US Dollar Index

The US dollar surged after Donald Trump imposed tariffs on BRICS countries. Focusing on Paris, Prime Minister Michel Barnier triggered special provisions in Paris on Monday to pass his budget bill. The US dollar index broke through important upward resistance and continued to move towards 106.70. The US dollar started December stronger against its major rivals. The US dollar index, which measures the value of the US dollar against a basket of currencies, rebounded above 106.0 at the beginning of the week and once hit a high of 106.33 and traded near. Overall, the US dollar maintained a bullish outlook on the support of strong economic data and the hawkish stance of the Federal Reserve. Despite profit-taking and geopolitical uncertainties due to low trading activity last week due to lack of liquidity and market holidays, the upward trend remains intact. The US dollar index is expected to continue to move higher. The US dollar has recovered since the reopening of US markets on Black Friday last week. After falling more than 1.5% in the previous week, the US dollar recovered in Asian trading on Monday and remained in the upward zone above 106.00 in early European trading. Meanwhile, US stock index futures are trading in negative territory, indicating a cautious market sentiment at the start of the week.

Technical indicators from the daily chart of the US dollar index suggest that the 14-day relative strength index (RSI) and the moving average convergence divergence (MACD) indicator are hovering around neutral levels and will undergo a period of consolidation. Despite the recent drop below the 20-day simple moving average (106.05), the index has quickly recovered above the 20-day EMA at the beginning of the week, indicating that the uptrend remains intact. The key short-term resistance consists of 106.52 (April 16 high); 106.54 (10-day EMA); and 106.55 (14-day EMA). If the dollar bulls recapture this level, 106.92 (last Wednesday's high), and 107.00 (round number) will be the next resistance areas. The uptrend is likely to continue in the medium term as the US economy remains strong and the Federal Reserve is expected to reduce its rate cut bets. Traders should keep a close eye on the 106.00 psychological level, as a break below it could trigger further declines to 105.62 (last week's low), and 105.45 (upward channel lower line).

Consider shorting the US dollar index around 106.50 today, stop loss: 106.60, target: 106.20, 105.10

WTI crude oil

Oil prices started the week well as traders prepare for the upcoming OPEC+ meeting on Thursday. OPEC+ received accusations from Iranian official Afsin Javan over the recent drop in oil prices. US WTI crude oil rose slightly in the Asian session at the beginning of the week, trading around $68.20/barrel, and the market volatility further declined, waiting for new changes in fundamentals. This week, we will focus on EIA inventory data and the OPEC+ meeting. At the same time, the US non-farm data will be released this week. If the non-farm data continues to strengthen, it will continue to put pressure on the Fed's interest rate cut expectations, which is not good for oil price bulls. Last week, due to the easing of sentiment in the geopolitical situation, the pressure on the supply side eased, and the weekly oil price fell by more than 3%. It is currently operating within the range. The market expects that this OPEC+ meeting is expected to postpone the increase in production and support oil prices. However, the bulls are obviously powerless at present, and global demand is expected to decline. Be careful of another decline and wait for the direction to be chosen. The ceasefire agreement that took effect last Wednesday reduced the risk premium of oil and lowered oil prices. However, the conflict in the Middle East has not interrupted the supply of oil, and it is expected that the supply of oil will be more sufficient in 2025.

From a technical perspective, WTI crude oil is still running below the long/short moving averages on the daily chart, including: 20-day {69.25}; 100-day {72.01}; and 200-day {76.18} moving averages, and has not fallen below the previous lows. It is mainly waiting for the direction to be chosen after consolidation. On the other hand, since the 14-day relative strength index (RSI) of the technical indicators of the daily chart is still in the negative area (near 45) and extends downward. Once the moving averages begin to turn downward, the oil price may test the low of $67.12 (the low on October 3) again, and further challenge the low of $66.53 (the low on November 18). As for the upside, $69.24 (20-day moving average) is the first target, and a breakout towards $69.80 (Uranium line in the horizontal channel), and $70.00 (market psychological level) key resistance levels. The next level is $71.28 (last week's high) above $72.01 (100-day moving average) to create a higher high and put $72.70 (upper line of the horizontal channel) in focus.

