USD

The U.S. Dollar Index continued its consolidation below the 104.00 level, maintaining a range-bound pattern from last week. The index fluctuated around the 103.50 area with limited market volatility and thin trading. Currently, there is no latest news regarding monetary policy, and investors are maintaining expectations for the Federal Reserve to initiate rate cuts around spring 2024. The U.S. Dollar Index is oscillating around the key 200-day moving average near 103.61, with bullish attempts still limited above the 104.00-104.25 level. In a broader context, amid increasing speculation of rate cuts in the first half of 2024, the U.S. dollar appears subdued to counter further deflationary pressures and a gradually cooling labor market. However, the resilience of the U.S. economy and hawkish remarks from some Federal Reserve officials provide support to the U.S. dollar.

The daily chart indicates that the U.S. Dollar Index is below the 100-day moving average of 104.22, presenting a bearish outlook at last week's close with a death cross formation. At present, the U.S. Dollar Index is increasingly likely to require some form of catalyst to facilitate a breakthrough in either direction. The minutes of the Federal Reserve meeting prevented the U.S. dollar from breaking below the crucial support level of 103.00. Therefore, if it drops below 103.17 again this week (last week's low), it cannot be ruled out that the U.S. Dollar Index will challenge the 103.00 psychological level. Once breached, the next targets will be 102.53 (61.8% Fibonacci retracement from 99.57 to 107.34) and 102.50 (lower channel support). The final target will be 102.00 (psychological level). Currently, the U.S. Dollar Index needs to reclaim the 103.61 level above the 200-day moving average to expect further rebound towards the 100-day moving average at 104.22 and the 104.21 level (last week's high). If the U.S. Dollar Index can close and open around 104.37 (38.2%) later this week, it is expected to return to the 105.00 psychological level.

Consider selling the U.S. Dollar Index around 103.60 today, with a stop loss at 103.80 and targets at 103.10 and 103.05.

WTI

Over the past two weeks, oil traders have been extremely busy, gathering news and data from various sources, intensifying the volatility of oil prices. However, oil prices have remained at the levels of two weeks ago. Concerns about demand and reports suggesting OPEC+ supply surpassing previous estimates have contributed to a more than 20% decline in oil prices from their peak at the end of September to last week's low. Due to this downward trend, oil prices have returned to the sensitive zone of the alliance group. OPEC announced the postponement of the scheduled meeting from November 26 to 30 last weekend. It is expected that this summit and the supervisory committee meeting will not change the quotas, but the delay has sparked strong opposition from OPEC member countries. Upon the news of the meeting's postponement, intraday prices fell by over 5%, and WTI crude oil prices briefly dropped below $74.0. The postponement of the meeting gives Saudi Arabia the possibility to encourage other cartel members to voluntarily reduce production to reverse the trend. The OPEC+ meeting this week has two possibilities: either OPEC will maintain the current production reduction policy into next year, or, led by Saudi Arabia, slightly increase the extent of production cuts. Neither option is ideal for Saudi Arabia, as it may have to either accept lower oil prices or take unpleasant unilateral production cut measures to support the market.

The daily chart shows that a battle of trends is unfolding in recent days. The closing last weekend presented a bearish death cross formation, with bearish protection from the 200-day moving average (77.85). In early November, oil prices fell below this moving average. WTI crude oil has attempted to return above this average twice but faced selling pressure from bears. If oil prices fail to regain 75.90 (downward channel midline) and the 200-day moving average (77.85) this week, prices may revisit the support levels of 73.80 (November 22 low) and 72.35 (last week's low). On the bullish side, the downward momentum is weakening. The daily chart is forming a bullish pattern in the shape of an ascending triangle. The relative strength index (RSI) shows a divergence, indicating the end of the downward momentum and the potential for a rebound or even a reversal to an upward trend. A sign of a trend reversal would be if prices can consistently return above the 200-day moving average (77.85) and further break through 78.48 (ascending triangle resistance line). In that case, oil prices have the opportunity to challenge the levels of $80.00 (psychological barrier) and $81.70 (upper channel line).

