US Dollar Index

The US dollar index retreated to 99.04 on Friday, remaining at its lowest level in more than two weeks after US President Trump threatened to impose 50% tariffs on the European Union, scheduled to take effect from June. If confirmed, the move would weaken US demand for goods from a major exporter and limit outflows of US dollars. However, the threat has rekindled concerns about Trump's aggressive and unpredictable trade policies, which has led both domestic and foreign markets to shun dollar-denominated assets, driving European and Asian currencies, stocks and bonds to outperform their US counterparts this month. Concerns about US growth were also supported by the threat of tariffs on Apple products. The tax bill passed by the House of Representatives will expand the US budget deficit more than expected, and a few days ago, rating agencies downgraded the US credit rating due to concerns about unsustainable debt. Last week, concerns about the US fiscal deficit continued to ferment, pushing US bond yields higher while failing to boost the US dollar price. This anomaly is reshaping the global capital flow pattern. The US dollar index fell below the key psychological support level of 100 again last week, seeing a near two-week low of 99.04. More critically, the market is questioning the traditional status of the US dollar as a "safe haven". Against the backdrop of heightened geostrategic uncertainty, the US dollar has recently shown weakness rather than strength.

From a technical perspective of last week's movements, the US dollar index is still in the corrective phase of a broader downtrend that began in March. The US dollar index is consolidating below 100.19 {35-day simple moving average}, and 100.00 {market psychological level}. A chance to re-break above this area in the future will open the door to the 101.26 {May 16 high}–101.27 {50-day simple moving average} area level, which is a former support-turned-resistance. Technical indicators on the daily chart present mixed signals, with the 14-day relative strength index (RSI) hovering around 41.80, showing indecision and lack of bullish momentum, while the moving average convergence/divergence (MACD) is attempting a bullish crossover. However, it is still below the zero line - indicating that bullish confidence is still insufficient. Therefore, on the downside, 99.00 {round mark} remains a key support level. A break below this level may attract further selling to the 98.32 {low point on April 1, 2022} mark, which may drag the index to the last 97.91 {low point since 2022} level.

Today, consider shorting the US dollar index around 99.20, stop loss: 99.35, target: 98.70, 98.50

WTI spot crude oil

WTI crude oil once hit $60.12 per barrel before the weekend, falling to a near two-week low, and faced its first decline in three weeks, under pressure from OPEC+ to increase crude oil production. The organization is reportedly considering increasing production quotas for the third consecutive month, possibly by 411,000 barrels per day in July, although no agreement has been reached. This has exacerbated growing concerns about oversupply after an unexpected rise in U.S. crude oil inventories. Data from The Tank Tiger also showed that U.S. crude oil storage demand recently surged to levels last seen during the COVID-19 pandemic as traders braced for a wave of supply that could come from OPEC+ in the coming months. The U.S.-Iran nuclear talks were also being tracked after reports that Israel could attack Iranian nuclear facilities sparked concerns about regional supply disruptions. On the other hand, news of a possible increase in production by OPEC+ further weighed on oil prices. According to market surveys, OPEC+ is considering another significant increase in production at its June 1 meeting. If the production increase is expected to come true, it will increase the risk of supply-demand imbalances in a market where supply has already rebounded.

From a long-term perspective, WTI crude oil prices broke down from a nearly 2-year "symmetrical triangle", which suggests a very bearish target price of about $34. Only time will tell, but at least in the short term, a bearish trend may be imminent. The daily chart shows that WTI crude oil has rebounded 17% from a false breakout at the 2023 low to a high of $64.00 in the middle of last week. At present, the oil price is fluctuating around the 34-day simple moving average of $60.94, and multiple resistance levels are concentrated in this area. It is worth noting that after WTI crude oil failed to break through the 60-day simple moving average {latest at $63.91} and $64.00 {last week's high} during the intraday session, the oil price continued to fall to last week's low of $60.12, so the short-term support can focus on $60.00 {market psychological barrier}, and $59.57 {May 9 low}. Then it is 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}. On the upside, if oil prices can effectively break through the $62.00 {40-day simple moving average} and $61.90 {last week's closing price} resistance levels, they may further rise to the $64.00 {last week's high} area, and if they break through, they will point to the 65.73 {80-day simple moving average}.

