USD

As of midday U.S. time on Monday, the U.S. Dollar Index slightly declined to around 105.20. The strong market potential and the Federal Reserve's firm stance on interest rate cuts have limited the decline of the dollar. Any possible rebound of the dollar largely depends on the key U.S. data this week, especially the Consumer Price Index (CPI) for April, set to be released on Wednesday. Following a weak performance at the beginning of the month, the dollar rose above 105.00. The slight rise in U.S. Treasury yields and traders' cautious stance while waiting for the April CPI data, due this Wednesday, boosted this recovery. The dollar may further rise based on its recent rebound. Market forecasts generally indicate that both the overall CPI and the core CPI, after seasonal adjustments, increased by 0.3% last month—a modest increase but a step in the right direction.

If downward pressure on the dollar index intensifies, it is expected to find temporary support at the 50-day moving average of 104.70, followed by the May low of 104.52 (May 3) and 104.43 (50.0% Fibonacci retracement from 102.35 to 106.51). If the dollar index falls further, it could reach the 100-day moving average of 103.99. On the upside, if the dollar index maintains its bullish momentum, it may retest 105.53 (23.6% Fibonacci retracement). If the index breaks this level, it could test the 20-day moving average of 105.68, followed by 106.00 (a significant round market level).

Today, consider short-selling the dollar index around 105.38, with a stop loss at 105.55 and targets at 105.00, 104.95.

WTI Spot Crude Oil

On Monday, oil prices rose, flashing a red signal. Concerns over the U.S. suspending the shipment of certain weapons to Israel amid fears of Laffa's offensive have further escalated tensions in the Middle East, preventing a rise in oil prices. Meanwhile, there is increasing speculation that OPEC+ will not lift its voluntary production cuts at the upcoming June meeting. WTI crude traded around $78.00 per barrel during the Asian session on Monday. Federal Reserve officials have indicated that interest rates might remain high for an extended period, which could affect economic growth in the U.S., the world's largest oil consumer, and reduce its oil demand. Additionally, China's Producer Price Index (PPI) dropped again by 2.5%. This marks the 19th consecutive month of deflation in China, indicating that business demand in the largest oil-importing country remains weak. This has added downward pressure on oil prices. In the Middle East, Iraq is committed to the voluntary oil production cut agreement reached by OPEC. Iraq is willing to cooperate with other member states to promote further stabilization of the global oil market.

From a technical perspective, WTI crude is in a short-term downtrend, and once the current adjustment ends, this trend is expected to continue. Oil prices are likely to rise. Prices are likely to reach the resistance area around $79.76 (38.2% Fibonacci retracement level from $67.94 to $87.08) and around $80.00 (psychological market threshold). The Moving Average Convergence Divergence (MACD) momentum indicator has risen above the zero line and is drawing green bars, suggesting that the current uptrend may continue. The next level aims at the 50-day moving average of $81.39, and $82.56 (23.6% Fibonacci retracement level). However, resistance from the 200-day moving average ($79.75) might eventually push prices back down. The overall bearish trend suggests that oil prices could ultimately fall back to $75.25 (61.8% Fibonacci retracement level). Before this position, consider focusing first on $76.67 (last week's low).

Today, consider going long on crude oil around $78.40, with a stop loss at $78.20 and targets at $79.50; $79.70.

XAUUSD

Gold remains weak as the dollar has rebounded and before the release of U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) data later this week, prompting gold to retest the $2,330 per troy ounce area. In the early European trading session on Monday, gold prices continued to drop to around $2,350. However, heightened geopolitical tensions in the Middle East have driven safe-haven flows, which are favorable for gold. Hawkish comments from the Federal Reserve and increasing speculation that the Fed might delay its easing plans have boosted the dollar, dragging down gold priced in dollars. Nevertheless, signs of economic weakness and ongoing geopolitical tensions in the Middle East could support precious metals in the short term. Later this week, the focus will be on the U.S. CPI, PPI, and retail sales data. If the economic data is stronger than expected, it could dampen hopes for a Fed rate cut and exert some selling pressure on gold/dollar.

