USD

The U.S. Dollar Index strengthened again before last weekend, following the release of positive data from the University of Michigan and a 25 basis point rate cut announced by the Federal Open Market Committee last Thursday. The Federal Reserve expressed optimism about economic growth, but acknowledged a slight easing in labor market conditions. Despite the rate cut, the U.S. Dollar Index rebounded and may continue to rise if data remains strong. Last week, with Donald Trump's successful bid for the presidency in the Republican wave, and his forthcoming inauguration in January 2025 as the 47th President, the markets experienced significant volatility. The U.S. Dollar and Treasury yields surged, pushing the Dollar Index to a four-month high, peaking at 105.45. Markets anticipate that Trump's policies, which may include restrictions on immigration, trade tariffs, tax cuts, and deregulation, could drive inflation higher and further increase the fiscal deficit, bolstering both the U.S. Dollar and bond yields. Following the Fed's decision to cut rates by 25 basis points last week, the market has fully absorbed the impact, and the pace of further rate cuts is unlikely to be influenced by Trump's expansionary policies. Although the U.S. Dollar Index saw a technical pullback to 104.35, it regained momentum post-Fed decision and continued to hover around 105.00.

The U.S. Dollar Index briefly reached a four-month high of 105.45 last week, underwent a technical pullback but still maintained its weekly gains, fluctuating around 104.50. The daily chart shows that the index is rising within an upward channel, maintaining a bullish outlook. Additionally, the 14-day Relative Strength Index (RSI) remains above the 50 level (latest at 61.80), reinforcing the current bullish sentiment. Moreover, the 5-day moving average (104.35) is above the 14-day moving average (104.25), forming a "golden cross" bullish pattern, indicating potential short-term price increases. In terms of resistance, the U.S. Dollar Index first aims for the 105.00 level, then the four-month high of 105.45 reached on November 6. Breaking this level could boost market confidence and support the U.S. Dollar Index approaching the 105.81 level (78.6% Fibonacci retracement from 107.35 to 100.16). On the downside, the first support is at 104.60 (61.8% Fibonacci retracement), followed by the 14-day moving average at 104.25 and the 104.00 level (a round number) as immediate supports. If these levels are breached, the U.S. Dollar Index could face downward pressure toward the 103.76 level (50.0% Fibonacci retracement), ultimately targeting the areas around the 120-day moving average at 103.39, and last Wednesday’s low at 103.34.

Today, consider shorting the U.S. Dollar Index near 105.10, with a stop loss at 105.20 and targets at 104.70 and 104.60.

WTI Spot Crude Oil

Last week, WTI crude oil prices stabilized above $70.00 per barrel, with expectations of a rise of over 1.5% by week's end. The increase in oil prices may be due to investors assessing the potential impacts of the recent Federal Reserve rate cut and forthcoming policies from the Donald Trump administration on oil supply dynamics. The Fed reduced the benchmark overnight lending rate by 25 basis points at its November meeting on Thursday. Lower oil prices support economic activity in the U.S., the largest oil-consuming country, and could positively affect oil demand. The incoming Trump administration might intensify sanctions on Iran and Venezuela, potentially reducing oil supply expectations, which has buoyed oil prices. The market is now analyzing what Donald Trump's policies might be and is reacting to this prospect. On the other hand, data showed a 9% decline in China's crude oil imports in October, marking a sixth consecutive month of year-over-year declines, which could exert downward pressure on oil prices. However, following a five-day session of the National People's Congress Standing Committee, investors are hopeful about potential stimulus measures from China. As the world's largest oil importer, favorable policies from China could boost oil demand.

With Donald Trump set to become the next U.S. President in January 2025, oil prices could enter a bearish cycle. Technical analysis on the daily chart indicates that the bullish tendency is weakening as oil prices failed to break above $73.14 (the 89-day moving average). However, the 14-day Relative Strength Index (RSI) consolidating around 48.00 - 50.00 suggests that bullish tendencies are still at play. On the positive side, WTI prices might attempt to retest the three-week high of $72.54 marked on November 7 and navigate around the $73.14 level (89-day moving average). A break above this could lead towards $75.09 (134-day moving average) and $75.24 (76.4% Fibonacci retracement from 77.93 to 66.57). The medium-term ultimate target is $76.79. On the support side, WTI prices might test around $69.25 (23.6% Fibonacci retracement). Breaking below these averages could increase downward pressure on prices. Additional support appears near $68.08 (October 31 low), with the next level at $66.57 (October 29 low).

