Dollar Index

The U.S. dollar traded in a tight range on Thursday, with the U.S. dollar index holding above 108.00, rising more than 2.5% in December and closing in positive territory for the third consecutive month. The index is currently in a consolidation phase, just below the 26-month high of 108.58 hit on the last day of 2024. But because the market remains cautious, the trading desk is understaffed due to the holidays around the New Year. The U.S. dollar failed to respond to more action in Asian markets. U.S. bond yields fell by more than 7 basis points across the board, dragged down by economic data, but the U.S. dollar index continued to consolidate at high levels. In the short term, the U.S. dollar continues to be supported against the background of the widening monetary policy differences between the Federal Reserve and other major central banks. During the New Year, due to reduced liquidity and the approach of Trump's inauguration, foreign exchange market volatility is likely to intensify. In the short term, the US dollar is expected to continue to consolidate at a high level.

Observing the technical trends in recent weeks, the U.S. dollar index rebounded to 108.58, the highest level since November 2022, on the last trading day of 2024, which means that the U.S. dollar is likely to maintain an upward trend in the short term. Yesterday it rose to 109.56, setting a new high in recent years. If the US dollar index stabilizes above the area composed of 109.20 (76.4% Fibonacci rebound level from 114.78 to 100.16); and 109.29 (the peak on July 14, 2022), the market outlook will rise. The target will be 109.56, and 110.00 (market psychological level) remains a key resistance level. On the other hand, if bears regain control of the market, initial support would be at 109.00 (round-number mark). A break below this level could lead to a test of support areas at 108.08 (high of November 22 last year), and 108.00 (round number mark) and 107.56 (20-day EMA).

Today you can consider shorting the US dollar index near 109.45, stop loss: 109.60, target: 108.90, 108.80

WTI Spot Crude Oil

U.S. WTI crude oil was trading around $72.70 on Thursday. It rose to a nearly 3-month high of US$73.30. U.S. crude oil continued to rise during the Asian trading session and was once trading near US$72.00 per barrel. Fundamental concerns about supply in 2025 still exist, but Affected by expectations of demand recovery in the short term, oil prices once again tested the upper edge pressure of the box. However, it should be noted that it has not yet entered the reversal range, and the supply side and demand side have not resonated upward. In the short term, rebound corrections at the technical level are still dominant. Data released by the U.S. Energy Information Administration (EIA) on Tuesday showed that it reached the strongest level since the epidemic. However, supply could tighten next year, depending on President-elect Trump's policies, including sanctions. He called for an immediate ceasefire between Russia and Ukraine and may re-implement the so-called maximum pressure policy on Iran, which could have a significant impact on the oil market.

Judging from recent trends, the 14-day relative strength index (RSI), a technical indicator, is hovering above 60, reflecting a neutral to strong trend. If oil prices effectively hold above $72.50 (135-day moving average) and $72.54 (November 7 high), $73.20 (150-day moving average) is the first resistance level nearby. If more bulls emerge to support oil, the next key level will be $75.05 (200-day EMA). On the downside are $71.53 (yesterday's low), and around $70.38 (100-day moving average). Once the above-mentioned key psychological level is broken by the bears, the next target will be directly pointed at $70.00 (the market's psychological level).

Today you can consider going long crude oil near 72.55, stop loss: 72.40; target: 73.50; 73.70

Spot Gold

Gold built recovery momentum during the U.S. session on Thursday, hitting a two-week high of $2,660.50. The precious metal benefited from poor market sentiment and appeared poised to continue its gains ahead of the weekly close. Gold prices rose for a third consecutive session on Thursday, rising more than 27% in 2024 and posting their best performance since 2010. The upward momentum has been driven by U.S. monetary easing, ongoing geopolitical tensions and record central bank purchases. However, with the Federal Reserve expected to take a more cautious approach to interest rate cuts in 2025, signaling a shift in its monetary policy stance to a hawkish stance, interest-free gold may encounter some headwinds. The change was influenced by uncertainty about possible policy shifts brought about by the incoming Trump administration's economic plans. Geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict are expected to continue to support gold, a traditional safe-haven asset, in the short term.

