US Dollar Index

The US dollar weakened after the US GDP turned soft. The market sees no change in the inflation component of the GDP data. The US dollar index remains near 108.00 and is looking for direction. Although the Fed kept interest rates unchanged at 4.25%-4.50% mid-week, Powell's press conference downplayed the significance of the change in inflation language and eased concerns that the Fed is shifting to a more hawkish stance. The US dollar traded positively after the Fed kept interest rates unchanged, re-crossing the 108 psychological mark to see a near-week high of 108.29. In line with widely expected, Chairman Powell delivered neutral remarks at the press conference. The US dollar index maintained its weekly buy bias with the help of rising yields and Powell's tone. Market participants are concerned that Trump's economic policies will have a boosting effect on economic growth and inflation, which may even increase volatility in the foreign exchange market.

From the recent trend of the daily chart, the US dollar index remains on a solid basis above 108.00, showing signs of stabilization after the Fed's policy announcement. However, momentum indicators reflect mixed signals. The 14-day relative strength index (RSI) of the technical indicator is still below 50, and the latest is in the negative area of ​​47.30, indicating that the bullish force is limited. In addition, the red bar of MACD indicates continued selling pressure. If the US dollar index maintains its current position, it is possible to rise further to the 108.50 (November 23 high), and 108.54 (20-day moving average) area. A break will re-up the 109.00 (round mark) level. A sustained and effective break below 108.00 will open the door to the downside. The first support target is 107.50 (60-day moving average), then 107.03 (70-day moving average), and 107.00 (round mark) area levels.

Consider shorting the US dollar index around 108.20 today, stop loss: 108.30, target: 107.80, 107.70

WTI spot crude oil

WTI prices face challenges as traders take a cautious approach amid rising uncertainty in US trade policy. Trump's nominee for Commerce Secretary, Howard Lutnick, said Canada and Mexico could avoid tariffs. Oil prices were in trouble after the U.S. Energy Information Administration reported that U.S. inventories increased by 3.463 million barrels last week. In the mid-week session, the U.S. WTI crude oil price traded around $72.50. WTI prices fell as the increase in U.S. crude oil inventories exceeded expectations last week. The White House said earlier this week that U.S. President Trump plans to impose a 25% tariff on goods imported from Canada and Mexico starting February 1. Trump's tariff threat could disrupt crude oil supply flows and put pressure on black gold in the short term. Prices are expected to be supported at current levels, but news related to Trump may cause volatility in the short term.

From a technical perspective, crude oil prices have continued to fall so far last week, hitting a low of around $71.72. The 14-day relative strength index (RSI), a technical indicator of the daily chart, fell to 44.50, which also put pressure on the rebound of oil prices. Crude oil prices fell back to $73.08 (50% Fibonacci retracement level from 66.80 to 79.37) and fluctuated below. At present, the bearish trend will continue and provide better selling positions for further declines to the $72.38 (40-day moving average) and $71.60 (61.8% Fibonacci retracement) area levels. In the short term, pay attention to $74.12 (200-day moving average) and $74.56 (38.2% Fibonacci retracement level) as strong resistance levels. The reaction here is likely to determine the recent trend of oil prices. Breaking through points to $75.00 (integer mark) and $75.40 (14-day moving average) levels.

Today, you can consider going long on crude oil around 72.65, stop loss: 72.50; target: 74.00; 74.20

Spot gold

The international gold price broke through the historical high and hit the key level slightly below $2,800 per ounce. The main reason is that the US economic data weakened and the market bet on the Fed to cut interest rates in March. At the same time, the uncertainty of the US tariff policy has boosted the demand for safe havens. The market is paying attention to the key inflation data to be released soon to judge the future policy path of the Fed. The latest US economic data showed that economic growth in the fourth quarter of 2024 was weaker than expected, which strengthened the market's expectations that the Fed will cut interest rates in March. The news led to a weakening of the US dollar, thereby increasing the attractiveness of commodities denominated in US dollars and providing some support for gold prices. The market is increasingly uncertain about the new trade and foreign policies of the Trump administration, and investors have shown stronger risk aversion. Earlier this week, the White House said Trump plans to impose high tariffs on Canada and Mexico from Saturday and consider additional tariffs on China. Gold is shining as a safe-haven asset as investors seek shelter from the uncertainty in the market.

