watch out for quick profit-taking as the year-end approaches. On the downside, the first support level is at $68.50 (the resistance line of the large descending triangle on the daily chart). The $67.12 level (the price held in May and June 2023) remains the first solid support nearby.

Consider going long on crude oil near 68.80 today, stop loss: 68.60; target: 70.00; 70.20

Spot gold

As the last month of 2024 draws to a close, gold is hovering near a one-month low below $2,600, vulnerable to the trauma of the Fed's hawkish policy decision. Gold extended its correction from a five-week high of $2,726, hitting a one-month low near $2,583.50, then rebounded to a high of $2,626, and is currently easing back to hover near $2,600. The main reason for the decline in gold prices is the Fed's cautious attitude towards rate cuts, which could lead to higher inflation in the face of U.S. President-elect Donald Trump's protectionist world. The U.S. central bank cut its policy rate by 25 basis points to a range of 4.25%-4.50%, in line with widespread expectations. However, the Fed's Statement of Economic Projections (SEP), also known as the dot plot, predicts two quarter-point rate cuts by the end of 2025. This is half a percentage point less easing than officials expected in September for next year. Gold traders will also be watching for fresh trading momentum ahead of the U.S. November PCE inflation report, which is released on Friday.

The daily chart shows that gold prices re-entered the key $2,600 (market psychological level) and the 100-day simple moving average of $2,605 in a mild rebound attempt in early Thursday trading. Re-entering the above areas on a daily closing basis will be crucial to unleash additional rebounds. The next upside hurdle is at the December 17 low of $2,633, followed by the 21-day simple moving average of $2,650. The 14-day relative strength index (RSI) of the technical indicator has risen but is still below the 50 level, indicating that gold prices are still a good selling opportunity on rebounds. If the rebound fails, gold sellers will challenge the monthly low of $2,583 again. The low of $2,536 on November 14 may be in focus.

Consider going long on gold today before 2,595.00, stop loss: 2,592.00; target: 2615.00; 2620.00

AUD/USD

AUD/USD rebounded from a two-year low of 0.6200 in early trading on Thursday. The pair benefited from a pause in the dollar's uptrend led by the hawkish rate cuts from the Federal Reserve. However, concerns about China's fragile economic recovery and Trump's tariff plans may limit the AUD's recovery. The Australian dollar recovered its intraday losses after the release of consumer inflation expectations on Thursday. However, AUD/USD fell as the US dollar appreciated due to the hawkish 25 basis point rate cut by the Federal Reserve at its December meeting on Wednesday. Australia's December consumer inflation expectations rose to 4.2% from 3.8% in the previous month, the highest level since September. However, the Australian dollar was under pressure due to the possibility that the Reserve Bank of Australia may cut interest rates earlier and more sharply than initially expected. Because the summary of economic forecasts or "dot plot" shows only two rate cuts in 2025, compared with four forecasts in September. The US dollar rose.

On Thursday, AUD/USD fell to a low of 0.6199 in more than two years. It is currently trading around 0.6240. Daily chart analysis shows that the currency pair is moving downward within a descending channel pattern, showing a bearish bias. However, the 14-day relative strength index (RSI) has fallen to around 31 levels, indicating oversold conditions and an upward correction may occur soon. On the support side, AUD/USD may find support at 0.6170 (October 7, 2022 low). A break below it will see the lower line of the descending channel around the 0.6140 level. On the upside, AUD/USD may find initial resistance near the 2023 low of 0.6270, and 0.6300 (round mark).

Today, consider going long on AUD before 0.6230, stop loss: 0.6220; target: 0.6270; 0.6280.

GBP/USD

GBP/USD continues to fall, approaching 1.2500 after the Bank of England's monetary policy decision. The Bank of England kept the bank rate at 4.75% as expected, but the accompanying statement leaned dovish, with three out of nine members of the Monetary Policy Committee opting for a rate cut. GBP/USD fell more than 1% after the Fed's hawkish rate cut on Wednesday, trading around 1.2585 in the Asian session on Thursday. The pound received upside support due to high inflation in the UK. Data on Wednesday showed that the UK Consumer Price Index (CPI) rose 2.6% year-on-year in November, compared with 2.3% in October. GBP/USD fell as the Federal Reserve hawkishly cut interest rates by 25 basis points, a two-year low, at its December meeting on Wednesday. The summary of economic projections, or the “dot plot,” shows only two rate cuts in 2025, down from the four forecast in September.

