USD

In trading before last weekend, the U.S. Dollar Index slightly fell after reaching a two-year high amid geopolitical instability. The dollar's pullback was attributed to profit-taking and positive economic indicators from China, including interest rate cuts and comprehensive stimulus plans. Consequently, the U.S. Dollar Index retreated from above 108.00 to stabilize around 107.50. The index, which evaluates the dollar against a basket of major currencies, maintained a bullish stance driven by robust economic data and a less dovish Federal Reserve stance. Despite the pullback, the upward trend remains intact, with investors now expecting gradual rate cuts. Technical indicators suggest potential consolidation, but the overall bullish momentum remains strong. In fact, on the macro front, U.S. unemployment claims unexpectedly slowed, although continued claims increased, and both the leading index and the Philadelphia Fed business outlook were disappointing. However, comments from some Fed officials that the U.S. has "not fully gotten there yet" on inflation and that the job market needs further cooling encouraged dollar buying. On the other hand, speculation that the Fed may slow rate cuts due to concerns over President Trump's policies potentially reigniting inflation continues to support the dollar.

From a recent technical trend perspective, the dollar surged to a new two-year high before the weekend, with the Dollar Index breaking through 108.00, reaching a peak of 108.07. The index's rise through 107.00 (a round number) and 107.07 (the high on November 15) will be key points. The new two-year high of 108.07 reached just before last weekend is the next level to breach. Above that, 108.44 (the high on January 11, 2022) is the next resistance spot. The major round number of 109.00 is another level to watch. On the other hand, after quickly soaring to the two-year high of 108.07 last week, the index experienced a swift profit-taking drop to around 107.40, indicating a possible shift in market sentiment. This pullback suggests that the long positions might be overextended, and a correction could occur. Indicators including the 14-day Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) continue to show overbought conditions, suggesting that consolidation is likely to continue. Therefore, the first downward level is the 107.07 - 107.00 range. Below that, the 10-day moving average at 106.52, and the key levels at 105.51 (18-day moving average) and 105.53 (high on April 11) should prevent any falls toward the round number of 105.00. If the Dollar Index does fall towards 105.00, then the 200-day simple moving average at 103.97 should catch any sharp declines.

Today, consider shorting the U.S. Dollar Index around 107.65, with a stop loss at 107.80 and targets at 107.30, 107.20.

WTI Spot Crude Oil

WTI crude oil prices closed above $70 last week, amid headlines filled with escalating tensions between Russia and Ukraine. Both nations are eager to secure a tactical advantage before potential resolution talks, as soon as President-elect Donald Trump takes office in January 2025. The ongoing Russia-Ukraine conflict continues to intensify, adding to the tense atmosphere in the commodity markets and driving up oil prices. Although Russia's military posture has not escalated to the level of a world war, it is undoubtedly a show of force, and these actions have led to a sharp rise in the Geopolitical Risk (GPR) index. Investors are flocking to traditional safe havens like oil (yes, in this case, going long on oil is considered a "safe haven," or at least a hedge), echoing each other with tight correlations. In this tense environment, the threat of unpredictability is increasing. The market fears not only intentional escalation of the conflict but also catastrophic mistakes. Meanwhile, any aggressive action against Russian oil assets could ignite the geopolitical powder keg, plunging global markets into chaos, especially as the Northern Hemisphere enters the peak energy demand season of winter, which is particularly dangerous.

Supported by the geopolitical tensions between Russia and Ukraine, WTI crude oil prices are set to close high last week, with a gain of over 6%. However, it remains to be seen if the trades driven by these tensions will yield further benefits. At this stage, oil prices may be rising. Nevertheless, the market seems to be reserved about these moves, as the actual oil market still suffers from an oversupply situation. Thus, the overall long-term outlook remains unchanged. On the upside, the first resistance levels to consider are $71.34 (50.0% Fibonacci retracement from $64.75 to $77.93), $71.29 (80-day moving average) before $72.55 (high on the 7th of this month), and $72.23 (50.0% Fibonacci rebound from $77.93 to $66.53). The next level to watch is the resistance zone formed by $73.57 (61.8% Fibonacci rebound), $73.61 (110-day moving average), and $74.00 (round number). On the downside, support should be eyed at $70.00 (psychological market level), followed by $68.69 (10-day moving average), with a break below shifting focus to $67.77 (low on November 14), and then the $67.12 (lows of May and June 2023) level.