At the start of the week, gold prices slightly declined. Nonetheless, gold's bullish posture remains intact, as it stays above the key 100-hour moving average (2,328) on the four-hour chart. The upward momentum is supported by technical indicators such as the Relative Strength Index (RSI), which is in the bullish zone near 54.95, suggesting further upside is favorable. Gold's first upward barrier will appear at $2,364.00 (the upper trend line of the daily chart's downward channel), followed by the May 10 high near $2,378 as it advances towards the psychological level of $2,400. A decisive breakthrough of this level could pave the way for a rebound to near the next major resistance near the historical high of $2,431.30. On the downside, a key support level lies near the convergence of the previous resistance now turned support at the 100-hour moving average of $2,328.00. If it searches lower, the next competitive level is near $2,300.00 (a psychological market threshold).

Today, consider going long on gold around $2,332, with a stop loss at $2,328.00 and targets at $2,348.00; $2,352.00.

AUDUSD

The further weakening of the U.S. dollar has allowed the Australian Dollar (AUD/USD) and other risk-related currencies to regain some equilibrium and once again breach the key level of 0.6600. On Monday, the AUD/USD traded near 0.6600, possibly due to the Reserve Bank of Australia's (RBA) decision on Tuesday to keep interest rates unchanged at 4.35%, which made its stance less hawkish. Market speculation suggested the RBA might adopt a more hawkish stance following last week's inflation data that exceeded expectations. The Australian Treasury announced last Sunday that it expects inflation to re-enter the RBA's target range by the end of 2024. In their December outlook, officials forecast inflation to drop to 3.75% by mid-2024 and to 2.75% by mid-2025, aligning with the RBA’s target range. The U.S. Dollar Index, which measures the dollar against six major currencies, continued to rise as markets digested key economic data from last Friday and cautious comments about rate cuts from Federal Reserve officials. However, a downward adjustment in U.S. Treasury yields might limit the dollar's upside.

From the daily chart, the AUD/USD began the week trading near 0.6600. The AUD/USD pair maintains a sideways trend within an "ascending triangle" pattern, with the 14-day Relative Strength Index (RSI) staying above the 50 level (57.00), indicating a bullish tendency. The AUD/USD pair may test the upper limit of the fluctuation zone near 0.6650, and 0.6647 (the resistance line of the ascending triangle). Breaking this level could lead to a retest of the March high at 0.6667 and potentially extend gains to the psychological threshold of 0.6700. On the downside, the 50-day moving average near 0.6542 is expected to provide immediate support. If the AUD/USD falls below the 50-day moving average, it might face more selling pressure, with potential targets at the 0.6500 (round number) and 0.6485 (23.6% Fibonacci retracement level from 0.6871 to 0.6362).

Today, consider going long on the Australian Dollar around 0.6590, with a stop loss at 0.6575 and targets at 0.6640; 0.6650.

GBPUSD

The British Pound/US Dollar (GBP/USD) pair had a strong start to the week, hovering near the upper end of the range around 1.2560 amidst a resurgence of selling pressure on the dollar. On Monday during the London session, GBP/USD showed strength above the psychological support level of 1.2500. Concerns about the health of the U.S. labor market were stoked by higher-than-expected initial jobless claims for the week ending May 3, lending support to GBP/USD. As the U.S. labor market shows signs of cooling, financial markets have grown more confident about the Federal Reserve beginning rate cuts starting from their September meeting. Currently, investors are focusing on the upcoming release of the U.S. Consumer Price Index (CPI) for April on Wednesday. The annual overall CPI is expected to drop from 3.5% in March to 3.4%. Economists anticipate that the monthly growth rates for the overall and core CPI will slow from the previous 0.4% to 0.3%.

Boosted by multiple positive factors, the pound rose to near 1.2550 at the start of the week. GBP/USD rebounded sharply from 1.2466 (the 50.0% Fibonacci retracement level from the low of April 22 at 1.2299 to the high of May 3 at 1.2634), and from 1.2445 (the low of May 9). The pair is still clinging to the 34-day moving average, which is trading near 1.2530, suggesting a bearish sentiment. Bulls must vigorously defend this technical baseline; failing to do so could lead to a retest of the 1.2500 (psychological market threshold); 1.2466 (50.0% Fibonacci retracement level), and 1.2445 (last week's low). The 14-period Relative Strength Index (RSI) is oscillating between 45.00 and 55.00, indicating market participants are indecisive. On the other hand, if the bulls regain control and push prices beyond the 200-day moving average at 1.2540 and 1.2554 (23.6% Fibonacci retracement level), this could inject optimism into the market, driving further increases in the pound and potentially leading GBP/USD towards the 1.2600 (psychological market threshold) and 1.2666 (61.8% Fibonacci retracement level).

