US Dollar Index

The US dollar index closed higher for the fourth straight week and ended last week at 100.98. Investor sentiment was boosted by hopes of easing US-China trade tensions and growing expectations that the Federal Reserve will cut interest rates. A series of mostly weak economic indicators reinforced the view that the Federal Reserve will cut interest rates at least twice this year. The Michigan consumer confidence index fell sharply, housing starts and building permits were lower than expected, while import and export prices unexpectedly rose. Earlier this week, consumer and producer inflation (CPI and PPI) both fell short of expectations, and retail sales also fell short of expectations. The dollar surged more than 1% for the first time at the beginning of last week as China and the United States agreed to significantly reduce tariffs within 90 days, signaling a possible breakthrough in a broader trade deal between the world's two largest economies. However, with data released last week showing easing inflation and disappointing retail sales, these indicators prompted traders to increase bets on further Fed rate cuts later this year. Traders are now turning their attention to possible currency intervention in Asia and the deteriorating tone of the Russia-Ukraine talks. The dollar is also under pressure from several Asian currencies, especially the Korean won, and there is speculation that Washington may support a weaker dollar as a strategic move in the ongoing trade negotiations.

The US dollar index traded in the 100.00–102.00 range last week, showing indecision. The technical indicator Moving Average Convergence Divergence (MACD) on the daily chart shows mild buying momentum, although the momentum (10) reading is around 1.0, reflecting limited upward pressure. The 14-day relative strength index (RSI) is around 51.80, indicating short-term indecision and neutral to bearish momentum. The weekly chart closed with a bearish "shooting star" pattern. At this stage, the index is confined to a narrow range between 100.14 {18-day simple moving average} and 101.65 {50-day simple moving average}. Therefore, the upward resistance can first consider 101.65 {50-day simple moving average}, and a break will test and further point to 101.98 {May 12 high} and 102.00 {market psychological barrier} area levels. As for the downside, the first position to watch is 100.14 {18-day simple moving average}, and 100.00 {market psychological barrier}. The next level challenges 99.60 {May 8 low}, and 99.17 {May 6 low}.

Today, consider shorting the US dollar index around 101.15, stop loss: 101.30, target: 100.50, 100.40

WTI spot crude oil

WTI crude oil closed at $61.90 per barrel last week, recording a weekly gain of more than 2%, which was their second consecutive weekly gain as the easing of US-China trade tensions boosted sentiment. The 90-day tariff truce between the world's two largest oil consumers helped ease concerns about weak demand. As optimism about US-China trade relations overshadowed concerns about global oversupply. Earlier last week, the two countries agreed to a 90-day ceasefire in their trade dispute and pledged to significantly reduce tariffs, a breakthrough that eased demand concerns in the world's top oil consumer. However, reports that Iran may reach a deal with the United States to lift sanctions limited gains. President Trump also said progress was made in long-term peace talks with Iran, raising expectations of increased Iranian oil supply. In addition, U.S. government data showed an unexpected increase in crude oil inventories. The International Energy Agency also raised its global supply forecast by 380,000 barrels per day, saying Saudi Arabia and other OPEC+ members increased production and gradually lifted production cuts. Future oil price trends may depend more on the progress of the Iran nuclear deal and whether OPEC+ will resume its commitment to cut production. In addition, economic data may also rekindle concerns about weak demand if it shows a weak recovery in global growth. In the short term, oil prices may remain volatile, but risks remain on the downside.

