US Dollar Index

The US Dollar Index, which measures the value of the US dollar against a basket of currencies, plunged sharply to a low of 105.62 last week after hitting a nearly two-year high of 108.07 the previous week. The US dollar continued its recent weekly decline. The US Dollar Index corrected further and hit a new low in more than two weeks before 105.62. The correction of the US dollar began last Monday after US President-elect Trump nominated experienced hedge fund manager Scott Bessant for the position of Treasury Secretary. Investors downplayed the so-called "Trump deal" after financial market participants considered Bessant a "safe pair of hands." In an interview with the Financial Times (FT), Bessant said he would focus on enacting Trump's tariffs but would gradually "advance in layers," a situation that would maintain geopolitical stability. At the same time, Bessant prefers to reduce the budget deficit to 3% of gross domestic product (GDP), a move that would maintain fiscal discipline. Lack of liquidity and market holidays led to reduced trading activities last week, but the US Dollar Index is expected to have a chance to continue to rise due to strong growth in the US economy. Overall, the dollar remains bullish on the back of strong economic data and a hawkish Fed. Despite profit-taking and geopolitical uncertainties, the uptrend remains intact.

The US dollar index faced more selling pressure last week, with one of its major components, the euro; and in particular, the sharp rise in the yen dragging the index down. Technical indicators on the daily chart suggest a period of consolidation as the 14-day relative strength index (RSI) and the moving average convergence divergence (MACD) indicators hover around neutral levels. With the decline in the US dollar index last week, the previous support level has now turned into resistance. On the upside, 106.00 is the psychological market level that bulls must break. Next, 106.52 (April 16 high), and 106.53 (14-day moving average) are the first levels to watch. If the dollar bulls recapture this level, 106.92 (last Wednesday high), and 107.00 (round number) will be the next resistance areas. On the other hand, if the correction of the US dollar index continues, the key levels of 105.13 (34-day moving average); 105.05 (38.2% Fibonacci retracement of 100.16 to 108.07); and 105.00 (round mark) will play a short-term support role, and the next step will be to point to the 104.43 (45-day moving average) level.

Today, consider shorting the US dollar index around 105.88, stop loss: 106.00, target: 105.50, 105.40

WTI crude oil

Last week, oil prices fluctuated in light trading due to the uncertainty of OPEC+ production plans and the durability of the ceasefire agreement between Israel and Hezbollah in Lebanon. WTI crude oil prices fell 3.61% for the week, closing at $68.49. The ceasefire that took effect last Wednesday reduced the risk premium of oil, leading to the decline in oil prices. At this stage, the market is focused on the upcoming OPEC+ key meeting on December 5. In addition, the market is also closely watching the upcoming US economic data. The United States is the world's largest crude oil consumer. The recent rising borrowing costs have caused a certain suppression of economic activities, thereby weakening crude oil demand. In the short term, WTI crude oil prices will continue to be dominated by geopolitical risks and the results of the OPEC+ meeting. The tension in the Middle East may support oil prices to a certain extent, especially in the face of uncertainty on the demand side, the increase in supply risks will support oil prices. In addition, changes in market expectations of the Federal Reserve's monetary policy may also have an impact on oil price trends. If the US economy remains strong and the Federal Reserve fails to take interest rate cuts as expected by the market, crude oil demand may weaken further and prices will face downward pressure.

From the daily chart, WTI crude oil prices are still dragged down, facing selling pressure and more downside risks. At present, oil prices continue to trade in a familiar horizontal channel (from last month to date), that is, the 72.70-66.85 area. The 14-day relative strength index (RSI) is neutral. On the upside, $69.80 (Uranium line in the horizontal channel), and $70.00 (market psychological level) are key resistance levels. If political tensions further increase, buyers will look to rise above $71.28 (last week's high) to $72.13 (100-day moving average) to create higher highs and bring $72.70 (upper line of the horizontal channel) into focus. On the other hand, traders need to look to $68.45 (lower support line of the triangle on the daily chart), and the $68.15 range of last Friday's low to find the first support at this stage. If the above area is broken, $67.12 (October 3 low) is the next support level, and further downwards to challenge the low of $66.85 (lower line of the horizontal channel).

Consider going long on crude oil near 68.30 today, stop loss: 68.10; target: 69.50; 69.70

Spot gold

Gold fell sharply at the beginning of last week as geopolitical concerns eased, and tried to recover lost ground in the rest of the week. The release of employment-related macroeconomic data from the United States may change expectations for the Federal Reserve's December policy decision and trigger the next big move in gold prices. Gold was under heavy bearish pressure at the beginning of last week as risk funds dominated the actions of financial markets. Although selling pressure around the US dollar and falling US Treasury yields helped gold limit losses, the easing of geopolitical tensions caused gold prices to continue to fall in the first half of last week. And fell nearly 3%. Late last week, as the benchmark 10-year US Treasury yield fell to its lowest level in nearly a month at mid-week, below 4.3%, gold rebounded and recorded gains for two consecutive trading days. At the same time, the continued weakness of the US dollar after the release of mixed macroeconomic data helped gold prices remain stable in the middle of the week. Gold prices have been trading in a narrow range as U.S. financial markets were closed for the Thanksgiving holiday last Thursday. After the bond market resumed trading early Friday, the 10-year yield extended this week's decline, giving gold bullish momentum to rise above $2,655.

