Dollar Index

The dollar index, which tracks the greenback against a basket of six major currencies, remained subdued for a second day, hovering around 101.00 in Wednesday's session. The dollar weakened as U.S. inflation data came in below expectations. It fell nearly 1% the previous day, pressured by unexpected inflation data that suggested President Donald Trump's tariffs would have only a limited impact. Data released on Tuesday showed that headline inflation fell to 2.3% in April, the lowest since February 2021 and slightly below market forecasts of 2.4%. On the trade front, markets continue to assess the impact of temporary tariff cuts between the United States and China, which will be reduced to 30% and 10% respectively within 90 days under the agreement. The easing of trade tensions has prompted traders to reduce expectations for further rate cuts from the Federal Reserve, arguing that policymakers may retain more flexibility if inflation risks continue to ease. Looking ahead, investors will focus on retail sales and producer inflation data due later this week for further insights into the state of the U.S. economy.

The daily chart of the US Dollar Index shows bearish signals and is currently trading around 101.00. The 14-day relative strength index (RSI) of the index's technical indicators hovers around 51.50, indicating neutral momentum. While the Moving Average Convergence/Divergence (MACD) shows a moderate buy signal, but this is offset by the extension of the Stochastic RSI fast indicator in the 90s, indicating overbought conditions. Further strengthening the short-term selling pressure. In terms of moving averages, the 50-day, 100-day, and 200-day simple moving averages are all clustered around the 100 level, indicating a broader bearish trend. Therefore, the short-term key support levels are 100.35 {30-day simple moving average}, 100..00 {market psychological level}, while the resistance levels are 101.30 {40-day simple moving average}, and 101.81 {Tuesday's high}} near the key obstacle area.

Today, consider shorting the US dollar index around 101.20, stop loss: 101.30, target: 100.60, 100.70

WTI spot crude oil

WTI crude oil rose nearly 2.6% to a near one-month high of $63.48 in the middle of the week, boosted by temporary tariff cuts and better-than-expected inflation reports. Trump's visit to the Middle East and Iran's neutral warning to its neighbors also triggered market concerns about geopolitical situations and boosted oil prices. The U.S. Labor Department reported on Tuesday that the U.S. consumer price index rose 2.3% in the 12 months ending in April, the smallest year-on-year increase in four years, which led Wall Street firms to lower their forecasts for a U.S. recession in the coming months. The data also gives the Federal Reserve room to possibly start taking some action. On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, are planning to increase oil exports in May and June, which is believed to be likely to limit oil's upside. Elsewhere, signs generally indicate that demand for refined fuels remains strong.

From a technical perspective, the daily chart shows that the current price of US crude oil has successfully broken through the top of the previous range of fluctuations at $62.00, forming a bullish trend structure in the short term. The price has stood firmly above the $60 integer mark and has closed above the 20-day {60.87} and 34-day {62.38} simple moving averages, indicating that bullish momentum has increased. At the same time, the 14-day relative strength index (RSI) of the technical indicator is now in the 53 positive zone, while the red column of the MACD indicator has expanded, and the fast line is higher than the slow line, supporting the judgment of the continuation of the rise. If the market can hold above the support level of the 20-day {60.87} simple moving average, the next target will point to the year's high area near the $63.95 {simple moving average}; the next level will point to $64.71 {April 23 high}. However, if it falls below the 20-day {60.87} simple moving average mark, the short-term rally may face the risk of a correction to the $60.00 {market psychological mark} level.

Consider going long on crude oil near 62.20 today, stop loss: 62.00; target: 63.50; 63.70

Spot gold

Gold prices fell sharply for the second time in three days on Wednesday, driven mainly by improved risk appetite driven by positive trade news related to the United States. This, coupled with a bearish technical chart pattern, has caused gold prices to fall below $3,200 for the first time. Gold/USD traded as low as $3,168, down more than 2%, as a truce in the trade war between Washington and Beijing boosted traders' morale, although there is still some uncertainty about the global economic outlook. U.S. President Trump's visit to the Middle East kept market sentiment positive as he reached agreements with multiple countries. News that deals with Japan and South Korea seemed close to being reached weakened gold's safe-haven appeal, with investors shifting funds to risky assets. This put pressure on the non-yielding metal, which failed to take advantage of the weaker dollar, which was rumored to be favored by the Trump administration. Reports said the White House may pressure other countries to appreciate their currencies.