Gold prices broke through a new all-time high, hitting a key level just below $2,800 per ounce. The short-term technical outlook for gold prices remains bullish, making it a "buy on dip" trade. The 14-day relative strength index (RSI), a technical indicator on the daily chart, remains firmly above the midline, currently approaching 67.80, keeping gold buyers hopeful. Adding credibility to the bullish potential, the 50-day moving average closed above the 100-day moving average last Thursday, confirming the "golden cross" bullish pattern. Gold prices need to continue to break through the static resistance level of about $2,780 (the central axis of the daily chart's upward channel) to continue to rise. However, a close above the symmetrical triangle target of $2,785 or the record high of $2,790 is crucial to start a new uptrend. The next relevant upside targets are the psychological barriers of $2,800 and $2,850. On the downside, immediate support will be seen at the previous day's low of $2,745.00 and the 2,745.60 (10-day moving average) area. Sellers will then target this week's low of $2,731, followed by the round-number mark of $2,700.

Consider going long gold before 2,788.00 today, stop loss: 2,785.00; target: 2,820.00; 2,825.00

AUD/USD

AUD/USD remained neutral around 0.6200 on Thursday, struggling to gain traction after the release of the US fourth quarter GDP data. The Federal Reserve chose to keep interest rates steady but maintained a cautious tone, expressing concerns about the stagnant deflationary progress. Meanwhile, the Reserve Bank of Australia is widely expected to shift to a policy easing stance in the coming month, further weighing on the Australian dollar. The Australian dollar ended a three-day losing streak against the US dollar after the release of the export price index on Thursday. Australia's import price index rose 0.2% month-on-month in the fourth quarter, rebounding from a 1.4% drop in the third quarter and exceeding market expectations of a 1.5% drop. AUD/USD weakened as the US dollar generally strengthened. The Federal Reserve kept interest rates unchanged on Wednesday as expected, but gave little hint of a possible rate cut this year, reinforcing the strength of the US dollar. Easing inflation pressures by the end of 2024 has triggered market speculation that the Reserve Bank of Australia (RBA) may cut interest rates in February.

On Thursday, AUD/USD traded near 0.6200, still slightly below the ascending channel on the daily chart, indicating a bearish bias. In addition, the 14-day relative strength index (RSI) of the technical indicator is still below the 50 level, reinforcing the bearish sentiment in the market. This could push AUD/USD to 0.6200 (round mark), 0.6164 (January 17 low) levels. On the upside, immediate resistance is at 0.6282, the 45-day moving average, followed by 0.6300 (market psychological mark). A rebound above this level and a return to the rising channel could shift the bias back to bullish towards 0.6330 (this week's high).

Consider going long AUD before 0.6200 today, stop loss: 0.6185; target: 0.6240; 0.6250.

GBP/USD

The GBP/USD pair was trading around 1.2420 in early European trading on Thursday. The modest decline in the US dollar provided some support to the major currency pair. GBP/USD rotated in a tight circle and briefly fell below 1.2400 after the Federal Reserve kept interest rates unchanged. The interest rate futures market generally predicts a lack of change in interest rates and the Fed has no particular reason to rush to cut interest rates further. The second half of the trading week will be the release of key US data to judge whether the Fed has made the right decision. As the interest rate futures market generally predicted, the Federal Reserve kept interest rates steady on Wednesday, and Federal Reserve Chairman Jerome Powell reiterated the Fed's data-dependent approach to interest rate adjustments. Fed Chairman Powell noted that the Federal Open Market Committee (FOMC) is closely monitoring the policies enacted by US President Donald Trump, but denied that the newly-appointed US President had directly engaged with the Fed.