From a recent weekly technical perspective, gold bulls are taking back control of the rebound after last week's sharp drop. But the 14-day relative strength index (RSI) on the daily chart briefly regained the 50 level, reflecting the lack of bearish pressure. However, the bullish conviction in gold prices may be temporarily dissipated as the bearish "death cross" pattern (20-day and 60-day moving averages) is still affecting the market. If gold bulls fail to close above $2,663.40 (50.0% Fibonacci retracement from 2790.00 to 2536.80), and 2,666.40 (Friday’s high), bears may rush into the market and push the price towards $2,633.50 (38.2% Fibonacci retracement). The next support is at last week’s low of $2,605, and $2,600 (a psychological level). A break below this level does not rule out a drop to the 100-day moving average at $2,573.40. On the other hand, a sustained break above the 50-day moving average at $2,669.50 could open up upside to $2,693.20 (61.8% Fibonacci retracement), and $2,700 (round-number level). Further up, the November 25 high of $2,721 will be tested.

Consider going long on gold today before 2,636.00, stop loss: 2,632; target: 2,656.00; 2,660.00

AUD/USD

AUD/USD traded just above the psychological 0.6500 mark before the end of last week, rising for the third consecutive day. The dollar hit a two-week low last week as markets bet on the Federal Reserve to cut interest rates by another 25 basis points in December. This is seen as a key factor supporting AUD/USD, although bulls seem to prefer to wait and see as they are concerned that US President-elect Trump's tariff plan could trigger a trade war between China and the United States. Meanwhile, the US personal consumption expenditure (PCE) price index released on Wednesday showed that progress in reducing inflation stalled in October. On this basis, the market is increasingly convinced that Trump's expansionary policies will boost inflation, which should limit the Fed's further easing. This helped limit the dollar's losses, which in turn curbed AUD/USD's gains. Apart from this, geopolitical tensions caused by the protracted war between Russia and Ukraine persist, so caution is needed before making aggressive bullish bets around the risk-sensitive Australian dollar. As the market sentiment was not very hot late last week due to the Thanksgiving holiday, the AUD/USD pair was still at the mercy of the US dollar price dynamics, so the last week seemed to end in a dull manner. The daily chart of AUD/USD shows that the pair is currently recording higher highs and higher lows, which is favorable for further gains in AUD/USD. However, the same chart shows that the pair is developing below all moving averages, with the 34-day simple moving average (0.6571) firmly declining above the current level, while AUD/USD is below longer moving averages, including 100-day 0.6661; and 200-day 0.6628. The 14-day relative strength index (RSI), one of the technical indicators, is in the negative territory around 46 and hovering within familiar levels. Only the momentum indicator is rising, but below its recent highs, which is not enough to support a continued rise. The short-term outlook is neutral. On the downside, the shorter 14-day moving average provides initial support around 0.6496. Further support areas are seen at 0.6434 (last week's low), and 0.6430 (midline of the daily chart's descending channel). A breakout points to the 0.6400 (round mark) level.

Today, consider going long on AUD before 0.6510, stop loss: 0.6500; target: 0.6550; 0.6560.

GBP/USD

After climbing to its highest point in more than two weeks at 1.2750, GBP/USD closed at a near-weekly high of 1.2745 before the end of last week. The pair ended an eight-week losing streak. GBP/USD hit a two-week high near 1.2750 last week after the U.S. Thanksgiving holiday. GBP/USD pair strengthened as the dollar extended its recent weekly decline as trading volumes were thin due to the Thanksgiving holiday. The correction in the dollar began on Monday after US President-elect Trump nominated experienced hedge fund manager Scott Bessant for the position of Treasury Secretary. The positive shift in market risk sentiment put the dollar under pressure again, helping GBP/USD to gain traction, hitting a two-week high of 1.2750. In addition, US Treasury yields continued to decline, making it difficult for the dollar to find a foothold. The US economic calendar will not provide any high-impact macroeconomic data releases. Trading activity has been muted ahead of the weekend. However, month-end fund flows and position adjustments on the last working day of November may increase market volatility and trigger irregular movements in GBP/USD before the end of the European session.