Today, it is advisable to consider going long on the British Pound at levels before 1.2540, with a stop loss at 1.2525 and targets at 1.2580, 1.2590.

USDJPY

On Monday, USD/JPY breached the 156.00 mark as the market continued to digest the yen's gains following two suspected "yen intervention measures" implemented by the Bank of Japan (BOJ) at the end of April and early May. The BOJ has remained tight-lipped, refusing to formally confirm or deny direct intervention in the global markets on behalf of the yen. Investors will look for further clues from the U.S. Consumer Price Index, Producer Price Index, and retail sales this week to seek new momentum. Earlier on Monday, the BOJ reduced the amount of Japanese government bonds it purchased in its latest operation in the 5 to 10-year window from 475 billion yen in the previous operation to 425 billion yen. A senior ruling party figure, Katsunobu Kato, stated that conditions for normalizing Japan's monetary policy are in place. However, the BOJ must monitor economic conditions and coordinate carefully with the government to determine when to raise interest rates. The significant interest rate differential between Japan and the U.S. continues to pressure the yen, creating a tailwind for the USD/JPY pair.

USD/JPY strengthened last week and climbed slightly above 156.00. If the pair sees further increases this week, resistance could be at 156.96 (23.6% Fibonacci retracement level from 146.48 to 160.20), with a break potentially leading to further resistance at 157.98 (the high of May 1). Given the risk of foreign exchange intervention by Japanese authorities to support the yen, any rebound towards these levels should be viewed cautiously, as it could trigger a sharp downward reversal if such intervention occurs again. On the other hand, if the USD bears return and the price starts to decline, the initial support level will be at 154.95 (38.2% Fibonacci retracement level), followed by 154.23 (30-day moving average). A further break below this threshold could bolster selling interest, paving the way for a move towards trendline support and just above 153.34 (50.0% Fibonacci retracement level).

Today, it is advisable to consider going long on the U.S. dollar before 155.95, with a stop loss at 155.70 and targets at 156.60, 156.70.

EURUSD

At the start of the new week, the Euro/US Dollar (EUR/USD) is fluctuating narrowly just below the 1.0800 level. Comments from central bank officials could impact the near-term trajectory of this currency pair. The U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) data, set to be released on Tuesday and Wednesday respectively, could trigger the next significant movement in EUR/USD. Hawkish remarks by Federal Reserve policymakers last weekend helped the dollar recover some of the losses it incurred following disappointing jobless claims data last Thursday. Federal Reserve Governor Michelle Bowman stated last Friday that she sees no need to cut interest rates this year, while Minneapolis Fed President Neel Kashkari mentioned that further rate hikes this year cannot be ruled out. If Fed officials dispel expectations of a rate cut in September, the market positioning indicates there could be more upside for the dollar.

Technically, EUR/USD remains within a downtrend channel that has persisted since mid-December 2023. The bearish atmosphere for this major currency pair is unchanged, as it trades below the key 100-day moving average at 1.0827 on the daily chart. However, the 14-day Relative Strength Index (RSI) is in the bullish region near 56.02, suggesting that further upward movement is not out of the question. Key upward barriers for EUR/USD will appear at the psychological market threshold of 1.0800 and near the 100-day moving average at 1.0827. If there is a bullish breakthrough of the latter, it could rebound to the high of April 9 at 1.0885. On the downside, preliminary support is near the 20-day moving average at 1.0712. Any sustained break below this level could lead to further selling pressure, dropping to the 23.6% Fibonacci retracement level of 1.0690 (from 1.0981 to 1.0601), and then to the April 16 low at 1.0649 (the low of May 1).

Today, it is advisable to consider going long on the Euro at levels before 1.0775, with a stop loss at 1.0760, and targets at 1.0820, 1.0830.

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