US Dollar Index

The US Dollar Index stabilized around 97.00 on Thursday after ADP data on Wednesday showed an unexpected drop in private sector payrolls, with employment falling by 33,000 in June, raising concerns about a weak labor market. On the trade front, President Donald Trump announced on "Truth Social" that the United States has reached a new agreement with Vietnam, which includes a 20% tariff on imports from the country. The agreement raised hopes for the possibility of a bilateral trade deal. The logic of the market is that if no country agrees to a deal, then the United States will face pressure, which is not good for the dollar because it will lead to adjustments to everything, including the fiscal bill, even if tariffs are not formally written in the bill. But if there are countries that reach a solution, those that don't will be in trouble. This is generally good for risk appetite because you feel relieved that there is a (trade) deal.

The US Dollar Index showed early signs of stabilization late this week. After setting a new multi-year low of 96.38 on Tuesday, the index is attempting a slight rebound. Although the rebound looks encouraging, the price is still capped below the 9-day simple moving average, which is currently around 97.50. Recent price action has slightly breached the lower line of the falling wedge pattern: a structure often associated with bullish reversal signals. A daily close above the wedge resistance and the 9-day SMA could open the door for a stronger rally with targets at 97.33 {9-day SMA}, and 97.80 {14-day SMA}. Momentum indicators also point to a possible turnaround. The Relative Strength Index (RSI) has slightly recovered from oversold territory and is currently hovering at 30.50, suggesting that selling pressure is easing but has not reversed yet. The next key support levels to watch are currently at 96.38 {Tuesday's low}, and the 96.00 round number mark.

Consider shorting the dollar index around 97.25 today, stop loss: 97.35, target: 96.70, 96.60

WTI spot crude oil

WTI crude oil traded around $66.30/barrel on Thursday. U.S. oil rose about 3% on Wednesday after Iran suspended cooperation with the UN nuclear watchdog and the United States and Vietnam reached a trade deal, but the unexpected increase in U.S. crude oil inventories limited the rise in oil prices to some extent. Concerns about supply disruptions in the Middle East have eased after Iran and Israel reached a ceasefire. Iran has enacted a law requiring any future inspections of Iranian nuclear sites by the International Atomic Energy Agency to be approved by Tehran's Supreme National Security Council. The market is pricing in some geopolitical risk premiums from Iran's moves on the IAEA issue, but this is related to sentiment and oil will not be disrupted. Oil prices also rose after both U.S. President Trump and Vietnamese state media said that after last-minute negotiations, the United States and Vietnam reached a trade agreement to impose a 20% tariff on many of the Southeast Asian country's exports.

Demand for oil is rising despite expectations that OPEC+ will increase production by 411,000 barrels per day in August. WTI crude has stabilized at the 9-day simple moving average of $65.93, and the $65.00 mark provides additional support, with $63.72 {last week's low}, and the 50-day simple moving average as subsequent technical bottoms. Momentum indicators currently reflect a neutral tone. The relative strength index (RSI) hovers around 48, indicating a lack of directional confidence. A sustained break above $66.75 (Wednesday's high) could open the door for a rebound. If the price holds above the key support and breaks above $67.08, and $67.37 {21-day simple moving average}, the strong bullish momentum could pave the way for the $68.00 mark level.

Consider going long on WTI crude oil near 66.20 today, stop loss: 66.00, target: 67.50, 68.00

Spot gold

Spot gold traded around $3,330/oz on Thursday. Gold prices rose on Wednesday as weaker-than-expected employment data sparked hopes that the Federal Reserve will cut interest rates earlier than the market expected. ADP private payrolls fell by 33,000, the first net job loss since early 2023, which gave gold a big boost. Earlier on Wednesday, the ADP National Employment Report showed that U.S. private sector employment fell for the first time in more than two years in June, suggesting that the Federal Reserve may cut interest rates as early as September. Fed Chairman Powell reiterated this week that the Fed is patient about further rate cuts. But he did not rule out the possibility of a rate cut at this month's meeting and said everything depends on follow-up data. This raises the importance of the monthly non-farm payrolls report released on Thursday, which will provide a deeper understanding of the health of the labor market.

From a technical perspective, the breakout above the 50-day simple moving average (3,321) this week is seen as a key trigger for gold price bulls. Moreover, the oscillators on the daily chart have started to gain positive momentum again, suggesting that the path of least resistance for gold prices is to the upside. Hence, any subsequent declines may still be seen as buying opportunities and find support around the 3,321-3,320 area. However, a successful break below it may prompt some technical selling and drag gold prices further towards the 3,300 round number mark. On the other hand, the 3,363-3,365 area, or the more than one-week high hit on Wednesday, now seems to be an immediate obstacle, after which the gold price may target the 3,400 round number mark. A sustained strong break above the latter would negate any short-term negative outlook and push the gold price to the next relevant barrier in the 3,435-3,440 area.

Consider going long on gold near 3,323 today, stop loss: 3,320, target: 3,350, 3,355

AUD/USD

The Australian dollar fell to around $0.6570 on Thursday, ending a three-session rally, weighed down by weak trade data. Australia's trade surplus narrowed sharply to A$22.4 billion in May, well below expectations of A$50.9 billion and a revised A$48.6 billion in April. It was the smallest surplus in nearly five years, with exports hitting a three-month low as tariffs hit the U.S., which saw shipments fall. Also under pressure were services PMI data from China, Australia's top trading partner, which fell to a nine-month low and missed expectations. Meanwhile, the market is facing U.S.-led trade tensions, with uncertainty surrounding a new U.S.-Vietnam trade deal and concerns about efforts to isolate China from key supply chains. Meanwhile, a weaker U.S. dollar limited the AUD's losses, keeping it near an eight-month high, as expectations of a rate cut from the Federal Reserve rose. Investors are now awaiting the RBA's decision next week.