Today, consider going long on crude oil near $70.00, with a stop loss at $69.80, and targets at $71.20 and $71.50.

XAUUSD

Despite a decline in U.S. Treasury yields, gold prices fell last week as the dollar began to recover. Traders continued to digest Donald Trump's victory in the U.S. presidential election and reduced their exposure to the so-called "Trump trade" due to uncertainties around tariffs. Gold closed at $2,688. The U.S. stock market continued its upward trend, shaking off election jitters, which had been a major driver for the rise in gold prices. However, as political risks in the U.S. have subsided, market participants will focus on Trump’s policies. Following his victory, the dollar strengthened, even though investors anticipate the Federal Reserve to be less dovish. Some of Trump's policies are considered likely to trigger inflation, which would pressure the U.S. central bank. Despite lower U.S. Treasury yields, gold prices declined as the dollar began to recover. Additionally, Trump's election victory reduced political risk, which also hit gold prices. Election panic had been a major factor driving gold prices up. In the past month, the uncertainty of the election and whether the transition of power would be smooth affected gold prices, but this election seems very decisive for the White House, allowing many risk assets to benefit from the potential impacts of future policies, thus seeing funds flowing from metals to these alternatives.

Gold prices retreated from a two-day peak near $2,700, a critical level that was breached mid-last week, but buyers still could not break through. The 14-day Relative Strength Index (RSI) indicator retreated to a negative zone level of 48.30 after peaking earlier. If sellers remain firm and push the price down to $2,668.40 (the 38.2% Fibonacci retracement from $2,471.90 to $2,790) and below the November 6 low of $2,652, then look for momentum to challenge the $2,620 (the lower line of the daily downward channel) before testing the October 10 low of $2,603. On the other hand, if gold prices break above $2,700 again, buyers will focus on $2,714.90 (the 23.6% 20-day moving average Fibonacci retracement), and $2,719.20 (the 20-day moving average). Above that, the next targets would be the November 6 high of $2,749.70, followed by the October 23 high of $2,758.

Today, consider going long on gold near $2,680.00, with a stop loss at $2,676.00, and targets at $2,700.00 and $2,710.00.

AUDUSD

Last week, following Donald Trump's assumption of the presidency as the 47th U.S. President, the Australian Dollar (AUD/USD) dropped to a several-month low. Concerns over new tariffs and a trade war with China further pressured the Australian dollar. The hawkish stance of the Reserve Bank of Australia and risk appetite helped to limit losses for the currency. The AUD/USD pair fell to around the psychological level of 0.6500 mid-week, marking the lowest point since August 8, but it recouped all its losses before the weekend, briefly moving back above the 0.66 level. The Reserve Bank of Australia decided last week to hold the official cash rate (OCR) steady at 4.35%, marking the eighth consecutive hold. RBA Governor Lowe reiterated a hawkish stance, emphasizing the necessity of a restrictive monetary policy in light of persistent inflation risks and a strong labor market. With the RBA maintaining a hawkish position, market expectations for an RBA rate cut were further pushed back. Additionally, the Australian dollar faced challenges from the U.S. dollar following the Federal Reserve's decision to cut rates last Thursday. The Aussie was also supported by a better-than-expected Chinese trade balance, providing support at lower levels. However, the downside risks for AUD/USD remain, as the market fears that Trump's policies could boost U.S. economic growth and inflation, leading to higher U.S. Treasury yields and a strengthening dollar.