Consider going long on crude oil around 75.20 today, with a stop loss at 74.90 and targets at 76.50 and 76.80.

Spot Gold

In the backdrop of a weakening US dollar, gold prices surged over 1.10% last week, with buying support pushing the market to trade above the psychological level of $2000 over the weekend. The weekly closing also reclaimed the $2000 mark. Despite signs of easing inflationary pressures, the minutes from the FOMC meeting released last week adopted a more hawkish tone. Additionally, optimistic US labor market and consumer confidence data on Wednesday may keep the Federal Reserve inclined towards prolonged interest rate hikes. This, coupled with a strong rebound in US Treasury yields, became a key factor in the last-day rally in gold prices last week. The market's focus now turns to upcoming economic activity data to glean more insights into the world's largest economy.

Gold has recorded its second consecutive weekly gain, but the upside potential appears limited for the metal this week after a significant recovery. The driving force behind the rise in gold prices is the hope that the Federal Reserve will refrain from further interest rate hikes. Nevertheless, the upside potential for gold seems constrained: the first rate cut is expected to be implemented only in the middle of next year, so it may only be at that time that gold prices could sustainably climb above $2000 per ounce.

From a technical perspective, since the beginning of last month, gold has repeatedly failed to surpass the $2010 level or the highest level in several months, despite reaching the $2010 level or the highest level in several months. Last Wednesday, it returned above the psychological level of $2000 for the third time and closed above $2000 over the weekend. As indicated by the bullish technical trend on the daily chart, the upward resistance for gold is minimal. However, gold needs the daily closing price to effectively stabilize above the $2000 threshold to maintain a meaningful upward trend. The recent resistance level is at the multi-month high of $2009.50. Above this level, new buying opportunities may arise, with a test of $2016.30 (trendline extending from the high near $1987.50 on July 20) and the high around $2020 in mid-May. On the other hand, recent support is at $1992.80 (78.6% Fibonacci retracement level from $2009.50 to $1931.60) and $1991.50 (last Friday's low). If broken, the $1979.70 (61.8% Fibonacci retracement level) to $1976.40 (20-day moving average) range may temporarily support the decline in gold prices.

Consider going long on gold around $1998 today, with a stop loss at $1995 and targets at $2010 and $2015.

AUDUSD

Amidst the struggles of the US dollar last week, the Australian dollar continued to rise. Despite the Australian Purchasing Managers' Index hitting multi-month lows, the Aussie dollar found upward support. This can be attributed, in part, to hawkish remarks from Michele Bullock, the Governor of the Reserve Bank of Australia. Bullock emphasized that the challenges of inflation are increasingly driven by domestic factors, especially demand. She highlighted that monetary policy tightening is an appropriate response to demand-driven inflation. Although US Treasury yields have improved, the US dollar index seems to continue its downward trend. The increasing likelihood of the Federal Reserve refraining from further interest rate hikes intensifies risk factors, potentially weakening the US dollar. With the Reserve Bank of Australia maintaining a hawkish tone and reduced expectations of a Fed rate hike, the AUD has risen. In November, Judo Bank's Manufacturing PMI preliminary reading dropped to 47.7 from the previous month's 48.2. Judo Bank's Services PMI fell from 47.9 to 46.3, and the Composite PMI decreased from 47.6 to 46.4. Despite poor data, the AUD/USD currency pair continues to rise with support from the weakening US dollar, as positive sentiment in global markets suppresses the dollar.

