US Dollar Index

On Monday (November 27), both the October existing home sales prices and the November Dallas Fed Business Activity Index, released by the United States, fell into negative territory, dropping by 17.6% and 19.9% respectively. This further highlights the impact of the interest rate hike. In the US market, the US Dollar Index experienced a decline. Last week, initial jobless claims once again decreased, signaling that the labor market appears to be entering a sustained cooling phase. However, the data from last week will keep market participants on edge in the face of upcoming employment and inflation data next month. A robust labor market will continue to keep demand at elevated levels, leading to inflation, which is a cause for concern. However, last week's report had a positive impact on the demand side, as it showed a decline in employment numbers for US service providers and manufacturers due to lukewarm demand and rising costs, marking the first occurrence in November since mid-2020. It is expected that market participants will continue to be unpredictable after each data release before the next Federal Reserve meeting, which may provide more clarity. For the market, there is still a belief that the road ahead will be challenging, and the US Dollar Index may face difficulties entering 2024.

From a technical perspective, the initial reaction to the data is that the US Dollar Index edged slightly lower to the key support area between 103.40 and 103.00. In the bigger picture, the US Dollar Index is stuck between 103.17 (low on November 21) and the 100-day moving average of 104.24 but is attempting to break below and close below the November 21 low of 103.17. However, in the short term, the key support area is at 103.00 (psychological market level) and 102.93 (low on August 30), posing a greater threat for the US Dollar to further decline to 102.53 (61.8% Fibonacci retracement level from 99.57 to 107.34). As for the potential for an upward trend, direct resistance is at 104.00 (psychological market level), 104.21 (high from last week), and 104.24 (100-day moving average), with the next level at the psychological level of 105.00. However, this depends on a significant change in the fate of the US Dollar early this week.

Today, it may be considered to short the US Dollar Index near 103.40, with a stop loss at 103.60 and targets at 103.00 and 102.85.

WTI Crude Oil

Yesterday, WTI spot crude oil opened slightly lower with a gap, maintaining around $75 per barrel. Investors are awaiting the OPEC+ meeting later this week to reach an agreement on supply limits through 2024. Last week, the ministerial meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), was postponed to November 30 to resolve disagreements among African producers on production targets, leading to a sharp drop in oil prices. Over the past week, the possibility of further OPEC+ production cuts has shifted from almost zero to a real possibility. Nevertheless, traders are approaching the upcoming meeting with extreme caution. Market alertness largely stems from the recent chaotic behavior of OPEC, which, without official explanation, delayed the meeting by four days and moved it online, blaming disputes among African member countries over quotas. If Saudi Arabia and Russia simply extend the current measures (unilateral cuts of 1.3 million barrels per day) until early 2024, oil prices could decline. If other member countries cut production, it may regain bullish momentum, but coordination will be challenging.

On the weekly chart, WTI crude oil closed with a doji star at a low level last week, and short-term strength or weakness is temporarily unclear. However, due to a bearish death cross closing on the daily chart over the weekend, oil prices may continue to seek lows early this week. The initial downside targets are 73.80 (low on November 22) and 72.35 (low from last week). On the other hand, the daily chart is forming a bullish ascending triangle pattern, and the relative strength index (RSI) shows signs of divergence, suggesting a potential rebound or even a reversal to the upside. A sign of a reversal in the uptrend is if prices can consistently return above 77.10 (high from last Friday) and 77.85 (200-day moving average), and further break through 78.48 (resistance line of the ascending triangle), giving oil prices a chance to challenge the $80.00 (psychological market level) level again.

Today, it may be considered to go long on crude oil near 74.70, with a stop loss at 74.40 and targets at 76.00 and 76.50.

Spot Gold

On Monday, as the U.S. real estate industry continues to grapple with rising mortgage rates and price increases, the gold market maintained a robust uptrend above a key resistance level. Spot gold broke through the $2010 mark, reaching a high of $2018. Currently, gold is showing a slight increase in a calm market, seemingly poised to fluctuate above $2000 per ounce. This marks the fourth time this month that gold has tested the $2000 level, but due to a lack of fundamental driving factors and low trading volumes in the latter part of last week, gold struggled to stabilize above this crucial level. Although significant data will be released this week, whether gold can stabilize above $2000 may depend on a steady decline in U.S. bond yields. Investors will continue to closely monitor speeches by Federal Reserve officials leading up to the quiet period before the December 2nd policy meeting. Fed Chairman Powell is scheduled to speak on Friday. The Chicago Mercantile Exchange's FedWatch tool indicates a 22% probability that the market is pricing in the likelihood of the Fed maintaining policy rates unchanged at 5.25%-5.5% until June of next year. If Fed policymakers deny market pricing and attempt to clarify that a rate cut is not being considered over a longer period, the U.S. dollar may gain support, making it difficult for gold to build bullish momentum.