The uptrend in gold prices has paused due to the formation of a "double top" chart pattern. Despite the fact that XAU/USD has fallen below $3,202 {May 1 low}, and $3,200 {market psychological barrier}, sellers need to protect this level at all costs. If they succeed, gold may slide to the next key support level, which is the 50-day simple moving average of $3,150.20, and $3,142 {April 2 high} level, followed by $3,100. In case of further weakness, the next target will be $3,000. Conversely, if XAU/USD recovers above the $3,200-3,202 area, buyers will face the next resistance level of $3,231 {34-day simple moving average}. If it breaks through, the next resistance level will be $3,265.60 {Tuesday high}, followed by $3,296 {10-day simple moving average}, and $3,300 {market psychological barrier} level.

Consider going long on gold today before 3,170, stop loss: 3,165; target: 3,200; 3,205

AUD/USD

AUD/USD continued to rise on Wednesday, rising more than 1.50% earlier as the dollar weakened following weaker-than-expected US inflation data. Australia's seasonally adjusted wage price index rose 3.4% year-on-year in the first quarter of 2025, higher than the 3.2% increase in the first quarter of 2024 and beating market expectations of 3.2%. This marked a recovery from the previous quarter. Australian Prime Minister Anthony Albanese was sworn in for a second term on Tuesday in a clear election victory. Key cabinet positions, including the finance minister, foreign minister, defense minister and trade minister, remained unchanged. The market now expects the Reserve Bank of Australia (RBA) to cut the cash rate to around 3.1% by the end of the year, a revision from the earlier forecast of 2.85%. However, the RBA is still widely expected to deliver a 25 basis point rate cut at its upcoming policy meeting.

AUD/USD traded close to 0.6500 on Wednesday. Technical analysis on the daily chart shows a bullish outlook with the pair trading above the 20-day simple moving average of 0.6414. Moreover, the 14-day relative strength index (RSI) of the technical indicator also exceeded 58, further reinforcing the bullish sentiment. Currently, AUD/USD may retest the 0.6500 {market psychological barrier}, and 0.6504 {300-day simple moving average} area, and a sustained break above this level will pave the way for a six-month high of 0.6515 set on December 2, 2024. A break below this level will pave the way for a further test of the 0.6581 {high on November 12 last year} level. On the downside, AUD/USD may test the 20-day simple moving average of 0.6414, and 0.6400 {round number}, followed by the 30-day simple moving average of 0.6343. A decisive break below these levels could weaken short- and medium-term price momentum and open the door for a decline towards 0.6300.

Today's recommendation is to go long AUD until 0.6415, stop loss: 0.6400, target: 0.6480, 0.6485

GBP/USD

The British pound rose further to nearly 1.3360 against the US dollar during the European session on Wednesday. The US dollar retreated further after the release of lower-than-expected US Consumer Price Index data for April on Tuesday. It stabilized after rising more than 1% in the previous session. However, the upside for the currency pair may be limited as the pound faces resistance from cooling employment and slowing wage growth in the UK, which may increase market expectations for further rate cuts from the Bank of England. Market participants are bracing for increased volatility in the British pound this week, and the recent strong performance of the GBP/USD pair has also been driven by a weaker US dollar, which came under pressure after lower-than-expected US inflation data. On the political front, US President Donald Trump said in an interview with Fox News that he is working to expand US access to the Chinese market and described the US-China relationship as "excellent".

This week, a bullish reversal in GBP/USD has the pair poised to enter a rough consolidation pattern in the short term. Price action has been in a volatile phase since the pullback from the recent high near 1.3445, but bearish momentum has been struggling to pull the pair back to the 40-day simple moving average near 1.3139. At this stage, once GBP/USD has established itself around the 1.3300 mark, but its bullish trend remains intact, the level now acts as the next potential resistance. In the short term, momentum has turned positive, as shown by the 14-day relative strength index (RSI). Therefore, the pair is likely to extend its gains. The first resistance level is 1.3356 {May 8 high}, followed by 1.3400. Conversely, if GBP/USD holds below 1.3300, sellers may continue to look to retest this week’s current low of 1.3208 {30-day simple moving average}, followed by the 1.3200 {round number} level.