Today, you can consider going long on crude oil around 61.40, stop loss: 61.20; target: 62.80; 63.10

Spot gold

Last week, gold prices rose more than 4.8% to a high of about $3,366 per ounce as trade tensions escalated again, driving risk aversion. President Trump proposed a 50% tariff on EU imports from June 1, while threatening to impose a tariff of at least 25% on Apple if it does not move iPhone production back to the United States. These statements came as investors became increasingly frustrated with the lack of progress in trade negotiations. Gold prices ended the week up about 4.81%, supported not only by trade concerns but also by growing unease about the US fiscal outlook. The bill is expected to expand the US budget deficit by nearly $3 trillion over the next decade. Earlier last week, gold prices also received support from rising geopolitical tensions following reports that Israel may take action against Iranian nuclear facilities. The gold market is currently in the tug of war. In the short term, the technical rebound of the US dollar and the sell-off of US bonds do pose pressure. However, a deeper analysis shows that the three major factors of currency depreciation pressure brought by the $3.8 trillion fiscal expansion, safe-haven demand caused by the damaged credit of US bonds, and the increasingly obvious risk of stagflation are building long-term support for gold.

From a technical perspective, the pullback of gold prices from the two-week high of $3,345 last week shows that the support level composed of $3,301.80 {25-day simple moving average}; and $3,300.00 {market psychological level} has some resilience. Moreover, the 14-day relative strength index (RSI) on the daily chart is now around 58.00, which favors bullish traders and supports the continuation of the uptrend that has lasted for more than a week. Therefore, any subsequent decline to $3,300 {market psychological level} may be seen as a buying opportunity and find support at $3,268.20 {34-day simple moving average}. However, a break below this support level may trigger some technical selling and pave the way for deeper losses, with the target pointing to $3,228.40 {50% Fibonacci retracement level of 2956.70 to 3500.10} and finally reaching the $3,200 round number level. On the other hand, $3,345.50 {last week's high} may act as an immediate resistance before $3,371.80 {23.6% Fibonacci retracement level}. If there is follow-up buying, gold prices have the potential to break through the resistance area of ​​$3,400 {round mark}-$3,415 {May 8 high}. A sustained strong break above the latter will reaffirm the short-term positive outlook and lay the foundation for further appreciation.

Today, you can consider going long on gold before 3,354, stop loss: 3,350; target: 3,380; 3,385

AUD/USD

Earlier last week, the Reserve Bank of Australia cut interest rates by 25 basis points, lowering the official cash rate from 4.10% to 3.85%. RBA Governor Michelle Bullock supported the central bank's decision to cut interest rates and maintained a dovish tone. Bullock mentioned that the board is ready to take additional actions if necessary, raising the prospect of future changes. She also pointed out that it is important to curb inflation and said that the rate cut is a positive step that has improved market sentiment, which is appropriate in the state of the economy. Plus the US dollar gained support after the release of strong US S&P Global Purchasing Managers Index (PMI) data. The S&P Global Composite PMI recorded 52.1 in May, up from 50.6 in April. AUD/USD depreciated to a low of 0.6390 in the first half of the week. The Australian dollar rose to a nearly three-week high of 0.6499 USD before the end of last week, recovering the position lost in the first half of the week as the US dollar weakened due to renewed concerns about the domestic fiscal outlook in the United States. The budget bill recently passed by US President Trump includes large-scale tax cuts and increased defense spending, raising concerns about inflation deficit expansion and long-term fiscal instability. The Australian dollar is also supported by improved global trade sentiment.

