US Dollar Index

Progress in negotiations between the US and Iran to end the Middle East conflict put pressure on the US dollar. However, a final peace agreement has not yet been reached, and the market remains awaiting confirmation that the US will lift its military blockade. Last week, global currency markets showed a clear divergence. The US dollar index remained strong, near a six-week high, mainly influenced by geopolitical factors related to Iran, with rising concerns about potential energy disruptions pushing up inflation. Non-US currencies were generally under pressure, with the Japanese yen and Canadian dollar relatively weak, while the British pound showed some resilience. Traders focused on the possibility of a shift in Federal Reserve policy and the potential transmission effects of the Middle East situation on global economic growth. The US dollar performed poorly last week. Markets experienced fluctuations, and the geopolitical landscape was fraught with uncertainty. Until last Friday, there was still no clear news regarding a US-Iran agreement to end the Middle East conflict, or at least some clarity, particularly regarding the reopening of the Strait of Hormuz.

Against this backdrop, the US dollar index closed last week largely near the 99.00 low level seen on Monday, while US Treasury yields exhibited a mixed trend: short-term yields hit new highs, while medium- and long-term yields saw a corrective pullback. After months of consolidation near multi-month lows, the US dollar index may be entering a broader recovery phase. If inflation remains high and the Middle East conflict continues to disrupt energy markets, the likelihood of the dollar returning above the 100.00 level in the coming weeks will increase. Technically, the US dollar index remains capped by 99.52 (last week's high) and 100 (a psychological level), while support lies at 98.64 (the 20-day moving average) and 98.26 (the low of May 13th), but the latest price action increasingly resembles accumulation rather than exhaustion.

Today, consider shorting the US Dollar Index at 99.10, with a stop-loss at 99.20 and targets at 98.70 and 98.60.

WTI Crude Oil

WTI crude oil fell about 5% on Monday, nearing $90 a barrel, continuing last week's downward trend as a deal between the US and Iran neared completion. Reports indicate that the proposed agreement could lead to the reopening of the Strait of Hormuz, an end to hostilities, the release of some frozen Iranian assets, and further negotiations to curb Tehran's nuclear program. However, President Trump stated that Washington will maintain the strait's blockade until a formal agreement is reached, adding that he is not in a "rush" to reach a deal. A full reopening of the Strait of Hormuz would provide significant relief to major Asian economies and could substantially lower oil prices, as the waterway carries about one-fifth of the world's oil and liquefied natural gas cargoes. The dual blockade of the Iranian conflict and the Strait of Hormuz has severely disrupted global energy markets, forcing Middle Eastern producers to halt millions of barrels of crude oil production daily.

From a technical perspective, the WTI crude oil daily chart has shown clear signs of a high-level pullback. After a continuous rise in oil prices, technical indicators entered overbought territory, and Monday's sharp drop at the open signifies a significant reversal in market sentiment. The MACD has shown signs of a death cross at a high level, with the red bars continuing to narrow, indicating a significant weakening of upward momentum. The RSI indicator has also fallen rapidly from near overbought territory, reflecting that short-term bullish funds are withdrawing from the market. Overall, while the medium-to-long-term trend still maintains a high-level consolidation structure, short-term downward pressure has significantly increased. WTI is approaching the $90 mark on the daily chart, with a key support zone between $87 and $85. If this area is breached, oil prices may fall further to around $82. On the upside, the $95-$98 area has become a key short-term resistance level; if this level cannot be regained, bearish pressure may continue to increase.

Today, consider going long on crude oil at 89.40, with a stop-loss at 89.20 and targets at 91.00 and 92.00.

Spot Gold

Gold rose to $4,570 an ounce on Monday, recovering last week's losses as optimism about a potential US-Iran deal eased concerns about inflation and interest rate hikes. Reports indicated that a proposed agreement could reopen the Strait of Hormuz, end hostilities, release some frozen Iranian assets, and lay the groundwork for further negotiations to limit Tehran's nuclear program. However, President Trump stated that the US would continue to close the Strait of Hormuz until a formal agreement is reached. Despite Monday's rebound, gold is still down about 13% since the start of the Middle East conflict, as heightened concerns about an energy-driven inflationary shock have fueled market expectations that central banks may need to maintain tighter monetary policy. Investors also continue to assess the outlook for Federal Reserve policy after Fed Governor Christopher Waller stated that he no longer believes central banks should maintain an accommodative bias in their policy statements.