The AUD/USD successfully held above 0.6500 (psychological level) and 0.6508 (38.2% Fibonacci retracement level from 0.6895 to 0.6270) last week, breaking above 0.6582 (50%) and the crucial resistance area of the 200-day moving average (0.6584), rebounding to a high of 0.6591 since August 10. Due to bullish momentum and improved sentiment, the currency pair may break above these levels in the coming trading days, laying the foundation for a potential rebound to 0.6600 (psychological level) and 0.6617 (high on August 10). This could potentially open the door for further upside to 0.6656 (61.8% Fibonacci retracement level) and 0.6723 (high on August 1). If sellers return and push prices below 0.6520 (mid-channel axis) and 0.6500, the AUD/USD may pull back to 0.6463 (20-day moving average). For the bulls, staunchly defending this bottom is crucial; failure to do so may bring downward pressure again, possibly leading to a decline to 0.6417 (lower channel line). If further weakness occurs, a retest of the 0.6400 region is possible.

Consider going long on the Australian dollar around 0.6555 today, with a stop loss at 0.6535 and targets at 0.6620 and 0.6635.

GBPUSD

Since hitting a low of 1.21 earlier this month, the GBP/USD exchange rate has returned to its highest level since early September, reaching 1.2615. In fact, supported by currency strength and the rare economic data, the pound's exchange rate is around 1.26 US dollars. The snapshot of the Purchasing Managers' Index (PMI) for November, released by the UK on November 23, unexpectedly showed growth in the dominant service sector. These latest data add more evidence that, despite not being fully charged, the momentum of the UK's economic development is certainly stronger than many feared at the beginning and middle of the year. Consumer confidence has also improved, leading to a timely rebound in the pound. Of course, inflation remains an issue for the Bank of England, but the latest data show a 5.7% year-on-year increase in core consumer prices in October, with a more pronounced deceleration trend. While this is down from May's increase of 7.1%, most forecasters expect further declines. Nevertheless, like many other countries, the UK interest rates may "remain at elevated levels for an extended period," providing ample support for the pound. However, there is still some bad news. New business orders remain sluggish, indicating that overall demand is at best still sporadic. Compared to other countries, productivity remains rather bleak, and the tax burden is close to the high point during peacetime. Given the lack of significant economic news in the coming week, some concerns may once again trouble the pound. Don't forget that its recent gains occurred in a market that was severely subdued due to the absence of many US trading desks during the holidays.

The daily chart shows that the relative strength index (RSI) indicator remains above 65, and the weekend closing exhibited a golden cross bullish pattern. The GBP/USD continues to trade above the 100-day moving average of 1.2497, reflecting a short-term bullish bias. Key support points are at 1.2454 (200-day moving average) and 1.2459 (38.2% Fibonacci retracement level from 1.3143 to 1.2037). Once the GBP/USD confirms these levels as support, its targets could be 1.2600 (trend resistance line extending from the high of 1.2271 on September 27) and 1.2720 (61.8% Fibonacci retracement level). On the downside, if the GBP/USD falls below 1.2500 (psychological level), 1.2454 (200-day moving average) can be considered the next support level before 1.2400 (psychological level and the low on November 15).

It is advisable to go long on the pound before 1.2565 today, with a stop loss at 1.2540 and targets at 1.2640 and 1.2650.

USDJPY

Japan's Consumer Price Index (CPI) released shows a slight rebound in the inflation rate. Although the overall inflation rate has risen again, the increase is lower than expected. Meanwhile, Japan's overall and core inflation rates have remained above the Bank of Japan's target of 2% for over a year. Additionally, a new round of significant salary increases by Japanese companies next year may stimulate consumer spending and demand-driven inflation. This has fueled speculation that the Bank of Japan is likely to end its negative interest rate policy in the first few months of 2024. Overall, this suggests that inflation pressures in Japan are easing. However, this has a limited impact on the Japanese yen. Japan's inflation data indicates that the Bank of Japan is currently unlikely to seek an exit from its ultra-expansive monetary policy. In the coming weeks, the USD/JPY trend is likely to remain almost entirely dependent on the US dollar. The Bank of Japan may not be dissatisfied with this, as it reflects low expectations for its monetary policy. Meanwhile, despite disappointing data from Japan's Manufacturing Purchasing Managers' Index (PMI), which has been in contraction for the sixth consecutive month in November, the USD/JPY remains below the week's high. The upside potential for this currency pair remains limited. The speculation about the Federal Reserve having completed rate hikes is growing, and a rate cut may begin in the first half of 2024, keeping the US dollar bulls on the defensive, slightly above the lowest levels since August 31 touched earlier last week.