Today, consider going long on crude oil around $70.90, with a stop loss at $70.70, and targets at $72.20 and $72.40.

XAUUSD

After two weeks of sharp declines, gold reversed its direction and reclaimed support above $2,700 due to escalating geopolitical tensions and increased demand for safe-haven assets. Key U.S. inflation data and headlines surrounding the Russo-Ukrainian war may impact gold's valuation next week. The geopolitical tensions escalated with President Joe Biden authorizing Ukraine to use powerful long-range U.S. weapons to strike inside Russia, benefiting gold from inflows of safe-haven capital. In response, Russia announced on Tuesday that any attack on Russia involving a non-nuclear state under the auspices of a nuclear state would be considered a joint attack. Gold maintained bullish momentum following the announcement and closed in a positive area. In the absence of high-impact macroeconomic data releases, gold prices continued their weekly rise. As the Russo-Ukrainian conflict forced investors away from risk-sensitive assets, gold continued to rise late last week, reaching a two-week high and breaking through $2,700. Reports that Russia has prioritized a U.S. missile base in Poland have exacerbated concerns about a deepening crisis between Russia and Western countries. The ongoing deterioration of the Russo-Ukrainian conflict and persistent geopolitical risks have helped sustain a week-long upward trend in gold prices. Additionally, expectations that President-elect Trump’s expansionary policies may reignite inflationary pressures proved to be another factor favorable to gold. Gold is considered a hedge against inflation.

On the daily chart, the 14-day Relative Strength Index (RSI) indicator has rebounded above 50 to around 57, regaining positive traction and supporting the prospect of further gains in gold prices. Last week, breaking above the confluence point at $2,663.40 (50.0% Fibonacci retracement from $2,790.00 to $2,536.80) and $2,675.60 (20-day moving average) was seen as a key trigger point by bulls, highlighting the accumulation of bullish momentum. Therefore, gold prices are likely to break through the $2,700 barrier and rise towards the $2,710 - $2,711 resistance area (last Friday’s high range). If this barrier is breached, it would reaffirm the bullish inclination and push gold prices towards the next significant hurdle near $2,735.80 (78.6% Fibonacci retracement) and $2,737 per ounce. Beyond this, the immediate resistance lies at $2,750 (high on the 5th of this month), followed by $2,790 (historical high) and $2,800 (psychological market level). On the downside, the first support area is at $2,675.60 (20-day moving average), followed by $2,664.00 (50-day moving average) and $2,663.40 (50.0% Fibonacci retracement). If these support areas are broken by bears, further downside targets include $2,633.50 (38.2% Fibonacci retracement).

Today, consider going long on gold just below $2,700, with a stop loss at $2,695, and targets at $2,725.00 and $2,730.00.

AUDUSD

Last week, the AUD/USD fell below 0.6500 due to the market's focus on the strength of the U.S. dollar, which at one point reached a two-year high above 108.00. The outlook for AUD/USD is mixed, influenced by the hawkish Reserve Bank of Australia and mixed local economic data. However, although the overall trend remains bearish, the potential for future rate hikes by the Reserve Bank of Australia may limit the downside. Non-U.S. currencies are under pressure, but due to the hawkish stance of the RBA, the AUD/USD still found support near the 0.6480 - 0.6500 level. The minutes from the RBA's monetary policy meeting indicate that officials see no urgent need to adjust rates and need to see more than a quarter of declining inflation data. Interest rate futures show the market estimates the bank could start cutting rates as soon as May next year, and ongoing central bank divergence continues to support the relative performance of the AUD. Before last weekend, Judo Bank in Australia released mixed Purchasing Managers' Index (PMI) data, weakening the AUD against the USD. However, the AUD benefited from the RBA's tough stance on future rate decisions. On the other hand, Australia's big four banks predict that the RBA will cut rates for the first time. Westpac has moved its forecast for the first rate cut from February to May.