From the daily chart, spot gold is currently trading between the middle and lower Bollinger Bands. The middle band is around $4,604, and the lower band is around $4,451. The latest price is around $4,560, not far from the lower band, indicating that the short-term price has entered a relatively weak zone, but has not yet formed a valid break below the lower band. Structurally, gold prices have shifted from the previous rebound channel to a weak consolidation. In the MACD indicator, the DIFF is around -47.71, and the DEA is around -37.74, with the histogram still in negative territory, indicating insufficient momentum recovery. The technical picture does not support an overly optimistic interpretation. Unless the price returns above the middle band, the rebound is more likely to be seen as a correction rather than a new trend. The upper resistance is at the 21-day simple moving average at $4,608 and the 50-day moving average at $4,657, forming an upper supply band. On the downside, the short-term focus remains on the significant support zone formed by the $4,500 (psychological level) and $4,451 (lower Bollinger Band). A clear break below this zone could trigger a deeper decline.

Consider going long on gold today at $4,565, with a stop-loss at $4,550 and targets at $4,600 and $4,620.

AUD/USD

The Australian dollar rose above US$0.7170 on Monday, reaching its highest point in a week, as global risk sentiment improved following a near-agreement between the US and Iran. The proposed agreement would reopen the Strait of Hormuz, end hostilities, unfreeze some Iranian assets, and pave the way for further negotiations to limit Tehran's nuclear program. However, President Trump stated that Washington would maintain the strait's blockade until a final agreement is reached and that he would not be in a "rush" to reach one. In Australia, expectations for further monetary tightening by the Reserve Bank of Australia have diminished due to an unexpected rise in unemployment. The unemployment rate unexpectedly rose to 4.5% in April, up from 4.3% in March, marking its highest level in about four and a half years. According to financial market pricing provided by Westpac, the probability of a rate hike at the next meeting has fallen from 13% after the announcement to just 3%.

From a technical perspective, spot prices appear to have found support above the 38.2% Fibonacci retracement level of the recent corrective pullback, near the highest point since June 2022 reached earlier this month. Meanwhile, the Relative Strength Index (RSI) near 53 is slightly positive, and the slightly positive MACD convergence indicator suggests upward momentum is building. However, the exchange rate remains in a delicate balance, so it is wise to wait cautiously until follow-through buying appears above key moving averages to prepare for further appreciation. Subsequent upside may encounter immediate resistance at the psychological level around 0.7200, with higher resistance seen at 0.7270 (the May 13 high). On the downside, a break below the 23.6% Fibonacci retracement level of 0.7124 would expose the 23.6% Fibonacci retracement level of 0.7124, followed by stronger structural support around the 0.7100 level.

Consider going long on the Australian dollar today at 0.7158, with a stop loss at 0.7146 and targets at 0.7200 and 0.7220.

GBP/USD

GBP/USD rose in Asian trading on Monday, nearing 1.3500. The pair strengthened as market sentiment towards risk assets improved significantly due to increased hopes for a deal between the US and Iran. S&P 500 futures rose 0.85% to near 7,540 during Asian trading, reflecting strong investor demand for risk-sensitive assets. The dollar index, which tracks the dollar against six major currencies, fell 0.3% to near 99.00. However, pound bulls appeared hesitant given the serious leadership challenges facing UK Prime Minister Keir Starmer. This, coupled with the bullish trend of the US dollar, limited the upside potential of GBP/USD. Despite positive news, investors remained skeptical of a US-Iran peace agreement due to significant disagreements over Tehran's nuclear program and the standoff in the Strait of Hormuz. This, along with hawkish expectations from the Federal Reserve, supported the dollar and limited GBP/USD gains.

GBP/USD's rebound from a six-week low near 1.3300 was capped as selling pressure continued to linger above the 1.3480-1.3500 area. Despite later pressure, GBP/USD recorded weekly gains, reversing some of last week's sharp decline. At the start of the week, GBP/USD traded above around 1.3480. The pair extended its rebound, approaching the 14-day simple moving average of 1.3485, suggesting a slightly constructive short-term trend. A broader downtrend line, with breakout points near 1.3551 (May 13 high) and 1.3600 (psychological level), continues to limit the upside of the medium-term structure, while the Relative Strength Index (RSI) (14) is around 51, suggesting neutral momentum after the recent rebound from the lows. Support lies at the May 22 low of 1.3413; a daily close below this level would expose a deeper pullback risk, targeting the May 20 low of 1.3375.

