US Dollar Index

On Wednesday, the US dollar fell sharply after the release of S&P and ISM Services. Alberto Musalem, President of the Federal Reserve Bank of St. Louis, made hawkish comments. Fed Chairman Powell will speak during the US session, which may increase volatility in the US dollar index. Amid mixed US Treasury yields, the US dollar consolidated knee-jerk moves, which saw the dollar lose some of its strong gains on Monday despite an unexpectedly positive US labor market ahead of a new round of key data releases. The US dollar index faced some selling pressure, with US Treasury yields mixed ahead of Powell's speech and the release of key labor market data, and investor sentiment was cautious. The US dollar index weakened despite an increase in the Job Openings and Labor Turnover (JOLT) data for October. This weakness can be attributed to profit-taking after the recent rebound against the major G20 currencies. Economic data from China, including a cut in deposit rates and details of the stimulus plan, led to a decline in the US dollar index. The US dollar index is approaching the 106.00 area. This week's labor market data will guide the direction of the dollar as it will guide the likelihood of the Federal Reserve (Fed) lowering expectations in December.

The index rose above 106.50 on Tuesday, driven by positive economic data and the Fed's hawkish stance. However, driven by technical pullbacks, the index has retreated to 106.15. The dollar index has received support from the 25-day moving average of 105.85 and the 55-day moving average of 104.05. Indicating a bullish trend. Buyers are looking to defend this level and retest the 107.00 area. Technical indicators such as the 14-day relative strength index (RSI) and the moving average convergence divergence (MACD) on the daily chart show mixed signals, but the upward trend is likely to continue. The MACD is below its signal line, indicating bearish momentum, but the RSI remains stable above 50. The key support level is 106.00-105.85, and the next level is 105.45 (lower line of the upward channel). The resistance level can be considered 106.92 (last Wednesday's high), and 107.00 (round mark). If it successfully breaks through the above area, the next target will point to 107.56 (December 26 high).

Today, you can consider shorting the US dollar index around 106.50, stop loss: 106.65, target: 106.00, 105.90

WTI crude oil

As US inventories increase, oil prices retreated after briefly breaking through $70.00. The situation in the Middle East is tense, and President-elect Trump vowed to start a war if the Israeli hostages are not released. The US dollar index rose as Federal Reserve officials postponed the possibility of a December rate cut. On Wednesday (December 4), US crude oil continued to rise on Tuesday during the Asian session, trading around $70.00 per barrel. As Israel threatened that if the truce agreement with Hezbollah broke down, Lebanon would reignite the war, which rekindled the market's pressure on the supply side. At the same time, OPEC+ may extend production cuts at this week's meeting, which has warmed up the bullish sentiment of oil prices to a certain extent, but it should be noted that API crude oil inventories increased by 1.2 million barrels last week, which is not conducive to oil price bulls. On the other hand, the Israeli army ignored the ceasefire agreement reached in Lebanon last week and continued to attack what they called Hezbollah fighters. The ceasefire is at risk, making some oil traders more worried about tensions in the Middle East. The Organization of Petroleum Exporting Countries and its allies may extend production cuts at the OPEC+ meeting on Thursday, which also supports oil prices.

From a technical perspective, WTI crude oil is still in the "horizontal box". Before breaking through the moving average pressure, there is a certain risk of chasing the rise. If the US crude oil breaks through $69.80 (the uranium line in the horizontal channel) and the psychological pressure near $70.00, the bulls are expected to enter the acceleration stage. As shown in the technical chart, the 14-day relative strength index (RSI) and the stochastic index of the technical indicators continue to fall, and the short-term oil price is expected to remain under pressure. The support level is estimated at $68.93 (14-day moving average) to find the first support. If it breaks through, it will point to $67.12 (the price level maintained in May and June 2023), and this month's low of $66.61. On the other hand, the resistance level is $71.15 (89-day moving average) and $71.28 (last week's high), if the market can break through this area in the future. It will directly point to the level of $72.54 (high on November 7).

