US Dollar Index

The US dollar was flat on Monday as Ukraine made more headlines. Traders were considering the possible outcome of the Ukraine talks in Riyadh this week. The US dollar index hovered around 106 points, searching for direction. It was another bad week for the dollar, with the US dollar index falling back below the 107.00 area for the first time since mid-December. In fact, the US dollar index retreated for the second consecutive week due to the lack of clarity on the White House's trade policy, while President Trump's erratic tariff announcements seemed to test the market's patience, all against the backdrop of growing skepticism. The continued volatility of tariffs continues to weigh on the dollar due to the Trump administration's unpredictable trade stance. However, Federal Reserve Chairman Powell recently reminded that the US economy is still "in a very good place", suggesting that it is not all doom and gloom for the dollar. Even after the latest inflation data - reflected in stronger-than-expected consumer price index and producer price index readings - triggered a brief rebound, the dollar retreated from the weekly high, leaving more short-term downside.

As shown by the daily chart, non-commercial players (also known as speculators) have been increasing their long US dollar positions since November last year. However, open interest has declined over the past three weeks, which could ultimately limit downside risks. If sellers remain in control, the US dollar index could find the first line of defense at the February 14, 2025 low of 106.56, and 106.40 (100-day moving average), followed by the December 2024 low (105.42). Staying above this support level should maintain the bullish narrative. On the upside, sporadic buying could push the index back to the 107.00 mark and perhaps even the 9-day moving average of 107.57. A break above this threshold would open the door to the market's psychological level of 108.00.

Consider shorting the US Dollar Index around 106.85 today, stop loss: 107.00, target: 106.50, 106.40

WTI Spot Crude Oil

WTI is cautiously stabilizing above $70.00 as investors eye the Trump-Putin meeting. The impact of the Russia-Ukraine armistice agreement will have a negative impact on oil prices. OPEC may delay its planned monthly supply increase. WTI crude oil prices rebounded from the previous session's losses and traded around $70.60 per barrel during Monday's Asian session. However, crude oil prices faced resistance as optimism around a potential peace deal between Russia and Ukraine waned and supply concerns eased. The possible lifting of sanctions on Moscow could boost global energy supplies. According to BBC sources, Trump administration officials plan to meet with their Russian counterparts in Saudi Arabia on Tuesday to discuss a potential peace deal. The meeting marks an important step in restoring US-Russia relations following President Trump's breakthrough phone call with Russian leader Vladimir Putin. Meanwhile, the delay in the US reciprocal tariffs helped stabilize oil prices, with investors more optimistic about a potential trade deal. Last week, Trump instructed commerce and economic officials to evaluate reciprocal tariffs on countries that have imposed tariffs on US goods, with recommendations to be submitted by April 1.

The daily chart shows that WTI spot crude oil is retesting the $69.76 (76.4% Fibonacci retracement of $66.80 to $79.37), and the psychological market support level of $70.00. A break below this support level could open the way to the $68.50 (December 23 low last year) level. The chart's signals strongly suggest that crude oil is expected to fall to $67.50 (December 10 low last year). As for the resistance level, it first needs to break through the resistance level of $72.54 (20-day moving average), which may then push prices up to $73.08 (50.0% Fibonacci retracement level). A break above the above resistance area could push prices up to 73.65 (200-day moving average). A further break above $73.65 would confirm a short-term turnaround in crude oil prices, with a bullish target of $74.56 (38.2% Fibonacci retracement).

Consider going long on crude oil around 71.15 today, stop loss: 71.00; target: 72.50; 72.70

Spot gold

Gold prices have shaken off Friday's significant pullback and regained some calm, successfully retesting the $2,900 per ounce area amid a generally volatile US President's Day holiday. Spot gold traded around $2,900 on Monday, with the price of gold on track for a seventh straight weekly gain as investors worried about global trade tensions after US President Trump pushed for reciprocal tariffs. Gold prices fell slightly to around $2,880 before retracing above $2,900 on profit-taking in early Asian trading on Monday. However, concerns about a global trade war could help limit losses for the precious metal after U.S. President Donald Trump pushed for reciprocal tariffs. Delayed implementation of the Trump administration's tariff proposals and profit-taking by traders limited gold's upside. Trump signed a presidential memorandum on Thursday outlining his plan to impose "reciprocal tariffs" on foreign countries. However, he delayed the implementation of these measures as his administration negotiated with the countries that could be affected one by one. Easing concerns about a global trade war weighed on the price of gold, a traditional safe-haven asset.