The daily chart for gold maintains a positive outlook and may once again test the recent high of $2018. The 20-day moving average (1977), along with the 34-day (1966) and 180-day (1951) averages, are now acting as support, with the previous level at $1987.50 per ounce also receiving support this week. The relative strength index (RSI) is plateauing around 65 in technical indicators, indicating that although gold maintains a bullish bias, momentum is still challenging to accumulate. The key support is at $2000 (psychological market level). Once gold confirms this as a support level, technical buying may come into play. In this scenario, the next bullish targets could be $2018 (Monday's high) and $2041 (May 11th high). If gold falls below the $2000 mark, the first support area to watch is $1992.80 (78.6% Fibonacci retracement level from $2009.50 to $1931.60) and $1991.50 (last Friday's low). Below that, the $1979.70 (61.8% Fibonacci retracement level) to $1977.00 (20-day moving average) range may temporarily ease the downward pressure on gold.

Today, it may be considered to go long on gold near $2010, with a stop loss at $2006 and targets at $2022 and $2026.

AUDUSD

At the beginning of the week, the AUD/USD continued its upward trend, supported by a decline in the US dollar. The pair is currently trading above 0.66. Last week, the November Standard & Poor's Global Composite Purchasing Managers' Index (PMI) for the United States remained at 50.70. Meanwhile, the November Services PMI rose from October's 50.6 to 50.8, while the Manufacturing PMI decreased from 50.0 to 49.4. Economists anticipate a significant slowdown in overall economic growth this quarter as the lagging effects of the Federal Reserve's rate hikes begin to have a greater impact. The market believes that the Fed will not raise rates in December and expects the Fed to introduce four rate cuts in May 2024. This, in turn, has weighed on the US dollar, becoming a "tailwind" for the AUD/USD currency pair. On the Australian dollar side, the hawkish stance of the Reserve Bank of Australia (RBA) has boosted the Aussie. Additionally, the optimistic outlook for the real estate industry in China, supported by the Chinese government, has also strengthened investor confidence. In other words, the positive outlook for the Chinese economy continues to support the Australian dollar.

On the daily chart, the AUD/USD rose to 0.6589 early last week and touched 0.6590 just over the weekend, reaching its highest level in three months but was held below 0.6615 (upper channel line) and 0.6620 (220-day moving average). At the same time, the RSI indicator is around 65, indicating that there is still momentum in the AUD/USD. Having faced resistance several times near the 0.6500-0.6522 region since August, caution should be exercised as the AUD/USD may lack further upward momentum and return below 0.65. The expected support below is at 0.6500 (psychological market level) and 0.6473 (20-day moving average), with the next level of support at 0.6417 (lower channel line). If it softens further, a retest of the 0.6400 region is possible. Resistance levels to watch are 0.6615-0.6620, with significant resistance at 0.6656 (61.8% Fibonacci retracement level) and 0.6723 (high on August 1).

Today, it may be considered to go long on the Australian dollar near 0.6585, with a stop loss at 0.6565 and targets at 0.6640 and 0.6655.

GBPUSD

At the beginning of the week, GBP/USD was trading just above 1.26, attempting to extend gains for the third consecutive trading day. Hawkish comments from Bank of England officials provided upward support for GBP/USD. The Bank of England remains steadfast in its fight against inflation, and Governor Andrew Bailey's recent hawkish remarks emphasized the necessity of raising rates over a longer period. Positive UK Purchasing Managers' Index (PMI) data released last Thursday boosted GBP/USD. Signs of a turnaround in business activities in the UK were evident as the November Standard & Poor's Global/CIPS Services PMI and Composite PMI, after three consecutive months of contraction, expanded. The Services PMI and Composite PMI returned to the expansion zone, breaking expectations of stagnation. However, the Manufacturing PMI improved but remained below the expansion threshold. On the consumer front, the November GfK Consumer Confidence Index showed a smaller-than-expected decline. There are no significant and market-moving data releases from the UK this week, so market participants may focus on speeches from Bank of England officials.

On the daily chart, GBP/USD aims to continue its upward trend, gaining further momentum after confirming a breakout from an ascending triangle on November 14. The Relative Strength Index (RSI) continues to stand strong above the 65 level, and GBP/USD is trading above all major simple moving averages, including the 20-day (1.2380), 100-day (1.2494), and 200-day (1.2457). The bullish bias for GBP/USD remains unchanged. However, GBP may encounter initial resistance near 1.2650. Further upside potential may see GBP/USD testing the October 30 high at 1.2735 and 1.2720 (61.8% Fibonacci retracement level from 1.3143 to 1.2037). On the downside, the 100-day and 200-day moving averages (1.2494 and 1.2457, respectively) provide strong support. If GBP/USD consistently falls below these levels, it may trigger a new downtrend towards 1.2400 (psychological market level and the low on November 15). The final line of defense for GBP/USD is at 1.2300 (psychological market level) and 1.2298 (23.6% Fibonacci retracement level) area.