Today, you can consider going long on crude oil around 68.20, stop loss: 68.00; target: 69.50; 69.70

Spot gold

After a consolidation phase around $2,640, gold prices rose and rose to $2,650. The benchmark 10-year Treasury yield fell after the release of weak macroeconomic data in the United States, helping gold prices to rise. In the Asian market on Wednesday, gold prices continued to consolidate and fluctuated narrowly below the $2,650 level. Traders do not seem to be active at the moment, preferring to wait and see clues on the Fed's rate cut path before making directional bets. Therefore, the market focus will still be on the speech of Fed Chairman Powell later today. In addition, the highly anticipated US non-farm payrolls report will provide guidance for the next monetary policy decision of Fed policymakers and provide a significant boost to the price of zero-yielding asset gold. Meanwhile, the expansionary policies of US President-elect Trump will boost inflation expectations, which may force the Fed to take a cautious stance on rate cuts. Therefore, this still supports a slight rise in US Treasury yields, boosting the US dollar and setting resistance for gold prices to the upside. That said, geopolitical uncertainties and market concerns about Trump's tariff plan still provide some support for safe-haven gold prices.

From a technical perspective, gold prices have remained range-bound recently after last week's decline and are still seen as bearish consolidation. In addition, the break below the four-day rising channel this week is also favorable for bears. That said, the neutrality of the daily oscillator suggests that if gold prices fall further below the early week swing low (around $2,622-2,621), it may continue to receive some support around the $2,600 mark. At the same time, if there is follow-up selling, gold prices may test the 100-day moving average, which is currently located around $2,579.20. On the other hand, the $2,655.60 (55-day moving average) area and subsequently the $2,671.20 (23.6% Fibonacci retracement of $2287 to $2790) area may act as strong resistance in the near term. A break above this level could see the gold price reclaim the $2,700 round-figure level.

Consider going long on gold before 2,645.00 today, stop loss: 2,642; target: 2,660.00; 2,665.00

AUD/USD

Disappointing data results on key Australian fundamentals weighed heavily on the Australian dollar, pushing AUD/USD to a fresh four-month low of 0.6400 within the boundaries of a key competitive zone. The Australian dollar moved lower following weak GDP data. Given that Australia's headline inflation has fallen to the central bank's 2%-3% target range, slowing economic growth could put pressure on the Reserve Bank of Australia to take steps to cut interest rates. Moreover, the US’s new round of export restrictions on China, concerns about China’s fragile economic recovery and the upcoming tariffs imposed by US President-elect Trump on China have become another factor weighing on the Australian dollar, a proxy for China. In addition, the US dollar continues to be supported by the Fed’s less dovish outlook, but bulls prefer to wait for more clues on the path of future rate cuts. This in turn boosted the AUD/USD pair above the weekly and multi-month lows hit on Tuesday. Apart from this, the US Non-Farm Payrolls (NFP) report should affect the US interest rate policy outlook and provide new directional momentum.

From a technical perspective, the AUD/USD pair remains in a bearish consolidation phase as it maintains the range-bound price action seen in the past two weeks or so, following the decline from the monthly swing high in September. Moreover, the oscillator on the daily chart remains in the negative territory, far from the oversold zone. This in turn suggests that the path of least resistance for the AUD/USD pair is to the downside and supports the prospect of further declines. That said, AUD/USD could turn weak, further break below 0.6400 and retest the year-to-date lows near 0.6350-0.6345 hit in August. On the other hand, any clear rebound above the psychological 0.6500 level could face strong resistance and continue to face resistance near the 0.6535-0.6540 resistance zone. However, if the strength continues, it could trigger a short-covering rally that would push AUD/USD closer to the 0.6600 round mark.

Today, consider going long on AUD before 0.6415, stop loss: 0.6400; target: 0.6470; 0.6480.

GBP/USD

After a pullback, GBP/USD edged up to 1.2700 in the second half of Wednesday as the US dollar lost strength following the release of disappointing data. Markets are eagerly awaiting a speech from Federal Reserve Chairman Jerome Powell. GBP/USD recovered slightly on Tuesday following a sharp fall on Monday. The pair continued to move higher in early European trading on Wednesday, approaching 1.2700. GBP/USD has been tumbling around 1.2700 during the week, with US data released on Tuesday showing that JOLTS job openings rose to 7.74 million in October from 7.37 million in September. The data was higher than the market's expectations of 7.48 million, helping the dollar remain resilient among rival currencies and limiting the upside for GBP/USD. GBP traders are grappling with a sharp lull in meaningful UK-centric economic data, while the broader market is preparing for the upcoming release of US non-farm payrolls this weekend, which has disrupted bids. The Governor of the Bank of England will speak via a pre-recorded interview at a conference hosted by the Financial Times. The appearance of the BoE Governor is not expected to attract any attention, but GBP traders will be closely watching for any meaningful news that the BoE Governor may reveal.