On Thursday, AUD/USD was trading around 0.6570. Technical analysis of the daily chart shows a persistent bullish bias as the pair moves upwards within an ascending channel pattern. The 14-day relative strength index (RSI) is above 50, further reinforcing the bullish sentiment. Moreover, the pair remains above the 21-day simple moving average of 0.6516, indicating strong short-term price momentum. On the upside, the pair could retest the eight-month high of 0.6590 marked on July 1. A successful break above this level could support the pair to test the upper line of the ascending channel, which is around 0.6660. On the other hand, the 21-day simple moving average of 0.6516 is seen as a major support level. A break below this level would weaken short-term price momentum and exert downward pressure on the AUD/USD pair to test the market psychological level of around 0.6500, with the next level pointing to the 50-day simple moving average level of 0.6469.

Consider going long on AUD near 0.6560 today, stop loss: 0.6545, target: 0.6610, 0.6630

GBP/USD

During the Asian trading session on Thursday, the GBP/USD pair fell further, approaching 1.3585. It was the lowest level since June 23, as investors sold the pound and turned to the dollar after the strong performance of the US employment report. GBP/USD plunged on Wednesday, falling back below the 1.3600 mark, and the pound faced some selling pressure against the backdrop of a sell-off in UK government bonds. British bonds experienced the biggest sell-off since October 2022 due to the British government's decision to cut benefits and increased concerns about the future of the finance minister. Market concerns about the UK's debt situation may exert some selling pressure on the pound in the short term. On the dollar side, the ADP National Employment Report showed that US private sector employment fell for the first time in more than two years in June, suggesting that the Federal Reserve may cut interest rates in September. Traders will take more clues from the US employment data in June.

From the daily chart, although GBP/USD fell below the 20-day simple moving average of 1.3583 in the middle of this week and hit a six-day low of 1.3562, the currency pair has recovered some gains and re-traded above 1.3600 {market psychological barrier}. It should be noted that the 14-day relative strength index (RSI) of the technical indicator fell from about 65 to 54 on the same day, but the upward trend remained. If GBP/USD rebounds above 1.3663 {9-day simple moving average}, it is expected to recover to the 1.3700 round mark level. Otherwise, it is not ruled out that the currency pair will re-test 1.3600 {market psychological barrier} in the short term, and if it breaks, it will challenge 1.3562 {Wednesday low} and the 1.3500 round mark range respectively.

Consider going long GBP near 1.3640 today, stop loss: 1.3630, target: 1.3690, 1.3710

USD/JPY

The yen weakened against the U.S. dollar on Thursday as stronger-than-expected U.S. non-farm payrolls data boosted the greenback, further exacerbating the policy divergence between the Federal Reserve and the Bank of Japan. USD/JPY surged in early U.S. trading following the release of a strong U.S. non-farm payrolls report, reigniting demand for the greenback. The pair is currently trading around 145.00, up nearly 1% on the day, after trading in a narrow range during much of the Asian and European trading sessions. The strong jobs data reinforced the narrative of the resilience of the U.S. economy, leading the market to reduce expectations for a near-term rate cut by the Federal Reserve. Treasury yields subsequently rose, boosting the dollar and pushing USD/JPY higher as traders reassess the path of U.S. monetary policy.

From a technical perspective, resistance near the 145-month mark for USD/JPY suggests that the path of least resistance for USD/JPY is to the downside. If some follow-through selling occurs below the 144.40-144.35 area, it will confirm the bearish outlook and drag the spot price further towards the 144.00 round number mark. This is followed by Thursday's low, around the 143.45 area. On the other hand, any positive move back above 145.25 {Thursday's high} may still face strong resistance near the 146 mark. However, a sustained strong break above this level may trigger a short-term covering move and push USD/JPY to the 146.00 psychological mark, and 146.10 {100-day moving average}.

Consider shorting the US dollar around 145.10 today, stop loss: 145.30, target: 144.20, 144.10

EUR/USD

The euro slipped to $1.17 against the US dollar, retreating from the recent four-year high, as investors turned to the US dollar in response to the stronger-than-expected US jobs report. Meanwhile, markets digested speeches from ECB policymakers and minutes from the ECB's latest policy meeting. Speaking at the ECB Central Bank Forum, President Christine Lagarde welcomed June inflation data that was in line with the central bank's 2% target, but warned of "double-sided risks" associated with rising geopolitical tensions and increasing economic divergence. Other ECB officials said interest rates are likely to remain unchanged at this month's meeting, with the deposit rate having been cut eight times since June 2024, due to ongoing concerns about global trade uncertainty, instability in the Middle East and the euro's recent appreciation. Markets currently expect only one more rate cut before the end of the year.

The daily chart shows that EUR/USD maintains an upside bias after hitting a two-day low of 1.1746. Despite this, momentum remains bullish, and the technical indicator Relative Strength Index (RSI) shows this. That said, if the pair breaks above 1.1800 {market psychological barrier}, it is expected to test the year's high of 1.1829. If broken, the next key supply zone will be the 1.1850 and 1.1900 round numbers. On the other hand, if EUR/USD falls below 1.1750, it is expected to fall further to 1.1700. Key support levels are below the latter, at the daily low of 1.1653 on June 26 and the 1.1600 mark.

Today, consider going long on the euro around 1.1740, stop loss: 1.1730 target: 1.1800, 1.1810

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