Consider going long on GBP at 1.3490 today, with a stop loss at 1.3480 and targets at 1.3550 and 1.3560.

USD/JPY

The USD/JPY pair edged lower to around 158.80 in early Asian trading on Monday (May 25). Progress in negotiations between the US and Iran to end the Middle East conflict pressured the dollar and pushed the yen slightly higher. Despite this, a final peace agreement has not yet been reached, and the market remains awaiting confirmation that the US will lift its military blockade. This progress in US-Iran negotiations, coupled with reduced demand for the dollar as a safe haven due to easing tensions in the Middle East, is pushing the USD/JPY pair slightly lower from recent highs. Traders remain highly vigilant as the USD/JPY approaches the key level of 160.00 again. This level is widely seen as a "warning line" for potential intervention by Japanese authorities in the foreign exchange market—back on April 30, the authorities intervened for the first time in nearly two years, injecting approximately $34.5 billion after the exchange rate broke through 160.72. Japanese Finance Minister Katsunobu Kato reiterated last week after the G7 finance ministers' meeting that Japan is ready to act on excessive foreign exchange volatility, while emphasizing that any intervention would be carried out in a manner that does not push up US Treasury yields.

From the daily chart, the USD/JPY is currently trading around 158.80, in a consolidation phase after a continuous rise. Several technical indicators show bullish signals, but momentum has slowed. Regarding the moving average system, the short-term moving averages MA20 (158.11) and MA50 (158.75) are both below the current price, forming short-term support; MA100 (157.55) and MA200 (154.81) are significantly lower than the current price. This bullish alignment of "price above all major moving averages" suggests that USD/JPY remains in an uptrend. It's worth noting that the price has been steadily trading above the MA50 since breaking through it in early May, indicating that the upward structure remains intact. However, the price has encountered resistance multiple times in the 160.00 (psychological level) - 160.72 (recent high) area, indicating that upward resistance is strengthening. On the downside, consider the 158.00 (psychological level) and 157.57 (historical low and 100-day moving average).

Today, consider shorting the US dollar at 159.10, with a stop loss at 159.30 and targets at 158.40 and 158.20.

EUR/USD

The EUR/USD opened with a bullish gap at the start of the new week, as renewed optimism about a potential US-Iran peace deal weighed on the safe-haven dollar. Spot prices rebounded during the Asian session, near the mid-range of 1.1600, with the EUR/USD exchange rate rising to 1.1645, up 0.37% from the previous trading day. Over the past month, the EUR/USD exchange rate has fallen by 0.65%, but has risen by 2.27% over the past 12 months. Historically, the EUR/USD exchange rate reached its all-time high of 1.87 in July 1973. The euro as a currency only began circulating on January 1, 1999. However, by considering weighted averages of previous currencies, it is possible to model synthetic historical prices from much earlier periods. However, caution is still advised regarding the overall situation, and it's best to avoid prematurely betting on a continuation of the modest rebound from the April 7th low of around 1.1575 reached last Thursday.

From a technical perspective, EUR/USD remains above the 23.6% Fibonacci retracement level of the April-May decline. Furthermore, the Relative Strength Index (RSI) is around 46, and the Moving Average Convergence Divergence (MACD) indicator is slightly positive, suggesting improved momentum. This supports the possibility of further appreciation during the session, although hawkish Fed bets may limit the dollar's decline and suppress spot prices. Therefore, any further gains are more likely to encounter immediate resistance near the 1.1660 (last week's high) level, at which point the current bearish technical logic will fail, and a reversal will occur, initially targeting the 1.1700 (psychological level). A break above this level would target the 1.1787 (May 12th high) level. On the downside, near-term support is at the psychological support level of 1.1600, with deeper support at 1.1577 (the lower Bollinger Band) and the 1.1500 level area.

Today, consider going long on the Euro at 1.1628, with a stop-loss at 1.1615 and targets at 1.1680 and 1.1690.

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.