From a technical perspective, the USD/JPY fell sharply from just below 150 to 147.15, a level not seen since September 12, at the beginning of last week. Mid-week, the US dollar rebounded, breaking above 149.00, and after reaching a weekly peak of 149.75, the USD/JPY encountered strong resistance near 149.88 (10-day moving average), 149.98 (4-hour chart 200-hour moving average), and 150.00 (psychological level). Following these levels is around 150.35 (daily chart lower boundary of the upward channel). If it continues to strengthen and breaks above the latter, it will offset any recent negative tendencies and push the USD/JPY to the 151.00 level. Bulls may eventually revisit the 32-year high of 151.94. On the other hand, any meaningful decline is likely to find some support around 149.00. If it breaks below this level, the USD/JPY could fall to the 148.00 (November 22 low) level. Subsequent selling pressure could push the USD/JPY towards the monthly oscillation low of 147.15 touched last Tuesday.

It is recommended to short the US dollar at 149.70 today, with a stop loss at 150.00 and targets at 148.60 and 148.50.

EURUSD

Last week, US macroeconomic data continued to underperform, indicating a gradual weakening of the US economy. This has strengthened speculation in the market that the Federal Reserve will end its rate-hiking actions. As a result, US bond prices rose, and the US dollar index continued to decline. Meanwhile, the Eurozone's Purchasing Managers' Index (PMI) for November showed some improvement, with the index rising from 43.4 to 43.8, surpassing the market's expected 43.1. The services index also increased from 47.8 to 48.2. Germany's Composite Purchasing Managers' Index rose from 45.9 to 47.1, exceeding expectations. The Euro/US Dollar sharply rebounded and remains in a highly bullish situation. After the explosive surge to 1.0965 on Tuesday, continuing from the high on August 11, the Euro against the US Dollar maintained its elevated position. The Euro/USD still maintains a constructive bias, with recent prices setting higher highs and higher lows, trading above key moving averages. It closed near the high at 1.0940 over the weekend. The technical outlook for this currency pair indicates that the bullish trend remains intact. Without significant macroeconomic data releases, risk sentiment may drive the Euro/USD trend this week.

On the daily chart, the Euro/USD showed a pattern of rise, fall, and rebound last week, reaching a high of 1.0965, the highest in three months. Currently, the upward momentum of the Euro is encountering some resistance around 1.0959 (61.8% Fibonacci retracement level from 1.1275 to 1.0448), 1.0965 (last week's high), and 1.0670 (trendline extending from the high on August 30 at 1.0855). However, the potential trend dynamics still appear bullish, indicating limited downside for the Euro. With a close near the high and the formation of a golden cross last weekend, coupled with the Euro/USD continuing to trade above the midline of the upward channel, and the relative strength index slightly above 50, reflecting insufficient bearish interest. On the upside, the Euro/USD needs to close above and effectively stay within the resistance zone composed of 1.0959-1.0965-1.0970 on the daily chart to clear obstacles for further upward movement. The targets to watch are 1.10 (psychological level) and 1.1079 (76.4% Fibonacci retracement level), with the next level at 1.1150 (high on July 27). Support levels are at 1.0855 (lower boundary of the upward channel). If this support is lost, the Euro may retrace towards 1.0811 (200-day moving average) and 1.0763 (38.2% Fibonacci retracement level).

It is advisable to go long on the Euro before 1.0915 today, with a stop loss at 1.0895 and targets at 1.0985 and 1.0995.

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