From the daily chart, AUD/USD traded slightly below 0.6500 last week, fluctuating in the range of 0.6390 to 0.6500 throughout the week, and slightly bullish, supported by daily technical indicators. The pair remains above the 34-day simple moving average of 0.6380, while the 14-day relative strength index (RSI) of the technical indicator has surged above 59, and the upward momentum remains strong, while the average supports the continued upward momentum. On the upside, last week's high of 0.6499, and 0.6500 {market psychological level} are the first immediate resistance levels. If this barrier is decisively broken, a test of 0.6515 {six-month high recorded on December 2} may provide strong resistance. A sustained rebound beyond this point will target the seven-month high of 0.6581 on November 12, 2024, and the 0.6600 {round number level} area level. On the other hand, the immediate support is near the psychological level of 0.6400, followed by the 34-day simple moving average near 0.6380. A breakout points to the 0.6300 {market psychological level}, and the 0.6309 {100-day simple moving average} area level.

Today, it is recommended to go long on the Australian dollar before 0.6482, stop loss: 0.6470, target: 0.6540, 0.6560

GBP/USD

The pound hit highs several times during last week's trading session, with the exchange rate against the US dollar near the high of 1.3546, and a sharp rise of 2.06% for the week, close to the highest level since February 2022. The pound strengthened as the UK retail sales data for April was stronger than expected, marking the fourth consecutive month of growth and indicating that consumer spending continued to show resilience despite the impact of tax increases driven by US tariff policies and global trade tensions. At the same time, consumer confidence rebounded in May, with households showing greater optimism about their personal financial situation and being more willing to spend on major purchases. In addition, Ofgem announced that it would cut the energy price cap by 7% from July, easing household pressure after several previous increases. However, inflation remains high, with the UK Consumer Price Index (CPI) data for April higher than expected. Although the UK inflation data for April exceeded expectations and triggered concerns about the Bank of England's policy shift, the US dollar continued to be under pressure due to the downgrade of its sovereign rating, providing support for the pound. The current market is reassessing the divergence of the policy paths of the UK and the United States. With the interweaving of long and short factors, the pound may remain volatile at a high level in the short term.

From the daily chart structure, the trend of GBP/USD is still strong. At present, the currency pair has stabilized at the 1.3400 integer mark and 1.3425{5-day simple moving average}. The short-term 20-day moving average (1.3333) and the medium-term 50-day simple moving average (1.3165) are in a bullish arrangement, and the 50-day simple moving average (1.3165) provides medium-term support. The MACD bar chart of technical indicators is close to the zero axis, and the DIFF and DEA lines are glued together, indicating that the short-term direction is pending; as for the 14-day relative strength index (RSI), it is now around 65.58. Although it is not overbought, it is necessary to be vigilant about the risk of top divergence. It is worth noting that although the exchange rate once fell from 1.3470, the 14-day RSI broke through the 60 mark and stabilized, suggesting that if the correction does not break the support, the upward trend may continue. The first resistance above should focus on 1.3620 {February 22, 2023 high}, and if it breaks, it will challenge the 1.3750 level of the January 2022 high. On the other hand, once the currency pair turns around and makes a technical retracement to 1.3413 {last Friday's low}, and below 1.3400 {integer mark}, the next target is 1.3333 {20-day simple moving average}, which will become the long defense line.

Today, it is recommended to go long on GBP before 1.3522, stop loss: 1.3505, target: 1.3580, 1.3590

USD/JPY

The yen remained strong against a backdrop of broad bearishness on the dollar, surging 2.15% to a three-week high of 142.42 for the week, as markets increasingly accepted expectations that the Bank of Japan will continue to raise interest rates. This bet was reinforced by the release of Japanese consumer inflation data earlier this weekend that exceeded expectations at 3.5%, the highest level in more than two years. This reinforced market expectations that the Bank of Japan will continue to tighten monetary policy to combat persistent inflationary pressures. Meanwhile, headline inflation remained stable at 3.6%. The yen also benefited from a generally weaker dollar. Separately, Japanese Finance Minister Katsunobu Kato said earlier this week that he did not discuss exchange rate levels with U.S. Treasury Secretary Scott Bessant during the G7 meeting in Canada, downplaying speculation about coordinated currency intervention. In addition, hopes for a U.S.-Japan trade deal were another factor supporting the yen. Meanwhile, investors were nervous about U.S. fiscal concerns, renewed U.S.-China trade tensions, and geopolitical risks, further favoring the yen's relative safe-haven status.

