U.S. Dollar Index

The U.S. Dollar Index traded weakly, reporting 105.70 on Tuesday. The Federal Reserve has consistently sent hawkish signals, which may limit the decline of the U.S. dollar as the market delays the onset of an easing cycle. The U.S. Dollar Index experienced narrow-range fluctuations at the beginning of the week and is currently trading below 106.00. The strength of the U.S. dollar is driven by a robust domestic economy and sustained inflation pressures, prompting the Federal Reserve to adopt a more hawkish stance. Despite a calm start to the week, the U.S. Dollar Index continues to show resilience, indicating signs of potentially retesting the previous high of 106.51 or levels near that. The U.S. economy demonstrates enduring strength, with rising yields and strong growth supporting the stability of the U.S. dollar. Some Federal Reserve officials are beginning to consider raising interest rates as they believe inflation is not making any progress. At present, the market is delaying the onset of an easing cycle.

Although the bullish momentum has halted, the U.S. Dollar Index appears to be well supported by the 10-day (105.74) and 20-day (105.06) short-term moving averages, indicating that bullish sentiment remains in the short term. The 14-day Relative Strength Index (RSI) on the daily chart is in positive territory (59.87), leaving room for potential bullishness. Currently, the lack of a clear trend may indicate an ongoing struggle between bulls and bears, but the potential for bullish behavior remains. The Moving Average Convergence Divergence (MACD) is flat with green bars, indicating continued but subdued buying momentum. Despite occasional downturns, the overall green bars highlight the resilience of the bulls. On the upside, attention can be focused on the previous high of 106.51 and 106.80 (high on October 27th of last year). If it falls below the 106.00 level (a psychological market barrier) and extends the decline to 105.74 (10-day moving average) and 105.75 (76.4% Fibonacci retracement level from 107.34 to 100.61). If breached, it will test the 105.00 (integer barrier) level.

Today, consider shorting the U.S. Dollar Index near 105.90, stop loss at 106.05, target at 105.50, 105.45.

WTI Spot Crude Oil

The U.S. WTI (West Texas Intermediate) crude oil traded around $83.00 per barrel on Tuesday. As concerns about a broader Middle East war subsided, oil prices rose that day. Iranian Foreign Minister Hossein Amir Abdollahian stated on Friday that Iran has no intention of responding to retaliatory attacks launched by Israel, while Israeli authorities have largely remained silent. The WTI price fell to a near-month low. However, escalating tensions between Israel and Iran could limit the downside space for WTI prices. In recent weeks, U.S. crude inventories have increased more than expected, putting downward pressure on WTI prices. Additionally, hawkish comments from the Federal Reserve have strengthened the U.S. dollar, acting as resistance to oil prices. On the other hand, as China is the world's largest oil importer, hopes for Chinese demand may bring some relief to WTI prices.

From a technical perspective, geopolitical tensions continue to make oil prices subject to upward fluctuations, but recent prices have fallen to Monday's low of $80.59. The support levels of $80.59 (early-week low) and $80.00 (psychological market barrier) continue to act as temporary bottoms for WTI crude, with traders unable to reclaim levels above $83.38 (50.0% Fibonacci retracement from $71.42 to $87.08). Despite declines on all but three of the past 12 consecutive trading days, U.S. crude oil continues to trade near the 200-day moving average of $79.61 and above $80.00. If WTI crude continues to decline in the future, it will challenge the congestion area near $79.25 (50.0% Fibonacci retracement). A breach would lead to a continued test of $77.41 (61.8% Fibonacci retracement). On the upside, first look back at $83.38 (23.6% Fibonacci retracement), with the next level testing the $84.00 level (61.8% Fibonacci retracement from $93.94 to $67.94).

Today, consider buying crude oil near $82.85, stop loss at $82.60, targets at $83.90 and $84.15.

XAUUSD

Gold reversed direction yesterday and rose to the $2,320 region, erasing most of the daily decline. Due to weak U.S. Purchasing Managers' Index (PMI) data, the yield on the benchmark 10-year U.S. Treasury remained below 4.6%, supporting gold prices. On Tuesday during the Asian session, spot gold faced significant selling pressure, trading near the daily low of $2,295, the lowest level in a week. As investor sentiment eased due to concerns, they flocked to high-yield assets. Against the backdrop of easing tensions in the Middle East, Asian stock markets rose, followed by European and American stock indices. Gold prices fell sharply, erasing gains from last week, with a decline exceeding 3.50%. The pullback in gold prices may be attributed to profit-taking and a slight strengthening of the U.S. dollar. Influenced by the escalating tensions between Israel and Iran last Friday, gold touched a daily high of $2,392. Additionally, market participants began to anticipate that the Federal Reserve would delay interest rate cuts beyond expectations, further suppressing gold prices. Tehran downplayed Israel's retaliatory drone strike on April 19th, viewing it as an escalation in conflict.