The oil market is still dominated by supply dynamics, and any resumption of Iranian supply may quickly change market trends. From a technical perspective, the daily chart shows that WTI crude oil prices are supported near the $60 mark and are currently successfully breaking through multiple short-term moving average pressures, including: 10-day {60.44}, and 14-day {59.94} simple moving averages form a long arrangement, indicating that the market sentiment is strong in the short term. The weekly chart forms a long upper shadow cross, indicating that the buyer's buying is relatively active, and the short-term rebound is expected to continue. The technical indicator MACD maintains a dead cross state, but the green column momentum begins to shrink. The 14-day relative strength index (RSI) index is in the neutral area of ​​50.70, reflecting that the long and short are still in a tug-of-war. If the oil price can effectively break through the $61.91 {34-day simple moving average} and $61.90 {last week's closing price} resistance levels, it may be expected to further rise to the $63.48 {last week's high} area, and the break will point to the $65.12 {65-day simple moving average}. On the contrary, if it falls below $60.00 {market psychological barrier}, it may trigger a further technical correction to around $58.83 {23.6% Fibonacci rebound level from $71.98 to $54.78}, and the next level is around $57.47 {May 8 low}.

Today, you can consider going long on crude oil around 61.70, stop loss: 6150; target: 63.20; 63.40

Spot gold

Gold fell sharply last week, with a weekly decline of more than 3.6%, and once fell below the key support level of $3,200 to $3,120, a near four-week low. Subsequently, the gold market saw a "shocking reversal" in the market. After the spot gold price reached $3,120/ounce, the bulls launched a counterattack and finally returned to above $3,200. As global trade tensions eased, its appeal as a safe-haven asset weakened. The United States and China recently agreed to temporarily reduce tariffs for 90 days, easing investors' concerns about the long-term impact of the trade conflict. Geopolitical risks also seem to have eased, with the India-Pakistan ceasefire remaining stable. However, progress in negotiations between Russia and Ukraine showed signs of stagnation. Meanwhile, mild inflation data in the United States generally supports the interest-free metal, reinforcing market expectations that the Federal Reserve will cut interest rates at least twice this year. However, Fed Chairman Powell warned that inflation may become more volatile in the future due to more frequent supply shocks, which may complicate the central bank's efforts to maintain price stability. At this point in time, the gold market is facing an unprecedentedly complex environment: expectations of a "no landing" for the US economy have been shattered, and recession risks have risen; the Federal Reserve's monetary policy framework is facing a reconstruction (Powell's latest statement); multiple risks such as the Russia-Ukraine conflict and the situation in the Middle East are intertwined.

From a technical perspective, the good rebound from the more than one-month low of $3,210 was blocked near $3,239.90 {34-day simple moving average}. The 14-day relative strength index (RSI), a technical indicator on the daily chart, is still in the negative zone of 46.87. This makes it prudent to wait for strong follow-through buying before confirming that the decline in gold prices over the past week or so is over and making new bullish bets. Meanwhile, a drop back below $3,200 {market psychological barrier} may find some support around $3,162.50 {50-day simple moving average}. Some follow-up selling may put the gold price at risk of accelerating back to last week's low, around the $3,120 area. The downward trajectory may extend further to the next relevant support area of ​​$3,100. On the other hand, $3,239.90 {34-day simple moving average} may continue to act as an immediate barrier. A sustained strong breakout may trigger a new wave of covering rebounds and allow the gold price to recapture $3,286.60 {10-day simple moving average}, and the 3,300 round number mark. The latter should serve as a key point that, if decisively broken, may eliminate any short-term negative bias and turn the bias towards bullish traders, paving the way for further gains to $3,324.10 {last week's high}.

Consider going long on gold before 3,197 today, stop loss: 3,190; target: 3,240; 3,245

AUD/USD

After a volatile week, AUD/USD was stable above $0.64 for most of last week, as investors are looking to the Reserve Bank of Australia's policy decision next week. The RBA is widely expected to cut the cash rate by 25 basis points to 3.85%, but expectations for deeper easing have weakened. Stronger-than-expected labor market data released earlier this week helped to curb expectations of rate cuts. Official data showed that the Australian economy added 89,000 jobs in April, far exceeding expectations of 20,000, pushing total employment to a record 14.64 million. As a result, the market now expects about 75 basis points of rate cuts by the end of the year, down from 100 basis points a few weeks ago. Meanwhile, the US-China trade deal helped ease concerns about a global economic slowdown, further supporting the risk-sensitive Australian dollar. However, the Australian dollar faces challenges, possibly due to reports that the Trump administration plans to add several Chinese chipmakers to its export blacklist, also known as the "Entity List." Given the close trade relationship between Australia and China, any disruption to the Chinese market could have a significant impact on the Australian dollar.