From a technical perspective, USD/JPY was blocked at the 35-day SMA {latest at 144.21} during its rally on the daily chart before the weekend. This area is close to a convergence of support levels - including the 144.27 {50.0% Fibonacci retracement level from 139.89 to 148.65} level, and the 145-hour SMA of 144.34 on the 4-hour chart should serve as a key turning point. The subsequent decline favors bearish traders. Coupled with the technical indicator 14-day relative strength index (RSI) on the daily chart falling to 41.14, the lowest level since early May, confirms the short-term negative outlook for the USD/JPY exchange rate. From the current level, the two-week low of 142.80 hit last Thursday will be the first support level, below which the USD/JPY exchange rate may accelerate its decline towards the next relevant support level of 142.00 {market psychological level}, 141.97 {April 29 low} area, and then fall to 141.50 {April 23 low} level. On the other hand, a sustained strong break above the support-turned-resistance of 144.27 {50.0% Fibonacci retracement level} and the 145-hour simple moving average of 144.34 on the 4-hour chart may trigger short-term covering and push the USD/JPY exchange rate to the psychological level of 145.00. Next is the level around 145.30 {38.2% Fibonacci retracement level}, which, if decisively broken, may make the short-term bias bullish traders.

Today, it is recommended to short the US dollar before 142.75, stop loss: 142.95; target: 141.80, 141.50

EUR/USD

Last week, financial market participants continued to sell the US dollar as US President Trump's new tax law increased concerns about the country's fiscal health. The new bill, which includes tax cuts and increased spending on defense and immigration control, is expected to increase the national debt by $3.8 trillion over the next decade, the non-partisan Congressional Budget Office said. EUR/USD resumed its upward trend last week, with the major currency pair reaching a high of 1.1375, which is close to a three-week high, while the US dollar index fell to a near two-week low of 99.04. Investors are worried that the additional burden of the national debt may lead to a further decline in the US credit rating. Last week, Moody's downgraded the US sovereign credit rating by one level, from Aaa to Aa1, citing the failure of successive governments and Congress to agree on "reversing the trend of large annual fiscal deficits and growing interest costs." Currently, investors are digesting a series of economic data and their impact on the ECB's monetary policy outlook. Meanwhile, Fed officials have been guiding that it is not the right time to adjust monetary policy because uncertainty about the economic outlook under President Trump is unusually high. Concerns about the growing U.S. debt burden continue to put pressure on the dollar, exacerbated by the narrow passage of President Trump's new tax bill in the House of Representatives.

The 14-day relative strength index (RSI) indicator on the daily chart has risen above 62.40, and the short-term outlook for the currency pair is bullish as it turned upward after breaking above the 5-day simple moving average of 1.1301 and 1.1300 before the weekend, reflecting the hesitation of sellers. The 5-day {1.1301} and 20-day {1.1274} simple moving averages before the weekend formed a "golden cross" bullish pattern. Therefore, once the EUR/USD continues to rebound, it may first face the first resistance level at 1.1382 (May 6 high) and 1.1400 {round mark}, and then challenge 1.1475 (April 11 high) again. If it breaks, it will point to 1.1574 (three-year high). On the downside, the key support area seems to be formed at 1.1301 {5-day simple moving average} and 1.1300 {round mark}, followed by 1.1252 (38.2% Fibonacci retracement level from 1.0733 to 1.1572). If the bears continue to chase, the currency pair will test the 1.1200 {round mark} level.

Today, it is recommended to buy Euro before 1.1350, stop loss: 1.1335, target: 1.1410, 1.1420

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