From a recent technical trend observation, the AUD/USD last week hovered just below the round number of 0.6500, and the daily chart's 14-day Relative Strength Index (RSI) is around 40 in the negative region, further intensifying negative sentiment and showing a bearish outlook. The currency pair is currently in a "death cross" bearish pattern formed by the 34-day (0.6606) and 200-day (0.6629) moving averages, and is near the midline (0.6470) of a downward channel, possibly targeting 0.6443 (low on November 15), followed by 0.6400 (round number). On the upside, the AUD/USD faces initial resistance at the 20-day moving average of 0.6547 and the high of the previous week at 0.6545. Breaking these levels could weaken the bearish trend and look towards 0.6600 (psychological market level), breaking which would pave the way to the 200-day moving average at 0.6629.

Today, consider going long on the AUD just before 0.6485, with a stop loss at 0.6470, and targets at 0.6545 and 0.6560.

GBPUSD

Last week, the GBP/USD fell for the third consecutive day following disappointing PMI and retail sales data from the UK. This, along with escalating geopolitical tensions from the Russia-Ukraine and Middle East conflicts, supported the dollar. The GBP/USD rebounded slightly above 1.2500 after touching a near seven-month low of 1.2487. A positive shift in market sentiment supported the dollar's rise. The currency pair appears technically oversold, but attempts at a short-term rebound may be brief. Although GBP/USD remains under pressure, this week's economic schedule is crucial for determining direction. In the UK, the economic agenda is sparse. First, Bank of England Deputy Governor Clare Lombardelli will speak on Monday, followed by the release of the CBI Distributive Trades. This will be followed by car production, Nationwide house prices, and the Financial Stability Report. On the other hand, the US schedule will include housing data, the release of the last Fed meeting minutes, durable goods orders, and the Fed's preferred inflation indicator—the core Personal Consumption Expenditures (PCE) price index.

From the daily chart, GBP/USD was in a downtrend last week, touching a near seven-month low of 1.2487, continuing its bearish inclination. Currently, both the 10-day (1.2670) and 20-day (1.2812) moving averages have crossed below the 200-day (1.2819) moving average, forming a "death cross" bearish pattern, so bears are now focusing on last week's low of 1.2487 and the May 9 low of 1.2440 as support levels. If breached, the pair could refresh the year-to-date low of 1.2299 reached on April 22. Technical indicators such as the 14-day Relative Strength Index (RSI) are in oversold territory below 30. However, it has not yet reached the extreme levels typically seen in robust trends. In a downtrend, a level of 20 indicates GBP/USD is oversold. Conversely, if the pair undergoes a technical correction and reclaims 1.2598 (last Friday's high) and 1.2600 (round number), then the 10-day moving average of 1.2670 will become the next resistance level. If surpassed, the next stop will be last week's high of 1.2714.

Today, it is suggested to go long on GBP just before 1.2515, with a stop loss at 1.2505, and targets at 1.2565 and 1.2575.