Gold prices plummeted and briefly fell below $2,300 (a psychological market barrier), opening the door for a correction. If gold fails to retest the April 22nd low of $2,324.50 and remains below $2,300, a break will expose the key support level of $2,255.20 (34-day moving average; and 61.8% Fibonacci retracement from $2,146.20 to $2,431.50). The next level to watch is $2,223 (high on March 21st). On the other hand, the first resistance level for gold is $2,322.50 (38.2% Fibonacci retracement), followed by the high of the 9-day moving average at $2,360.80. A breakthrough of the latter will touch $2,400 (a psychological market barrier).

Today, consider buying gold near $2,318.00, stop loss at $2,314.00, targets at $2,335.00 and $2,340.00.

AUDUSD

Enhanced risk appetite and a weakening U.S. dollar allowed the AUD/USD to continue strengthening from a strong start this week, approaching the key level of 0.6500 ahead of Australia's release of crucial inflation data. The AUD/USD began the week on a positive note, rising early in the week as risk sentiment improved. Wall Street closed higher, while U.S. Treasury yields edged lower. However, the AUD/USD rebounded from its yearly low below the 0.6450 region. A source from Australia revealed that manufacturing activity improved in April. Judo Bank's manufacturing PMI rose from 47.3 to 49.9, indicating slight expansion. The services PMI dropped from 54.4 to 54.2, although its expansion rate was the fastest in two years. This week, economic affairs in the U.S. will be busy. The release of the preferred inflation gauge of the Federal Reserve - the Personal Consumption Expenditures (PCE) price index for March will determine the direction of the AUD/USD.

From a broader perspective, the AUD/USD is expected to continue its downward trend while remaining below the significant 20-day moving average of 0.6503 and the psychological market barrier of 0.6500. If sellers maintain control and the AUD/USD falls below 0.6400 (integer barrier) and the 2024 low of 0.6362, spot prices may retest the 2023 low of 0.6270 (October 26th of last year). On the other hand, the key levels of 0.6500 - 0.6503 are immediately resisted, with the next level at 0.6530 (200-day moving average), followed by the March high of 0.6553 (April 11th high).

Today, consider buying the AUD near 0.6470, stop loss at 0.6450, targets at 0.6530 and 0.6540.

GBPUSD

Yesterday, the GBP/USD gathered bullish momentum, extending the daily rebound to 1.2450 in the latter half. After PMI data came in weaker than expected, the U.S. dollar faced heavy selling pressure, driving the rebound of this currency pair. The GBP/USD rate rebounded overnight from the 1.2300 level (the lowest since November 14th) to near 1.2350 and showed narrow fluctuations during Tuesday's Asian session. Spot prices are currently trading around 1.2350, with little change on the day, and continue to be influenced by the dynamics of the U.S. dollar price. Reduced concerns about broader Middle East conflicts still support an overall positive risk tone, which is believed to weaken safe-haven currencies and provide some support for the GBP/USD currency pair. However, investors increasingly believe that the Federal Reserve will maintain higher interest rates amid soaring inflation, which continues to be a driving force for the U.S. dollar. Furthermore, speculation about the Bank of England adopting more aggressive policy easing further limits the upside potential of this currency pair.

From a technical perspective, recent breakthroughs near support levels of 1.2500 and 1.2400 are seen as new triggering factors for bearish traders. That is to say, the 14-day Relative Strength Index (RSI) on the daily chart is showing oversold conditions. Nonetheless, the GBP/USD currency pair seems poised to continue its downward trend since reaching its peak earlier this year in March. Meanwhile, any rebound could encounter strong resistance near the 1.2500 (integer barrier) support breakpoint. Clearing this resistance could trigger short-covering rebounds, pushing spot prices up to 1.2470 (midline of the downward channel) and the 1.2481 (50.0% Fibonacci retracement from 1.2069 to 1.2893) area. However, a stronger resistance is likely near the 1.2500 psychological level. On the other hand, the overnight low (near the 1.2300 level) now appears to protect the current downside space. Some subsequent selling will reiterate the negative bias and drag the GBP/USD rate towards the next relevant support level at 1.2263 (76.4% Fibonacci retracement) and on to the 1.2200 integer level.