Last week, AUD/USD briefly fell to a near three-month low of 0.6512 but surged to a near three-week high of around 0.6688 after the Federal Reserve cut the federal funds rate target range by 25 basis points last Thursday. The daily chart suggests a potential shift from bearish to bullish, indicating short-term upward momentum. Additionally, the 14-day Relative Strength Index (RSI), nearing the critical 50 level (currently around 43), shows a slight rebound in bullish sentiment. On the upside, the AUD/USD pair might first explore the 0.6645 area (the 50.0% Fibonacci retracement level from 0.6348 to 0.6942), and the vicinity of last week's high at 0.6688. A breach here could target the psychological level of 0.6700, the 50-day moving average at 0.6719, and 0.6727 (the 50.0% Fibonacci retracement from 0.6942 to 0.6512). On the support side, AUD/USD might test the 0.6574 level (the 61.8% Fibonacci retracement from 0.6348 to 0.6942), followed by the three-month low at 0.6512. If it breaks below the latter, the pair could test the critical psychological level of 0.6500.

Today, consider going long on the Australian Dollar near 0.6565, with a stop loss at 0.6550, and targets at 0.6620 and 0.6630.

GBPUSD

Last week, the GBP/USD staged a rebound, pulling the currency pair up from a three-month low near 1.2834. For the first time in five weeks, GBP/USD returned to the bullish zone, driven by global market optimism and central bank policy statements that overshadowed the rebound in demand for the dollar. After Donald Trump's decisive victory in the U.S. presidential election triggered a significant rise in the dollar against major currencies, sellers quickly re-entered the market on Wednesday. Even as risk appetite returned, the dollar's strength exceeded that of GBP/USD, pushing it down from above 1.30 to a three-month low of 1.2835. Late last week, the Bank of England, as expected, cut its benchmark policy rate from 5.0% to 4.75%. Furthermore, Governor Andrew Bailey maintained a cautious stance on future rate prospects during the post-policy meeting press conference. On the same day, the U.S. Federal Reserve also cut the federal funds rate by 25 basis points to a range of 4.50% to 4.75%, which was fully priced by the market. The dollar initially reacted knee-jerk to the Fed's rate decision with a slight rebound, but quickly reversed during Chairman Powell's press conference. Powell noted that the Fed remains on a path of gradual easing and that the election would not have any short-term impact on policy decisions. Following the Fed's remarks, the dollar resumed its corrective decline, allowing the pair to retest the 1.3000 level.

Last week, the daily chart indicated that although GBP/USD attempted a rebound from the three-month low of 1.2835, the momentum was capped by the 25-day moving average at 1.2997 and the psychological market level of 1.3000. Additionally, the 14-day Relative Strength Index (RSI) remained slightly below 50, indicating that sellers were not yet ready to relinquish market control. Should the pair fall below the round number of 1.29 this week, the next targets would be the 150-day moving average at 1.2869 and the 200-day moving average at 1.2816, continuing to limit the downside. Meanwhile, a "death cross" bearish pattern appeared last Thursday between the 21-day (1.2982) and 100-day (1.2992) moving averages, adding credibility to the potential for a downside. Therefore, a break below the 200-day moving average at 1.2816 is key for the pound to start a new round of declines. The next bearish target is the psychological level of 1.2750, with a breach potentially leading to a test of the August 8 low at 1.2665. Conversely, only a breakout above last Friday's high of 1.2990 and the fusion above the 100-day moving average at 1.2992 could potentially achieve a sustained rebound above the psychological threshold of 1.3000. A break above this level could target the highs of November 6 at 1.3048 and the 38.2% Fibonacci retracement level from 1.3434 to 1.2835 at 1.3063.

Today, it is recommended to go long on the pound before 1.2905, with a stop loss at 1.2890 and targets at 1.2960 and 1.2970.