Today, consider going long on crude oil around 67.80, stop loss: 67.60; target: 69.00; 69.20

Spot gold

At the beginning of the week, gold prices recovered slightly from the intraday lows, although they still maintained an intraday downtrend in the early European trading hours, and are currently trading around $2,635. Expectations that US President-elect Donald Trump's tariff plans could reignite inflation and limit the Fed's room to cut interest rates have triggered another rise in US Treasury yields. This has proven to be a key factor driving outflows from non-yielding gold. Meanwhile, a rebound in US bond yields has helped the US dollar steadily recover from the near three-week low hit on Friday, which has further weakened demand for gold prices. Nevertheless, trade war concerns, geopolitical tensions and a weaker risk tone have provided some support for the safe-haven gold/dollar pair. Traders may also refrain from making big bets ahead of important US macro data, including the non-farm payrolls report, at the beginning of the new month.

The relative strength index (RSI) indicator on the daily chart is just below 50, temporarily reflecting a lack of bearish pressure in the short term. On the upside, the first resistance zone is formed at $2,671.30 (23.6% Fibonacci retracement of the June high of $2,287 to the October high of $2,790), and the 50-day simple moving average of $2,669.50. Technical buyers may show interest if gold breaks above this level and starts using it as support. In this case, the next level to look at is 2,693.20 (61.8% Fibonacci retracement of 2790.00 to 2536.80), and $2,700 (round number). Further up, the November 25 high of $2,721 will be tested. Looking down, the first support may be at $2,600 (market psychological level), and 2,597.80 {38.2% Fibonacci retracement of 2287 to 2790), followed by the 100-day moving average at $2,575.50.

Consider going long on gold today before 2,633.00, stop loss: 2,630; target: 2,652.00; 2,655.00

AUD/USD

AUD/USD has experienced a sharp sell-off, breaking below the 0.6500 support level, hitting multi-day lows and approaching the late November 0.6430 area driven by renewed strength in the US dollar. AUD/USD remained stable around the 0.6500 mark just below during the European session on Monday. After benefiting from a weaker US dollar over the extended US holiday weekend, AUD/USD came under renewed pressure following a speech by US President-elect Trump. Trump threatened to impose 100% trade tariffs on BRICS countries if they seek a common currency to replace the US dollar, which triggered a new round of demand for safe-haven assets and boosted the US dollar. Retail sales data for October beat expectations, supporting the Australian dollar and reinforcing the market's belief that the Reserve Bank of Australia may not cut interest rates soon. Michelle Bullock, the Governor of the Reserve Bank of Australia, recently stressed that core inflation remains stubbornly high, which justifies the continued tight monetary policy stance. The RBA believes that it will take some time for inflation to stabilize around the target.

From the daily chart, the AUD/USD pair remains under pressure as technical indicators continue to point to a bearish bias, with the 14-day relative strength index (RSI) hovering below 45 (latest at 43), but the moving average convergence divergence (MACD) showing some bullish signs. However, in the short term, the 50-day (0.6644) falling below the 100-day (0.6658) moving average has formed a bearish "death cross" pattern and is a headwind for the AUD/USD pair. Therefore, the downside can first consider 0.6460 (November 27 low), further support areas look to 0.6434 (last week's low), and 0.6430 (the axis of the daily chart's descending channel). A breakout would target the 0.6400 (round number) level. On the other hand, if the pair manages to recover above the 20-day moving average (0.6525), it could signal a potential trend reversal and open the door for further gains in AUD/USD to 0.6535 (upper line of the daily descending channel). A breakout would target the 40-day simple moving average (0.6590), as well as 0.6000 (market psychological level).

Today, consider going long on AUD before 0.6460, stop loss: 0.6450; target: 0.6510; 0.6520.

GBP/USD

After a consolidation phase in the European morning, GBP/USD turned lower on Monday, breaking below 1.2650. The recovery in safe-haven demand for the US dollar, coupled with better-than-expected US manufacturing PMI data, weighed on the pair. GBP/USD attracted some sellers on the first day of the new week and reversed most of the gains that reached 1.2750 or a near three-week high on Friday. The intraday decline dragged the spot price back below the 1.2700 mark and was affected by Trump's social media post slamming the BRICS trading group's plan to replace the US dollar with its own currency. Trump warned that he would impose 100% tariffs on the emerging market trading group if it went ahead with its own way. Apart from this, cautious market sentiment was another factor that helped the safe-haven dollar to recover last week's losses. However, the GBP/USD pair rebounded briefly after the release of UK house price data, which showed that residential prices rose more than expected in November, as this provided support for the pound. In addition, the downside of GBP/USD seems limited as the market bets on another rate cut by the Bank of England this year have decreased.