The daily chart shows that gold prices have held the ascending trendline support at $2,885. The 14-day relative strength index (RSI) has retreated from the overbought zone and is trading in the bullish zone, currently approaching 68. If the rebound gains momentum, gold buyers will target the all-time high of $2,943. Before that, the February 12 high of $2,909 could test the bearish commitment. The next relevant resistance is at the psychological level of $3,000. If sellers decisively break through Friday's low of $2,877, it could trigger a fresh downside targeting the psychological $2,850 mark. Further downside to $2,836.60 (50.0% Fibonacci retracement of 2730.50 to 2942.70) could come into play.

Consider going long on gold today before 2,893.00, Stop Loss: 2,890.00; Target: 2,920.00; 2.925.00

AUD/USD

AUD/USD hit a two-month high during Monday's trading session, reaching 0.6373. The Australian dollar strengthened, with the AUD performing strongly amid positive market sentiment. Market sentiment was positive for risk assets as investors expected U.S. President Donald Trump's tariff agenda to not be as impactful as initially feared and a weaker U.S. dollar. The Australian dollar maintained its upward momentum against the U.S. dollar for the third consecutive day, helped by U.S. President Donald Trump's decision to delay the implementation of reciprocal tariffs. AUD/USD also moved higher as a disappointing US retail sales report reignited speculation that the Federal Reserve may cut interest rates later this year despite persistent inflation concerns. AUD/USD's upside may be limited by rising speculation of a rate cut by the Reserve Bank of Australia on Tuesday. The RBA is expected to cut the Official Cash Rate (OCR) by 25 basis points to 4.10%, the first rate cut in four years.

On Monday, AUD/USD hovered around 0.6360, moving up within an ascending channel. This suggests a bullish bias in the market. Moreover, the technical indicator 14-day relative strength index (RSI) remains above 60, further reinforcing the bullish bias. On the upside, AUD/USD may test the consolidation mark of 0.6400. A break below this level will directly target 0.6485 {120-day moving average). The main support for AUD/USD is likely to be at the 9-day moving average of 0.6304, and 0.6300 (psychological mark), followed by 0.6258 (50-day moving average). A break below these levels could weaken short-term price momentum, potentially pushing the pair towards the lower boundary of the ascending channel at 0.6200.

Consider shorting the AUD today before 0.6370, Stop Loss: 0.6385; Target: 0.6310; 0.6300.

GBP/USD

GBP/USD started the new trading week on a positive note and managed to recapture the 1.2600 mark on the back of the stable price action of the US dollar. GBP/USD edged up to around 1.2585 in early Asian trading on Monday. The major pair moved higher, boosted by an upbeat UK GDP report and weak US retail sales data. The US market will be closed on Monday as it is Presidents Day. US retail sales recorded the biggest drop in nearly two years, dragging the dollar lower. Better-than-expected UK GDP provided some support to the pound. The UK economy grew 0.1% quarter-on-quarter in the fourth quarter of 2024, beating expectations, according to preliminary estimates from the Office for National Statistics on Thursday. Traders will be keeping a close eye on UK labor market data and consumer price index inflation data, which will be released on Tuesday and Wednesday, respectively. These reports may provide some clues as to whether the Bank of England will cut interest rates again at its March meeting.

The daily chart shows that GBP/USD once hit a new high of 1.2630 this year after breaking above the 60-day simple moving average of 1.2501 and 1.2500 (round mark) before the end of last week. The 14-day relative strength index (RSI) is firmly above 60 and is currently close to 63, indicating that there is room for growth. Immediate resistance is at 1.2630 (last week's high). Further up, buyers will target the 100-day simple moving average of 1.2670. If GBP sellers step in at higher levels, the first challenge will be the 60-day simple moving average of 1.2501, and 1.2500 (round mark), and a deeper decline may challenge the next downside target of the February 3 low of 1.2249.