Today, it is suggested to go long on GBP near 1.2600, with a stop loss at 1.2580 and targets at 1.2660 and 1.2670.

USDJPY

At the beginning of the week, Japan released the October Corporate Services Price Index (CSPI) with a year-on-year increase of 2.3%, surpassing the expected 2.1%. USD/JPY maintained a range-bound and oscillating trend around 149.00 for several trading days, and it currently trades below 149.00. As there are no significant data releases from Japan this week, USD/JPY remains influenced by fluctuations in the US dollar. The minutes of the November Federal Reserve meeting revealed that Fed members need more evidence to prove that inflation is cooling before they can be convinced that inflation is continuing to decline towards 2%. The Fed's less hawkish stance has suppressed US bond yields, dragging down the US dollar. On the other hand, Japanese inflation data suggests that the Bank of Japan is unlikely to seek an exit from its super-expansive monetary policy for the time being. The national Consumer Price Index (CPI) for October was 3.3%, up from 3.0% in September. The national core inflation, excluding food and energy, eased from 4.2% to 4%. Core inflation, excluding fresh food, was 2.9%, compared to the previous value of 2.8%. Market participants will be watching US housing data on Tuesday. Later in the week, the focus will be on US economic growth data on Wednesday and Personal Consumption Expenditures (PCE) inflation data on Thursday. The annualized expected growth of the US GDP for the third quarter is 5%. These data points will provide a clear direction for USD/JPY.

From a technical perspective, USD/JPY seems to be oscillating below 150 (psychological market level) for the second consecutive week. The currency pair appears to face resistance near 150.10 (14-day moving average), 150.00 (200-hour moving average on the 4-hour chart, and psychological market level). The 50-day moving average (149.63) previously acted as dynamic support but has now turned into dynamic resistance, limiting the upside for the currency pair. If US economic growth and inflation data disappoint this week, we may see USD/JPY decline again. The initial target is around 148.00 (low on November 22). Subsequent selling pressure could push USD/JPY towards the monthly oscillation low near 147.15 touched on November 21. On the contrary, a sustained strong move above 150.00-150.10 would offset any recent negative tendencies and push USD/JPY up to the 151.00 level. Bulls could ultimately aim to retest the 32-year peak around 151.94.

Today, it is suggested to go short on USD near 148.80, with a stop loss at 149.10 and targets at 147.60 and 147.50.

EURUSD

At the beginning of the week, EUR/USD experienced a slight increase. The rise is attributed to the rebound in demand for the euro, with EUR/USD currently trading just above 1.09. The German economy has seen a mild slowdown in the second half of the year. Last Friday, the statistics bureau reported a 0.1% contraction in Germany's Gross Domestic Product (GDP) for the third quarter on a quarterly basis and a 0.4% contraction on an annual basis, compared to the previous decline of 0.3%. European Central Bank (ECB) Vice President Luis de Guindos stated last Friday that the risks to the economic outlook in Europe lean towards the downside. In the coming months, inflation may rise again, but keeping interest rates at current levels for a longer period can control inflation. The downside risks faced by the German economy, the largest in Europe, could exert selling pressure on the euro and act as a bearish factor for EUR/USD. Additionally, the German Constitutional Court ruled last week that reallocating unused debt originally allocated during the COVID-19 pandemic to current spending plans is illegal. This has created a funding gap of 60 billion euros in the government budget, with a particularly severe impact on climate policies.

On the daily chart, EUR/USD is poised to continue its upward trend but needs to break through resistance at 1.0959 (61.8% Fibonacci retracement level from 1.1275 to 1.0448) and 1.0965 (last week's high) to confirm the upward momentum. EUR/USD is trading above all moving averages, with the bullish 20-day moving average (1.0768) approaching the flat 100-day and 200-day moving averages, converging in the price range of 1.0790 to 1.0810. Finally, technical indicators have stabilized in positive territory after consolidating overbought conditions. Once EUR/USD surpasses 1.0960 and 1.0965, it will test bearish forces around 1.1000. Further breakthroughs could lead to resistance at 1.1079 (76.4% Fibonacci retracement level) and 1.1150 (high on July 27). Meanwhile, if EUR/USD significantly falls below the 200-day moving average support at 1.0810, it may initially decline to 1.0763 (38.2% Fibonacci retracement level) and then towards the 1.0700 (psychological market level) region.

Today, it is suggested to go long on EUR near 1.0930, with a stop loss at 1.0910 and targets at 1.0995 and 1.1030.

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