From a technical perspective, the AUD/USD pair maintains a mixed outlook. The 14-day relative strength index (RSI) of the daily chart is hovering around 52.03, indicating neutral momentum, while the moving average convergence divergence (MACD) sends a bullish momentum signal. Meanwhile, the 50-day {0.6331} and 100-day {0.6297} simple moving averages provide buy signals, contrasting with the bearish outlook of the 200-day {0.6453} simple moving average. However, the 14-day relative strength index (RSI) remains above 50, indicating that there is some bullish momentum despite the downward pressure. Therefore, the immediate support level is around the psychological level of 0.6400, followed by the 50-day simple moving average of 0.6331. If it breaks, it will point to the 0.6330 {market psychological level}, and the 0.6297 {100-day simple moving average} area. On the upside, the first resistance level is 0.6453 {200-day simple moving average}. If it breaks through this level, it may lead the currency pair to retest the six-month high of 0.6515 set on December 2, 2024. If it rebounds beyond this point continuously, it will target the seven-month high of 0.6581 on November 12, 2024.

Today, it is recommended to go long on the Australian dollar before 0.6390, stop loss: 0.6380, target: 0.6450, 0.6460

GBP/USD

The pound ended a slight decline of 0.15% against the US dollar last week, closing at 1.3288 before the weekend. The lack of major economic data releases from the UK has forced traders to focus on US data. Data released by the University of Michigan showed that the consumer confidence index fell to 50.8 in May, the lowest level since July 2022, below the expected 53.8 and down from 52.2 in April. Import prices unexpectedly rose in April, mainly due to a surge in capital goods costs and a weaker US dollar. US housing data was mixed, with new home starts rising in April while building permits fell to a near two-year low. GBP/USD reacted to US data with a delay, but eventually fell below 1.33. US economic data released so far this week suggest that a deflationary process is evolving. However, Fed officials remain reluctant to ease policy due to uncertainty about US trade policy, tariffs and their impact on inflation. Fed Governor Philip Jefferson stressed that the re-acceleration of inflation could be temporary or lasting. This week, the UK economic schedule will include the UK-EU meeting, as well as the release of UK inflation data, preliminary PMIs and retail sales. In the US, a series of Fed speakers, preliminary PMIs and housing data will be watched.

From the daily chart, GBP/USD has fallen below 1.3300 (market psychological level), and the upward trend of the currency pair is questioned, which may pave the way for a pullback, as the exchange rate shows continuous narrow fluctuations at low levels, indicating that buyers are losing momentum. Although sellers must break through the daily low of 1.3248 on May 15 to challenge 1.3200 (round number level), and the 34-day simple moving average of 1.3196. In the case of further weakness, the next support level will be 1.3115 (50-day simple moving average). At this stage, the 14-day relative strength index (RSI) of the technical indicator is now in the positive zone near 53.56, and the trend temporarily appears stable and has the opportunity to trigger momentum from falling to rising. For now, GBP/USD maintains an upward bias, and buyers need to regain and stabilize above 1.3300. Buyers may first test 1.3360 (last week's high). A break above this level could expose the year's high of 1.3445.