Gold prices were trading near $2,630.00 per troy ounce on Thursday, with the daily chart showing gold prices in a consolidation phase, with prices trading sideways. However, gold prices broke above the recent short-term moving averages, indicating that short-term momentum has turned bullish. Additionally, the 14-day relative strength index (RSI), a technical indicator, is hovering around 55, reflecting an uptrend. After gold prices rose above the 250 hour area of ​​​​$2,642.50, the first resistance was the monthly high of $2,664.50 set on December 16. Then comes $2,692 (December 13 high). Regarding its support, gold prices are likely to test the 250 hourly immediate support at $2,642.50. Further support appears near $2,624.80 (100-day EMA).

Today you can consider going long gold before 2,654.00, stop loss: 2,650.00; target: 2670.00; 2675.00

AUD/USD

AUD/USD rebounded above 0.6200 during the Asian session on Thursday. Disappointing China Caixin December PMI data, coupled with fresh USD buying, failed to prevent a negative shift in risk sentiment for the Australian dollar on the first trading day of 2025. The Australian dollar rose against the US dollar after China released its Caixin manufacturing purchasing managers' index (PMI) on Thursday. As a close trading partner, any fluctuations in the Chinese economy tend to affect the Australian market. China's Caixin manufacturing PMI unexpectedly fell to 50.5 in December, down from 51.5 in November. Markets expected a reading of 51.7 this month. As the market improves, manufacturer output and demand continue to grow. The output indicator remained in expansion territory for the 14th consecutive month, while total new orders increased for the third consecutive month. Reserve Bank of Australia policymakers have become more confident about inflation, although risks remain. The board stressed that monetary policy needs to remain "sufficiently restrictive" until there is greater certainty about inflation.

AUD/USD was trading around 0.6210 on Thursday, maintaining a bearish outlook on the daily chart, trading within a descending channel pattern. The 14-day relative strength index (RSI), a technical indicator, rebounded above 30, suggesting that an upward correction is possible in the near term. Immediate resistance is located at 0.6242 at the 14-day moving average and the next hurdle is at 0.6285 at the 20-day moving average. Key resistance is at the psychological level of 0.6300. On the downside, AUD/USD could trade at 0.6179 (low of December 31), with a break towards 0.6120 (low of March 6, 2020) and psychological support at 0.6100.

Today you can consider going long Australian dollar before 0.6195, stop loss: 0.6180; target: 0.6230; 0.6240.

GBP/USD

After an earlier recovery attempt, GBP/USD reversed course and fell to its lowest level in nearly eight months below 1.2400. As trading conditions normalized after the New Year's holiday, deteriorating risk sentiment led to renewed strength in the U.S. dollar, weighing on the pair. The GBP/USD pair remained on the defensive around 1.2530 during Thursday's Asian session, weighed down by a stronger US dollar. The prospect that the Federal Reserve will slow its easing cycle this year supports USD/GBP. A modest increase in dovish bets from the Bank of England this year dragged the Cable index lower. Bank of England Governor Andrew Bailey said a "gradual" approach to interest rate cuts "remains the right thing to do", hitting back at market bets on fewer rate cuts over the coming year. In addition, Bailey also said that before Donald Trump returns to the White House, uncertainty around geopolitical risks and trade policy may drag down the already slowing British economy, creating headwinds for sterling.

GBP/USD has retraced recent losses and is now trading just below 1.2400. Daily chart analysis shows that the bearish bias continues as the pair is located at the upper and lower limits of a descending channel pattern. The 14-day relative strength index (RSI), a technical indicator, remains below the 32 level, indicating continued weakness. On the downside, GBP/USD will first test 1.2352 (yesterday’s low), and 1.2300 (market psychological level). A decisive break below the aforementioned lows could intensify the bearish momentum. On the upside, GBP/USD is testing immediate barriers at 1.2475 (December 20 low), and 1.2500 (round-number mark). A successful break above these levels could bolster bullish momentum.