Today’s recommendation is to go long GBP before 1.3245, stop loss: 1.3230, target: 1.3320, 1.3330

USD/JPY

USD/JPY fell for the second consecutive day as market expectations of Bank of Japan tightening policy re-emerged. The decline was driven by hawkish comments from Bank of Japan Deputy Governor Shinichi Uchida and higher-than-expected April PPI data, which contrasted with weak US inflation data and growing speculation of a Fed rate cut. The yen continued to maintain its positive bias against the US dollar for the second day, with USD/JPY trading close to the 145.60 level or intraday low as we entered the European session on Wednesday. Hawkish comments from Bank of Japan Deputy Governor Shinichi Uchida on Tuesday opened the door to further policy normalization and became a key factor supporting the yen. On the other hand, the dollar was affected by market bets that the Federal Reserve will cut interest rates at least twice this year. In contrast, weaker U.S. consumer inflation data on Tuesday boosted market bets that the Fed will cut interest rates at least twice this year. This in turn kept the dollar on the defensive below its highest level since April 10 and further favored the low-yielding Japanese yen. However, the positive market sentiment due to optimism about the 90-day tariff truce between China and the United States may limit further gains in the safe-haven yen.

From a technical perspective, the recent break above the 200-hour simple moving average on the 4-hour chart and the positive oscillators on the daily chart favor bullish traders. Therefore, any subsequent break below the 146.00 mark may still be seen as a buying opportunity around the 145.00 level. However, a successful break below this level may trigger some technical selling and drag the USD/JPY to the 144.00 mark, which in turn points to the 143.50 and 143.00 psychological levels. On the other hand, the 146.65 area now seems to be an immediate barrier, and if it is broken, the pair could climb to the 147.00 round mark, which in turn points to the 148.00 area and surpasses the more than one-month high of 148.65 area reached on Monday. If the follow-up buying breaks through the latter, it will be regarded as a new trigger for bullish traders and push the spot price to the 149.00 mark.

Today, it is recommended to short the US dollar before 146.85, stop loss: 147.00; target: 145.50, 145.30

EUR/USD

After the European trading session on Wednesday, the EUR/USD pair traded close to the 1.1200 area, reflecting the cautious bullish sentiment of the market as it approaches the Asian trading session. Price action remains in the middle of the intraday range, indicating a balanced sentiment despite the mixed technical background. Although the short-term momentum indicators send cautious signals, the broader trend is still supported by the long-term moving averages, providing a basis for further gains if the recent gains can be maintained. EUR/USD rose to around 1.1195 during the Asian trading session on Wednesday. USD/EUR weakened as the US inflation data for April came in lower than expected. The United States and China reached an agreement to reduce tariffs after two days of negotiations in Geneva, Switzerland. Optimism that the tariff agreement between the world's two largest economies could ease the trade war prompted traders to lower their expectations for a recession. This in turn could provide some support for the US dollar and create resistance for major currency pairs.

EUR/USD remains at the top of its intraday range, indicating that buyers are still in control of the market despite mixed momentum readings. The broader technical picture remains positive, with multiple long-term moving averages reinforcing the overall uptrend. From a technical perspective, the pair presents a mixed but overall positive outlook. The 14-day relative strength index (RSI) is in the 4.80 range, indicating balanced momentum. However, the moving average convergence/divergence (MACD) still issues a sell signal, suggesting potential short-term resistance. Meanwhile, the bulls-shorts power indicator supports a buying bias, strengthening the bullish argument. Support levels are gathered at 1.1131{40-day simple moving average}, 1.1100{round mark}, and 1.1080{50-day simple moving average}. Resistance levels are at 1.1240{30-day simple moving average}, and 1.1248{weekly high}, and a breakout points to 1.1300{market psychological barrier}.

Today, it is recommended to go long on the euro before 1.1165, stop loss: 1.1150, target: 1.1230, 1.1250.

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