From the perspective of this week’s trend, price action suggests that further strength in the US dollar will put pressure on GBP/USD. The 40-day simple moving average (1.2752) fell below the 200-day simple moving average (1.2817), confirming the formation of a “death cross”, indicating further declines. The 14-day relative strength index (RSI) fell to around 40, indicating that the short-term trend is still weak. That said, the first support for GBP/USD will be 1.2500 (round mark). If cleared, it will clear the level to test 1.2487 (November 22 low). The next level points to the 1.2400 level. On the other hand, if GBP/USD breaks through 1.2600 (market psychological barrier) and last week's low of 1.2608, it will directly point to the 1.2680 (89-day moving average) area.

Today, it is recommended to go long on GBP before 1.2490, stop loss: 1.2480, target: 1.2540, 1.2550

USD/JPY

The US dollar rebounded by more than 2% after the Fed and the Bank of Japan decided to touch the level above 157.00. The Bank of Japan kept the interest rate at 0.25% and made further tightening conditional on the progress of wage negotiations. The monetary policy divergence between the US and the Bank of Japan is putting pressure on the yen. As widely expected by the market, the Bank of Japan stabilized the short-term policy rate target in the range of 0.15%-0.25% after the two-day policy meeting that ended on Thursday. According to the summary of the Bank of Japan's policy statement, the Japanese economy is recovering moderately but remains fragile. Inflation expectations are rising moderately. However, uncertainties about the future of the Japanese economy and prices remain strong. Meanwhile, the Fed’s hawkish rate cut on Wednesday pushed long-term US Treasury yields to multi-month highs, which is expected to weigh on the low-yielding yen. In addition, the dollar’s ​​rise to its highest level in two years after the Fed meeting should help limit the downside of USD/JPY.

The strong rise from the 148.65 support level or monthly low on the 3rd of this month, while holding below the 100-day moving average (148.75), and then breaking through the 155.00 psychological level may be seen as a key trigger by bulls. In addition, the daily chart oscillators have maintained bullish momentum and remain away from the overbought area. Therefore, if USD/JPY can continue to strengthen and break through the above-mentioned levels, it is expected to break through the 158.00 (round mark) level and then recapture the 158.62 (July 17 high) level. This momentum may further extend to test the 160.00 multi-month round high. On the other hand, the $156.75 (November 15 high) area now appears to be an immediate support ahead of the $156.00 round mark. Some follow-up selling could test Thursday's low near 154.45.

Today's recommendation is to short the dollar before 157.55, stop loss: 157.80; target: 156.50, 156.30

EUR/USD

EUR/USD consolidated its daily recovery gains near 1.0400 after the release of optimistic US data. But selling pressure on the euro remains heavy, returning below 1.0400 before the close. EUR/USD fell sharply after the Fed cut interest rates, but also took a slightly hawkish stance as the central bank expects to ease 100 basis points in the next two years. The pair is currently trading slightly below 1.0400 and is volatile. Powell said at the press conference that the central bank may be more cautious in considering further adjustments and acknowledged that the policy is less restrictive. He added that risks and uncertainties around inflation are tilted upwards, adding that higher inflation is one of the reasons for adjusting the dot plot. The central bank's monetary policy statement showed that economic activity continued to expand at a solid pace and acknowledged that labor market conditions have eased. Despite the improvement in employment conditions, Fed policymakers decided to keep the wording that "the committee judges that the risks to achieving employment and inflation goals are roughly balanced."

This week, EUR/USD fell sharply, breaking through the psychological 1.0400 mark, extending the decline to the day's low of 1.0344. From a technical perspective, EUR/USD is bearish and ready to continue falling. The daily chart shows that the pair broke down after repeatedly encountering sellers near the bearish 20-day simple moving average (1.0502). The 100 and 200-day moving averages are slowly turning lower, well above the shorter averages, while the 14-day relative strength index (RSI), one of the technical indicators, is moving down at negative levels (34.40), consistent with strong bearish momentum. Indicating that the ongoing bearish momentum is active. The recent situation supports testing 1.0347 (Wednesday's low), and the annual low of 1.0332. A breakout points to the 1.0300 (market psychological level). On the other hand, short-term resistance is at 1.0400 (market psychological level), and the low of December 13, 1.0452, and further to the 1.0500 level.

Today, it is recommended to go long on the euro before 1.0355, stop loss: 1.0340, target: 1.0410, 1.0420.

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