From a short-term technical perspective, the downside risks of GBP/USD pair will not change as long as the 14-day relative strength index (RSI) remains below the 50 level (last reported at 42). Despite the recent recovery, the leading indicator is currently fluctuating around 45. On the daily chart, the pair’s 50-day (1.2945) crossed below the 100-day (1.2975) to form a “death cross”, adding credence to the negative outlook. On November 22, the 21-day moving average closed below the 200-day moving average, while on November 27, the 50-day moving average cut into the 100-day moving average from above. GBP needs to break the 200-day moving average at 1.2820 to the top to initiate a meaningful uptrend towards the strong contention area around 1.2915 (76.4% Fibonacci rebound from 1.3048 to 1.2487). Further up, the 1.3000 psychological level could challenge the commitment of the bears. On the downside, strong support is at the 1.2600 round number mark, and a break below it will test the weekly low of 1.2507. Losing this level will open a downward channel and fall to the six-month low of 1.2487.

Today, it is recommended to go long on GBP before 1.2640, stop loss: 1.2625, target: 1.2690, 1.2700

USD/JPY

At the beginning of a critical week, the yen fell against the US dollar, re-entered above 150, and reversed the strong trend that rose to the highest level since October 21 last Friday. Subsequently, as the market bet that the Bank of Japan will raise interest rates again in December, the yen reduced its part against the US dollar and reversed from a decline to an increase in the US market, re-seeing around 149. In addition, the weakening risk tone and continued geopolitical tensions have become another factor supporting the safe-haven currency yen. That said, a rebound in US Treasury yields, driven by expectations of a less dovish Fed, should limit upside for low-yielding gold. Investors appear to believe that US President-elect Trump's tariff plans could push inflation higher and limit the Fed's scope for rate cuts. This, in turn, has triggered a sharp rise in US bond yields, helping to revive demand for the dollar and helping USD/JPY hold the psychological 150.00 mark in early European trading.

From a technical perspective, any further upside could face strong resistance around the 151.00 round number with daily oscillators tilted negative. However, sustained strength could trigger a short-covering rally and lift USD/JPY to the 151.65 intermediate mark and, in turn, towards the 152.00 mark. The latter represents the very important 200-day moving average and should act as a key pivot point. Some follow-through buying would suggest that the recent corrective pullback from the multi-month top is over and shift the near-term bias back in favor of the bulls. On the other hand, the psychological 150.00 mark now seems to protect the immediate downside ahead of Friday's swing low (around 149.45). Some follow-through selling could drag USD/JPY further towards the 149.00 round mark and, in turn, the next relevant support at 147.60-147.55 support and 148.00 mark (50% retracement level of the September-November rally).

Today's recommendation to go short before 149.80, stop loss: 150.00; target: 148.80, 148.60

EUR/USD

Renewed strong demand for the U.S. dollar, coupled with political concerns in France, weighed on the single currency, with EUR/USD falling below the 1.0500 support level again on Monday. The negative turn in risk sentiment and comments by U.S. President-elect Trump on BRICS helped the dollar gather strength at the start of the week. Meanwhile, U.S. stock futures were last down more than 0.2% on the day, reflecting the cautious tone of the market. EUR/USD faced some selling pressure at the start of the week amid a stronger dollar, falling to around 1.0500. Investors will be keeping a close eye on the speech by European Central Bank President Christine Lagarde. Market participants have fully priced in a 25 basis point rate cut by the ECB in December, which would mark the bank’s fourth rate cut this year. However, expectations of a larger 50 basis point rate cut have been fading since last month as tepid growth expectations in the euro zone have strengthened slightly. Expectations that the ECB will cut rates at its December meeting have put some selling pressure on the euro zone. On the other hand, the cautious stance of the U.S. Federal Reserve is likely to continue to support the dollar. Fed Chairman Jerome Powell stressed that the economy is not sending any signals that we need to rush to cut interest rates.

From the daily chart, EUR/USD failed to break above the 1.0600 round number last week, before retreating to 1.0455 at the beginning of the week. The 14-day relative strength index (RSI) of the technical indicator is around 39.00, and the bearish trend has not disappeared. Therefore, on the downside, the immediate support is located near the 1.0500 (market psychological level) level. The next key support is located near the 1.0450 level. Any more losses may cause the currency pair to fall to 1.0418 (last week's low), and 1.0400 (round number). As for the upside, the currency pair may face resistance near the 1.0600 (round number), and 1.0634 (50.0%% Fibonacci rebound level from 1.0937 to 1.0332) levels. A close above the 1.060 - 1.06340 level could set the tone for another up move. The next major resistance could be at 1.0700 (round number).

Today, it is recommended to go long on the euro before 1.0480, stop loss: 1.0470, target: 1.0530, 1.0540.

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