Today, it is recommended to go long GBP before 1.2612, stop loss: 1.2600, target: 1.2650, 1.2660

USD/JPY

USD/JPY fell sharply to around 151.40 as the yen performed strongly under the optimistic fourth quarter Japanese GDP data. Flash Q4 Japanese GDP data showed economic growth of 0.7%. The postponement of Trump's reciprocal tariff plan and poor retail sales data will put the US dollar at a disadvantage. On Monday, the yen strengthened as Japan's fourth quarter GDP growth exceeded expectations, and the market expected that the Bank of Japan may accelerate the pace of interest rate hikes. At the same time, the US dollar was under pressure due to weak US retail sales data last week, and the market re-evaluated the possibility of the Federal Reserve to cut interest rates this year. Although the GDP growth in the fourth quarter was not across the board, it still supports the market's view that the Bank of Japan will tighten policy more aggressively than the market expected. The stronger-than-expected growth of the Japanese economy has raised market expectations for the Bank of Japan's policy adjustment, driving the yen stronger. However, the divergence of global monetary policies has increased market volatility, and the US dollar has slipped on the weak economic data.

From the current level, the 151.45-151.40 area may provide immediate support before the 150.95-150.90 area, which is the lowest level since December 10 earlier this month. Given that the oscillators on the daily chart remain in the negative territory, some follow-up selling will be seen as a new trigger for bearish traders. Then, USD/JPY may accelerate its decline to the psychological level of 150.00 and then to the 149.60-149.55 area. On the other hand, any meaningful recovery beyond the 152.00 mark may face a strong barrier near the 152.70 area or the 200-day simple moving average. It is followed by the vicinity of 153.00 (round mark), which, if cleared decisively, could trigger a short-covering rally. The subsequent rise has the potential to take the USD/JPY pair above the rounded figure of 154.00, heading towards the supply zone of 154.45-154.50

Today, it is recommended to short the US dollar before 151.65, stop loss: 151.85; target: 150.90, 150.70

EUR/USD

The EUR/USD is trading in an uncertain manner amid the equally volatile development of the US dollar, returning to the area below 1.0500 after the US Presidential Day holiday caused trading conditions to decline. For the second consecutive cycle, the EUR/USD has recovered. The EUR/USD rose after Trump announced the tariff policy, once rising above the key resistance level of 1.0500, reflecting the market's increased demand for the euro. Although economic growth in the eurozone is relatively weak, the market generally expects that the European Central Bank may adopt an accommodative monetary policy, which provides support for the euro. In addition, low inflation and relatively healthy fiscal conditions in the eurozone have kept the market somewhat confident about the euro's long-term prospects. Overall, the volatility of the foreign exchange market remains high against the backdrop of tariff policies and global trade frictions. The weakness of the US dollar index reflects the market's reassessment of the Fed's policy outlook, while the euro is strong on the back of expectations of an easing policy by the European Central Bank. Although the market is pessimistic about the short-term outlook for the dollar, new volatility may occur in the foreign exchange market as further US economic data is released and tariff policies are implemented.

From a technical perspective, the 14-day relative strength index (RSI) indicator, one of the technical indicators on the daily chart, maintains its bullish slope and suggests that the exchange rate may rebound to a certain extent after correcting oversold conditions. In addition, the 9-day and 45-day moving averages formed a bullish "golden cross" last week, so on the upside, it is favorable for bullish traders. Therefore, there is a high probability of a subsequent test of 1.0563 (100-day moving average). Some follow-up buying should pave the way for further gains and help EUR/USD regain 1.0600 (market psychological level). The pair could then climb to the December 2024 swing high at around 1.0646 (61.8% Fibonacci retracement from 1.0937 to 1.1077). On the other hand, 1.0467 (38.2% Fibonacci retracement) now seems to protect the immediate downside. A strong break below this could drag the EUR/USD pair towards the 1.0400 round number and 1.0403 (9-day moving average) area.

Today, it is recommended to go long on the euro before 1.0470, with a stop loss of 1.0455 and targets of 1.0520 and 1.0530.

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