The bearish outlook for GBP/USD remains as the price remains below the key 50-day exponential moving average (1.2510) based on the daily chart in recent weeks. However, the technical indicator 14-day relative strength index (RSI) hovers around the mid-line 50, suggesting that consolidation cannot be ruled out. The initial support for the major currency pair is seen in the 1.2400-1.2390 area, representing the psychological level and the low of January 29. A break below this level could lead to a drop to the 20-day EMA at 1.2348. An additional downside filter to watch is 1,2300 (market psychological level). On the upside, if GBP/USD stabilizes above 1.2474 (40-day EMA), a test of 1.2500 (psychological level), and the 50-day EMA at 1.2510 is possible. Further gains are expected to reach the high of 1.25756 on January 7.

Today, we recommend going long GBP before 1.2405, stop loss: 1.2395, target: 1.2450, 1.2460

USD/JPY

USD/JPY fell as US GDP growth slowed to 2.3%, below the expected 2.6%. A rise in jobless claims failed to boost the dollar amid widespread economic concerns. The yen strengthened on policy divergence; the Federal Reserve kept interest rates unchanged, while the Bank of Japan maintained a tighter stance. The yen remained strong against its US counterpart for a second day in Asian trading on Thursday and dragged the USD/JPY pair below 154.50. Investors now seem to believe that the Bank of Japan will raise interest rates further, which in turn is seen as supporting the yen. In addition, the recent narrowing of the US-Japan yield gap has become another factor driving funds to the low-yielding yen. Meanwhile, concerns that US President Trump's trade policies may escalate into a global trade war may prevent yen bulls from making aggressive bets.

New sellers emerged around the 156.00 round number mark and subsequently broke below the 155.00 psychological mark to a low of 153.75, confirming the breakout of the multi-month ascending channel support. Moreover, oscillators on the daily chart are gaining negative traction, suggesting that the path of least resistance for USD/JPY remains to the downside. Therefore, a break below the 154.00 mark to retest the multi-week lows of the 153.71 region hit on Monday, below which USD/JPY could accelerate further down towards the 153.00 mark, looks like a distinct possibility. On the other hand, an attempted bounce may now encounter resistance around the 155.00 round number mark and then the 155.35-155.40 area. Any further gains may still be seen as a selling opportunity and be limited around the 156.00 mark.

Today, we recommend shorting the US dollar before 154.50, stop loss: 154.60; target: 153.80, 153.60

EUR/USD

The EUR/USD pair struggled to capitalize on the overnight rebound from the 1.0380 area or weekly lows, and traded in a narrow range during Thursday's Asian session. Spot prices are currently trading near the bottom of the 1.0400 level. The market is already pricing in the possibility of three more rate cuts before the end of the year due to concerns about the potential economic impact of trade tariffs threatened by US President Donald Trump. This in turn is seen as a headwind for the euro and the EUR/USD pair, despite the dollar's modest gains. Despite Trump's calls for lower interest rates, the US central bank decided to hold off at the end of its two-day meeting on Wednesday, saying it would not rush to reduce borrowing costs until inflation and employment data are suitable. The Fed's hawkish pause provided a tailwind for the US dollar and further limited the gains of the EUR/USD pair.

EUR/USD is consolidating in a range ahead of the key ECB monetary policy meeting, and from a technical perspective, the pair has been fluctuating in a choppy market recently. The outlook for short-term indicators on the daily chart is mixed. The 14-day relative strength index (RSI) has fallen below 50, indicating a weakening of bullish momentum, while the ADX is close to 24, indicating a weakening trend strength. Therefore, initial support levels can focus on the 1.0375 (34-day moving average) and 1.0356 (23.6% Fibonacci rebound from 1.0937 to 1.0177) areas. The next level will directly point to 1.0300 (market psychological level). As for resistance, 1.0432 (55-day moving average) will be considered, followed by 1.0467 (Thursday's high) levels.

Today, it is recommended to go long on the euro before 1.0380, stop loss: 1.0370, target: 1.0430, 1.0440.

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