Today, it is recommended to go long on the GBP near 1.2430, stop loss at 1.2410, targets at 1.2495 and 1.2510.

USDJPY

Due to enthusiasm for the U.S. dollar, the USD/JPY rose to its highest level in 34 years. Exceptionalist views on the U.S. economy and massive U.S. Treasury issuances are fueling buying interest in the U.S. dollar. The USD/JPY ignored verbal intervention warnings from the Bank of Japan. During Tuesday's Asian session, the yen strengthened against the dollar, recovering some of the previous day's losses, albeit lacking follow-through buying. Investors remain cautious due to speculation about imminent market intervention by Japanese authorities, which in turn is seen as a key factor providing some support for the yen. In fact, the Bank of Japan has indicated it is not in a hurry to normalize its policy, while the Federal Reserve is expected to delay rate cuts amid high inflation. Meanwhile, hawkish expectations from the Federal Reserve are keeping U.S. Treasury yields elevated, which will continue to be a driving force for the U.S. dollar and should limit the downside space for the USD/JPY exchange rate. Traders also seem reluctant ahead of the release of the U.S. Personal Consumption Expenditures (PCE) price index and key decisions from the Bank of Japan later this week.

From a technical perspective, the 14-day Relative Strength Index (RSI) on the daily chart remains in overbought territory, hindering new bets on the USD/JPY currency pair. However, any further decline is more likely to attract some dip buyers near the 154.30 area. This should help limit the downside space for spot prices around the 154.00 level. If breached, it could expose fluctuations near 153.60 (last week's low) and the 153.70 (161.8% Fibonacci retracement from 150.88 to 146.30) area. The next relevant support level is near 153.00 (psychological market barrier). A convincing break below the latter could trigger aggressive technical selling, dragging the currency pair towards the intermediate support level of 152.50 and eventually towards the short-term trading range resistance breakpoint near 152.00. On the other hand, the 34-year high reached on Monday around the 154.85 area is followed by 155.45 (200% Fibonacci retracement) and 155.70 (upper channel line on the daily chart).

Today, it is recommended to go short on the USD near 155.00, stop loss at 155.20, targets at 154.10 and 153.95.

EURUSD

Under the influence of a significant pullback in the U.S. dollar dominated by PMI and a generally risk-friendly environment in the forex sector, the EUR/USD continued its positive momentum yesterday and rose above 1.0700. The EUR/USD is testing the area near 1.0800, and the major currency pairs were steady in the calm Asian market on Tuesday, awaiting a slew of economic data releases. Both the U.S. and the entire eurozone will be observing updated U.S. data, with key U.S. data expected to be released in the latter half of the trading week, as the market continues to boil with anticipation for rate hikes. The rise in U.S. Treasury yields has had a ripple effect on European bond yields, with U.S. Treasury yields surpassing 2.5% in mid-April. However, at its April meeting, the European Central Bank clearly indicated an imminent loosening of monetary policy and warned that labor market, inflation, and growth data will continue to evolve broadly as expected. Currently, there is a strong consensus within the ECB to cut rates by 0.25 percentage points in June, so the next major question is how quickly the subsequent easing measures will be rolled out.

The EUR/USD recently plummeted from the level of 1.0885 (April 9th high) to a low of 1.2601 last week and stabilized near 1.0650. In April, the EUR/USD dropped 2.62% from its high to its low. The rebound from the recent low of 1.0600 has been limited, keeping the EUR/USD struggling near the 10-day moving average of 1.0663. The EUR/USD is currently in a bottoming phase. At this stage, the EUR/USD may continue its downward trend, falling to the previous major consolidation low of 1.0565 (lower boundary of the descending channel on the daily chart) and the last major fluctuation low near 1.0500, a psychological barrier. If the currency pair sees a short-term rebound, resistance is expected near 1.0700 (integer barrier) and around 1.0712 (61.8% Fibonacci retracement from 1.0488 to 1.1139). If it strengthens further, all eyes will be on the 1.0756 level, the midline of the Bollinger Band, followed by the next upward target at 1.0811 (200-day moving average), considered the next resistance level.

Today, it is recommended to go long on the EUR near 1.0680, stop loss at 1.0660, targets at 1.0750 and 1.0760.

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