USDJPY

The yen struggled to capitalize on intraday gains driven by domestic inflation. The uncertainty surrounding the Bank of Japan's interest rate hikes, optimistic market sentiment, and rising U.S. bond yields limited the yen's movements. The U.S. dollar climbed to a new high for the year, providing additional support for USD/JPY. During the first half of the European session last Friday, USD/JPY oscillated mildly between gains and losses within the 153.00 - 156.00 range, remaining within a familiar territory. The uncertainty around the Bank of Japan's interest rate plans and optimistic market sentiment weakened the yen. Additionally, the continued rise of the U.S. dollar following the U.S. election has been pushing USD/JPY higher. On Friday, Japan's Statistics Bureau reported that the national Consumer Price Index (CPI) for October slowed year-on-year from 2.5% to 2.3%, opening the door for another rate hike in December. Meanwhile, Japanese Prime Minister Shigeru Ishiba stated that the economic stimulus plan would be around 39 trillion yen, but this failed to sway yen bulls. On the other hand, concerns that U.S. President Trump's policies might reignite inflation and speculation that the Fed might slow its rate cuts continue to support the dollar. Furthermore, a prevailing risk-on environment tends to undermine the yen's safe-haven function, indicating that the path of least resistance for USD/JPY is upward.

Technically, USD/JPY successfully held above its 20-day simple moving average (latest reported at 153.86) since late September on the daily chart, bouncing off this average. This support level should now become a key pivot point. If it breaks below this level, it could trigger some technical selling, pulling spot prices down to the low of last week's fluctuation near 153.28. Subsequent selling could lead to the psychological level of 153.00, potentially paving the way for a significant corrective decline from the highs reached last week. The next target would be 151.95 (200-day simple moving average). Meanwhile, the 14-day Relative Strength Index (RSI) on the daily chart remains stable in the positive region (latest reported at 58.50), confirming the bullish outlook for USD/JPY. If it continues to strengthen and breaks through the psychological level of 155.00, it will reconfirm a constructive outlook and push spot prices past last week's high of 155.89 and the psychological level of 156.00, regaining the above area. Momentum could extend further to the month's high of 156.75.

Today, it is recommended to short USD just before 155.05, with a stop loss at 155.30, and targets at 154.00 and 153.80.

EURUSD

Last week, the situation between Russia and Ukraine continued to pressure the euro, with the EUR/USD falling to a near two-year low of 1.0332 during the week after the preliminary November HCOB Eurozone Purchasing Managers' Index (PMI) report indicated an unexpected contraction in overall business activity. The Eurozone composite PMI fell to 48.1, while economists had expected the index to hover near the 50.0 threshold. Additionally, Eurozone's third-quarter negotiated wages rose by 5.42% year-over-year, showing that the job market remains tight. At the same time, the German central bank indicated that the economy might stagnate in the fourth quarter due to potential new trade tariffs. The situation in Ukraine and Russia, along with potential future trade friction, pose threats to the Eurozone economy, and the uncertainty in German politics will likely weigh on the euro in the short term. Last week, favorable U.S. data and hawkish remarks from Federal Reserve officials benefited the dollar, causing EUR/USD to turn downwards in the latter half of the week. Within the next year, interest rates could be much lower than they are now, and it might make sense to slow down the pace of rate cuts as the Fed approaches a rate stabilization point.

From the daily chart, EUR/USD broke below the 1.0500 psychological support level last week, expanding its downward space before the weekend, and touched a new two-year low of 1.0332 below 1.0400. With short-term moving averages (including 20-day: 1.0688; 50-day: 1.0872) in decline, the currency pair may face more downside. The 14-day Relative Strength Index (RSI) oscillating between 25.00 and 30.00 in the bearish zone adds evidence for further weakness in the short term. Looking downwards, EUR/USD bottomed at 1.0332 last Friday. If this level is breached, the pair might find support near the round number of 1.0300, and 1.0290 (low of November 30, 2022). Breaking below that could target 1.0222 (low of November 21, 2022). Conversely, the 1.0500 psychological level and 1.0498 (last Friday's high) will be key barriers for bullish moves in the eurozone. Breaching these could retest the 1.0600 (psychological market level), and 1.0688 (20-day moving average) area.

Today, it is recommended to go long on the euro just before 1.0400, with a stop loss at 1.0380, and targets at 1.0450 and 1.0460.

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