GBP/USD hit a nearly three-week high near 1.2750 before the weekend. GBP/USD extended its upward trend after breaking through the November 20 high of 1.2714. From the recent technical trend, GBP/USD rebounded sharply from the previous week's low of 1.2487 to a nearly three-week high of 1.2750 before the weekend, which coincides with 1.2751, the level where the 22-day simple moving average on the daily chart is located. As long as this level remains intact, technical buyers may continue to be interested. On the upside, 1.2800 (market psychological level) and 1.2810 (30-day moving average) serve as the next resistance level, followed by 1.2915 (76.4% Fibonacci rebound level from 1.3048 to 1.2487). At this stage, the 14-day relative strength index (RSI) of the technical indicator of the daily chart has turned oversold and climbed to around 44.00, which may indicate that the bearish momentum has slowed down. However, the bearish trend has not disappeared. If 1.2645 (28 Nov low) support fails, 1.2619 (23.6% Fibonacci rebound) could act as next support, followed by 1.2600 (psychological market level).

Today's recommendation is to go long GBP before 1.2730, stop loss: 1.2715, target: 1.2795, 1.2810

USD/JPY

Last week, the yen resumed its broad uptrend, soaring to a more than one-month high of 149.47 after stronger consumer price index data was released in Tokyo, Japan. The data reignited speculation that the Bank of Japan will raise interest rates again as early as December. In fact, Japan's core CPI rose 2.2% year-on-year, which supported the case for further tightening by the Bank of Japan. Apart from this, concerns about the impact of US President-elect Trump's trade tariffs on global growth and the protracted Russia-Ukraine war also provided additional support for the safe-haven yen. Trump promised earlier this week to impose tariffs on all products entering the United States from Canada, Mexico and China, which in turn could trigger a trade war. Meanwhile, Russia may use its new hypersonic missiles to attack Ukraine in response to Western countries launching missiles into its territory. This, coupled with the weaker US dollar, prompted the USD/JPY to fall sharply intraday to 149.54, below the 150.00 psychological mark, or the lowest level since October 21.

From a technical perspective, last week’s break below the 200-day moving average (151.99) and 150.19 (38.2% Fibonacci retracement of the 139.58 to 156.75 range) can be seen as key triggers for bears. Moreover, the 14-day relative strength index (RSI) on the daily chart has been gaining negative traction (latest around 39) and remains far from oversold territory, suggesting that the path of least resistance for the pair is to the downside. Hence, any meaningful rebound attempt is more likely to encounter strong resistance near the 200-day moving average. However, once the pair rebounds and breaks above the 200-day moving average, the target is to recapture the 152.70 (23.6% Fibonacci retracement), and 152.77 (34-day moving average) levels, and a break above the above areas could extend the upside momentum for the pair to 153.58 (20-day moving average) level. On the contrary, if it falls below 149.65 (last week's closing price) and 149.47 (last week's low), it will reaffirm the negative outlook and drag USD/JPY below 149.09 (October 21 low), and 149.00 (round mark). The downward trajectory may further extend to 148.17, and 146.14 (50.0%; and 61.8% Fibonacci retracement levels, respectively).

Today, it is recommended to short the US dollar before 149.85, stop loss: 150.10; target: 149.00, 148.80

EUR/USD

Last week, as the US financial market entered the weekend early, trading activities remained weak, and EUR/USD continued to fluctuate in a narrow channel around 1.0550. EUR/USD price ended a three-week losing streak and closed higher before the weekend. As the market bets that the Federal Reserve will cut interest rates by another 25 basis points in December, the US dollar has struggled to benefit from the recent gains and hit a three-week low of 105.62. This has become a key factor supporting EUR/USD. Meanwhile, hawkish comments from ECB official Isabel Schnabel earlier last week forced investors to scale back bets on more aggressive easing in December, boosting EUR/USD. German consumer inflation data for November released last week was lower than expected, boosting such expectations in the market. In addition, expectations that US President-elect Trump's expansionary policies will boost inflation and limit the Fed's room for further rate cuts, coupled with geopolitical risks, helped limit the dollar's losses.

Last week, EUR/USD finally showed a long-awaited technical rebound, once hitting a recent high near 1.0600. The recovery of the major currency pair appears to be a mean reversion that may extend to the 34-day moving average near 1.0703. Nevertheless, the overall outlook will remain bearish as the short-term moving averages are all falling, including the 34-day (1.0703); and the 50-day (1.0812), which indicates a downtrend. The 14-day relative strength index (RSI), a technical indicator on the daily chart, rebounded after conditions turned oversold and climbed above 40.00, however, the bearish trend has not disappeared. Therefore, the downside can first focus on 1.0500 (round mark), followed by 1.0418 (last week's low), and 1.0400 (round mark). On the other hand, the first support level is 1.0600 (market psychological level), followed by 1.0700 (round number level); 1.0703 (34-day moving average); and 1.0706 (61.8% Fibonacci rebound level from 1.0937 to 1.0332) The area will be a key obstacle. A break will move up to the 42-day moving average near 1.0752, and further to 1.0807 (78.6% Fibonacci rebound level), and 1.0812 (50-day moving average) levels.

Today, it is recommended to go long on the euro before 1.0570, stop loss: 1.0555, target: 1.0620, 1.0630.

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