USDJPY

Last week, following the confirmation that Donald Trump will become the 47th U.S. President in January 2025, the USD/JPY surged to a three-and-a-half-month high of 154.71, rising over 2.0%. Later in the week, the Federal Reserve announced a 25 basis point rate cut, leading to a significant decline in the dollar as traders unwound the so-called "Trump trade," pulling the currency pair back to 152.60. Jun Mimura, a Japanese Finance Ministry official, expressed concern over yen volatility, and with the yield on ten-year Japanese government bonds breaking above 1% for the first time in over three months, it limited the yen's depreciation. On the other hand, the noise from the U.S. and Japanese elections could cast a shadow over the yen's prospects, but more likely, the uncertainties surrounding the U.S. and Japanese elections should materialize. A risk to watch is Trump's potential global tariff imposition, as this could impact global trade and growth, posing risks to America's inflation journey and Fed policies. In the short term, Trump's protectionist policies might exert further downward pressure on the yen. However, looking from another angle: as the Federal Reserve and the Bank of Japan continue their policy normalization, the market remains optimistic about a USD/JPY decline in the first half of 2025. This should continue to support the bearish direction for USD/JPY.

The daily chart shows the 14-day Relative Strength Index cooling off from near-overbought conditions (currently at 56.80), suggesting consolidation but with waning bullish momentum. USD/JPY has pulled back to the main trend line support of the ascending channel around 152.40. If it continues to test lower towards the 151.79 (20-day moving average) - 151.68 (200-day moving average) zone, it could signal a short-term bearish reversal. This trend could continue lower, with a target at 150.76 (the 50.0% Fibonacci retracement from 161.95 to 139.58), next supported by the psychological market barrier at 150.00. A breach here could aim for 148.82 (the 89-day moving average). Alternatively, despite the corrective moves in USD/JPY, a "golden cross" bullish pattern formed last week between the 20 and 200-day moving averages suggests that in the short and medium term, the trend is still upwards. Given the technical analysis principle that "the trend is your friend," the pair still has potential to resume and eventually continue its upward trajectory. Initial targets would be at 153.40 (the 61.8% Fibonacci retracement), and breaking above could target the November 7 high of 154.71. Above that, the upward momentum could extend to the July 30 high of 155.24 and the 155.50 (midline of the ascending channel) resistance level. A breakthrough above would provide a stronger bullish signal, potentially aiming for the 156.67 level (76.4% Fibonacci retracement).

Today, consider going short on the dollar before 152.80, with a stop loss at 153.00, and targets at 151.80 and 151.70.

EURUSD

Last week, after a significant mid-week decline, the EUR/USD pair rebounded by nearly 0.7%. However, the pair struggled to stabilize and fell below 1.0700 again before the weekend, fueled by renewed demand for the dollar. Additionally, Donald Trump's proposal to raise tariffs also weighed on EUR/USD. Following Trump's victory in the presidential election last Wednesday, the dollar initially outperformed its rivals, but it lost some of its strength as investors took profits ahead of the Federal Reserve's monetary policy announcement. As widely anticipated, the Fed cut its policy rate by 25 basis points to a range of 4.5%-4.75% during its November meeting. In its policy statement, the Fed reiterated that the risks to the labor market and inflation were "roughly balanced." The market's response to the Fed event was largely muted. Before the weekend, cautious market sentiment helped the dollar hold its ground, preventing further rebounds in EUR/USD. Additionally, the European Central Bank is perceived to be cutting rates faster than the Fed, which dragged the euro lower. With inflation risks in the eurozone easing faster than expected, the ECB has already cut rates three times this year. Expectations of further rate cuts continue to heat up, persistently weakening the euro in the short term.

The daily chart shows that the EUR/USD’s 14-day Relative Strength Index (RSI) remains below 50 (currently around 37.50), indicating that the bearish tendency remains intact after last week's correction. The sharp selloff mid-week suggests a further softening of the euro. In the short to medium term, the trajectory indicates a further weakening of the euro. On the downside, the key levels to watch include the critical support composed of 1.0700 (a round number), 1.0686 (last Friday’s low), and 1.0682 (a more than four-month low from last week). Another set of static support levels include 1.0665 (the June low) and 1.0600 (the year-to-date low from April). For potential upward rebounds, EUR/USD might first consider climbing to the initial resistance at the psychological market level of 1.0800, aligned with 1.0805 (last Friday’s high). Once it breaks the resistance at the 200-day simple moving average at 1.0869, the pair could target the round number of 1.0900 and the area around 1.0937 (last Wednesday's high).

Today, consider going long on the euro before 1.0700, with a stop loss at 1.0690, and targets at 1.0760 and 1.0770.

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