From the technical indicators on the daily chart, the 14-day relative strength index (RSI) indicator is in the negative zone near 44. Since last Friday, GBP/USD has tested 1.2600 (market psychological barrier) several times, but it was constrained by the support area composed of 1.2636 (10-day simple moving average) and 1.2619 (23.6% Fibonacci rebound level from 1.3048 to 1.2487). After successfully holding this level, it highlights the hesitation of sellers. At present, GBP/USD is temporarily slightly below 1.0700. If it looks up, the resistance level may be 1.2741 (25-day simple moving average) and 1.2767 (50% Fibonacci rebound level), then it will point to 1.2800 (market psychological barrier). On the downside, initial support is at 1.2636 (10-day SMA), and 1.2619 (23.6% Fibonacci rebound from 1.3048 to 1.2487), followed by 1.2600 (round number).

Today's recommendation is to go long GBP before 1.2680, stop loss: 1.2670, target: 1.2725, 1.2730

USD/JPY

USD/JPY rose on Wednesday, but upside potential seems limited. Expectations of a less dovish Fed pushed up US bond yields, weakening the lower-yielding yen. Bets on a Bank of Japan rate hike in December and weak dollar demand may limit the pair before Fed Powell. This week's upbeat US manufacturing PMI data and job openings data suggest that the US economy remains strong, boosting the dollar. However, the final reading of the Japanese banking sector's services purchasing managers' index for November was 50.5, higher than the previous reading of 50.2. The reading was stronger than the expected 50.2. On the other hand, Bank of Japan Governor Kazuo Ueda said on Saturday that the central bank will adjust the degree of monetary easing at an appropriate time if it is convinced that the potential inflation rate rises to 2%. Traders are increasingly confident that the Bank of Japan may raise interest rates this month. This, in turn, may support the yen in the short term. In addition, the continued political uncertainty in France, the tense political situation in South Korea, and the escalation of geopolitical risks in the Middle East may boost safe-haven flows, benefiting the yen against the dollar.

USD/JPY maintains bearish sentiment on the daily chart as the pair remains capped below the key 50-day moving average of 151.05. The technical indicator 14-day relative strength index (RSI) is below the midline near 40, suggesting that the pair will fall further. A break below the 100-day moving average at 148.89, and 148.65 (Nov. 3 low), could see the pair slide more sharply to 147.18, the high of Sept. 2. On the bright side, key resistance levels emerge at the 150.00 psychological mark. Sustained upside momentum could even push it all the way to the next hurdle of 150.75, Monday’s high, and 151.05 (50-day moving average). A decisive break above the aforementioned levels could attract enough bullish energy to take USD/JPY back to the 200-day moving average high of 151.98.

Today, we recommend shorting before 150.80, stop loss: 150.95; target: 149.80, 149.60

EUR/USD

EUR/USD rose for a second day, extending its recent move above the 1.0500 mark in response to the uncertain tone of the US dollar ahead of key US data later this week. EUR/USD has re-stabilised in the first half of the week, recovering some of Monday's losses and briefly breaking above the key 1.0500 mark, rebounding from recent lows. The euro has been supported by renewed weakness in the US dollar and reduced political uncertainty surrounding the French government, despite the fact that French Prime Minister Michel Barnier faces a no-confidence vote on Wednesday (and is likely to lose), which has also supported the euro/dollar. Monetary policy remains in focus. In Europe, the ECB has kept interest rates steady since its decision in October to cut its deposit rate to 3.25%. Inflation remains a pressing concern, as consumer price index data for Germany and the eurozone rose sharply in November, while eurozone wage growth accelerated to 5.42% in the third quarter. The latest hawkish comments from ECB board member Isabel Schnabel have previously provided some support to the euro.

The near-term technical are currently biased towards the bearish side, with key support levels for EUR/USD to watch including the 2024 low of 1.0425 (hit on November 26). If the EUR/USD declines further, it could test the next support at 1.0332 (November 22 low), and the November 2022 weekly low of 1.0222. On the upside, immediate resistance is located at the weekly high of 1.0609 (November 20), then 1.0634 (50.0% Fibonacci rebound from 1.0937 to 1.0332), and then the November high of 1.0671 (34-day moving average). In the short term, as long as it remains below the 200-day moving average, the downward trajectory of EUR/USD will be strengthened.

Today it is recommended to go long on Euro before 1.0495, stop loss: 1.0485, target: 1.0540, 1.0550.

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