Today's recommendation is to go long on GBP before 1.3275, stop loss: 1.3260, target: 1.3330, 1.3340

USD/JPY

The yen appreciated to 145 yen per dollar on Friday and briefly crossed 145 to a near one-week high of 144.92, rising for four consecutive sessions despite weaker-than-expected economic growth data. Japan's economy fell 0.2% on a quarterly basis in the first quarter, the first decline in a year and worse than the expected decline of 0.1%. Earlier last week, the Bank of Japan acknowledged that the economy may stabilize due to the impact of US trade policy. However, the central bank still insisted that rising wages and prices will support the path toward policy normalization, helping to support the yen. Investors are also watching the progress of US-Japan trade talks, with Tokyo pushing to finalize a deal by June. Japanese Prime Minister Shigeru Ishiba reiterated Japan's position that any agreement must include provisions for the automotive industry and urged Washington to remove the 25% tariff on Japanese vehicles. However, optimism about the US-China trade deal curbed the performance of the safe-haven yen, helping the USD/JPY exchange rate to stabilize above the psychological level of 145.00. Meanwhile, the dollar struggled to attract any meaningful buyers amid bets that the Federal Reserve could cut interest rates further, which was supported by poor U.S. macro data last Thursday.

From a technical perspective, the weekly decline dragged USD/JPY down to around 145.30 (38.2% Fibonacci retracement of 139.89 to 148.65). Considering that the 14-day relative strength index (RSI) on the daily chart plunged from 60 to around 51 last week, it has just begun to gain negative momentum. If the RSI falls below the 50.00 level, it will trigger bearish momentum. If it is accepted below the 145.00 psychological level, it may drag the spot price to the 144.27 {50.0% Fibonacci retracement} area. The 144.00 round number mark is closely followed. A clear break of the above support level may shift the short-term bias in favor of bearish traders and pave the way for deeper losses to 143.45 {May 8 low}, and 143.24 {61.8% Fibonacci retracement}. On the other hand, the 146.00 round number mark, 146.14{50-day moving average} now appears to be an immediate obstacle. Any further gains may be seen as a selling opportunity and are limited around the 146.58{23.6% Fibonacci retracement} area. However, a sustained break above the latter may trigger a short-term covering rebound in the pair and push USD/JPY above 146.95{65-day moving average}, and 147.00, approaching the 148.54{last week's high} level.

Today, it is recommended to short the US dollar before 146.35, stop loss: 146.60; target: 145.30, 145.10

EUR/USD

EUR/USD moved back and forth last week, once seeing a one-month low of 1.0951, when the United States and China announced a 90-day truce agreement accompanied by a reduction in tariffs. Late last week, The pair rebounded to a weekly high of $1.1265 as the reduction in tariffs initially sparked optimism about a broader de-escalation in the trade war, but this enthusiasm has faded and investors are now waiting for further developments. Meanwhile, the major currency pair rose as U.S. Treasuries faced selling pressure, with a sharp drop in U.S. bond yields following the release of U.S. PPI and retail sales data. Concerns about a possible slowdown in the U.S. economy have resurfaced, weighing on the dollar. On the monetary policy front, the European Central Bank is expected to continue lowering borrowing costs in June and could cut interest rates further. ECB Governing Council member Martins Kazaks noted that if the baseline inflation forecast - a return to 2% this year - comes true, the rate cuts may be nearing the end. In April, eurozone inflation remained at 2.2%, while core inflation rose to 2.7%. Meanwhile, GDP growth in the first quarter was revised down to 0.3% from an initial estimate of 0.4%.

EUR/USD showed a "fall-then-rise" pattern last week, with the weekly high/low being 1.1265/1.0951. However, the short-term outlook for the pair remains uncertain. Because, The 14-day relative strength index (RSI) of the daily chart technical indicator slipped to nearly 40.00 last week and then rebounded strongly to the mid-49.40 level, indicating hesitation among traders. The 20-day simple moving average forms the first resistance near 1.1275. If it breaks, the psychological barrier of 1.1300 will be the main resistance level for the currency pair. If buyers maintain control in the broader trend this time. There is a chance to challenge the high of May 7 at 1.1378. And it may further point to the 1.1473 {April 11 high} area to open the door. On the contrary, 1.1148 {40-day simple moving average} will be the key support for euro bulls. Then comes 1.1100 {market psychological barrier}. A break will test the 1.1059 {55-day simple moving average} level.

Today, it is recommended to go long on the euro before 1.1160, stop loss: 1.1145, target: 1.1220 , 1.1230.

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