Today it is recommended to go long GBP before 1.2365, stop loss: 1.2355, target: 1.2430, 1.2450

USD/JPY

On Thursday, USD/JPY traded as high as 157.84, close to December’s multi-month high of 158.07. Amid widespread risk aversion, additional gains await. USD/JPY retreated slightly to around 157.00 during early Asian trade on Thursday. Japanese markets are closed for the rest of the week. The U.S. S&P Global Manufacturing Purchasing Managers' Index for December will be closely watched on Friday. The U.S. dollar index, which measures the greenback's value against six major peers, is currently trading around 108.30. The large interest rate differential between the United States and Japan acts as a tailwind for the currency pair in the short term. The Bank of Japan is due to release its quarterly report on regional economic conditions next week, which is likely to include a view on whether rate hikes are spreading across the country. The report may provide some hints about the Bank of Japan's next policy decision on January 24. Meanwhile, verbal intervention from Japanese authorities could help limit the yen's losses.

Despite a brief bearish trend at the start of the week, USD/JPY remains deep in the bull market and is currently testing waters around 157.00 after briefly hitting a near 5-month high of 158.07. The pair bounced off the 200-week moving average near 149.95, gaining 6.35% from bottom to top in the process. If USD/JPY falls below 107.00 (round-number mark), and 106.62 (65-hour EMA) levels, the price may return to the current level of 156.00 (market psychological mark). On the upside, USD/JPY could retest the monthly high of 158.08 reached on December 26. A break above this level could pave the way for further gains, with the pair possibly targeting around 160.00 (the psychological barrier).

Today it is recommended to short the US dollar before 157.70, stop loss: 157.90; target: 156.80, 156.70

EUR/USD

EUR/USD fell another full percentage point on Thursday, kicking off 2025 at its lowest price in two years. EUR/USD has fallen below 1.0230 for the first time since November 2022, and if conditions don't improve in January, Fiber will post its fourth straight month of losses. EUR/USD fell for a third consecutive day during the Asian session on Thursday. The euro faces challenges as the European Central Bank maintains dovish guidance on interest rate policy this year. The European Central Bank will cut the deposit facility interest rate by 100 basis points to 3% in 2024, and is expected to further drop to 2% by the end of June 2025 - considered a neutral interest rate. On Wednesday, European Central Bank President Christine Lagarde said the central bank aims to achieve its 2% inflation target by 2025. Lagarde expressed hope that 2025 will be the year when we achieve our goals as expected and consistent with our strategy. The U.S. dollar index, which measures the dollar's value against six major currencies, rebounded to multi-year highs and was trading around 109.20 on the back of the U.S. Federal Reserve's hawkish turn.

EUR/USD fell to its lowest since November 2022 at 1.0224 and is currently trading around 1.0250. A review of the daily chart shows an ongoing bearish bias as the pair is confined within a descending channel pattern. The 14-day Relative Strength Index (RSI), a key momentum indicator, remains below the 30 level, confirming continued bearish sentiment for the EUR/USD pair. Additionally, the 9-day moving average (1.0391) is below the 14-day moving average (1.0405), indicating weaker short-term price momentum. On the downside, yesterday’s two-year low of 1.0224, and 1.0200 (round-number mark) appear to be the main supports for the EUR/USD pair. A successful move above this level could reinforce the bearish bias and exert downward pressure on the pair, allowing it to find support in the area around the 1.0100 (market psychological barrier) level. In terms of resistance, EUR/USD tested an immediate barrier at the 1.0300 (round-number mark) level, followed by 1.0332 (November 22 low). A break above these moving averages could take the pair closer to yesterday's high of 1.0375.

Today it is recommended to be long the euro before 1.0250, stop loss: 1.0235, target: 1.0300, 1.0320.

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