US Dollar Index

The US dollar index hovered above 99 on Wednesday, after experiencing volatility earlier in the week, as investors continued to assess the prospects for a US-Iran peace deal amid renewed tensions in the Middle East. President Donald Trump stated that negotiations aimed at extending the ceasefire and reopening the Strait of Hormuz were underway, while Secretary of State Marco Rubio warned that any final agreement could still take days to reach. The US military stated it conducted a self-defense strike in southern Iran, while the Iranian Revolutionary Guard claimed it targeted an F-35 fighter jet and several drones for allegedly entering Iranian airspace. Meanwhile, Treasury yields continued to decline as markets lowered expectations for a near-term Federal Reserve rate hike. Investors' focus now shifts to upcoming personal consumption expenditure inflation data for further clues about the Fed's future policy direction.

Market news indicates that uncertainty remains in the US-Iran peace negotiations. Although the dollar index briefly fell to around 98.90, it subsequently found support, suggesting that the bears have not established sustained downward pressure. From a daily chart perspective, the RSI (14) indicator shows a bullish trend but weakening momentum, having fallen from its high to around 54. Bullish momentum has weakened, and the index has entered a period of equilibrium. The US dollar index previously formed a low in the 97.60-97.80 range, subsequently rebounding to around 99.5, and is currently fluctuating around the 99 level. The US dollar index remains above the Bollinger Band middle line at 98.67 and the simple moving average at 98.58, indicating that the short-term recovery structure has not yet been broken. However, resistance is clearly visible near 99.52 (the high of May 21st) and 99.67 (the upper Bollinger Band).

Today, consider shorting the US Dollar Index at 99.32, with a stop-loss at 99.45 and targets at 98.90 and 98.80.

WTI Crude Oil

WTI crude oil fell more than 4% on Wednesday, breaking below $89 a barrel and hovering near a five-week low, as market optimism rose regarding a possible peace agreement between the US and Iran, despite conflicting signals from both sides. Iranian state television reported an informal draft agreement to end the war, while the White House dismissed the report as “completely fictitious.” The potential reopening of the Strait of Hormuz, which typically carries about 20% of global oil and liquefied natural gas supplies, could significantly alleviate pressure on global energy markets. However, key issues remain unresolved, including Iran’s frozen assets and guarantees of navigation through the strait. Iranian officials said indirect negotiations with Washington are continuing, while US Secretary of State Marco Rubio warned that any agreement could still take days. The Strait of Hormuz remains largely closed, although two non-Iranian supertankers transited the strait for the first time in a week on Tuesday. Uncertainty surrounding the Strait of Hormuz remains the dominant short-term factor. Global crude oil inventories, OPEC+ spare capacity, and demand prospects provide a buffer, but the resumption of navigation through the strait, logistical bottlenecks, and tanker capacity will be key variables. Even if an agreement is ultimately reached, full supply normalization will take time, and oil prices may remain volatile within a higher range.

Technically, oil prices have found effective support near the key psychological level of $88.00 and the 75-day simple moving average area of ​​$88.48, a level where cost curves, historical lows, and multiple technical indicators converge. A break below this level would test the $86.00 mark, while on the upside, watch the $93.83 (last week's low) and the $97.20 (20-day simple moving average) area; overall, prices are expected to fluctuate widely between $88 and $105, with geopolitical news being the primary catalyst.

Today, consider going long on crude oil at 88.15, with a stop loss at 88.00 and targets at 90.00 and 91.00.

Spot Gold

On Wednesday, gold prices hovered near $4,500 per ounce, pressured earlier in the week as investors remained cautiously optimistic about the possibility of a peace agreement between the US and Iran, despite renewed tensions in the Middle East. President Donald Trump stated that negotiations to extend the ceasefire and reopen the Strait of Hormuz were ongoing, while Secretary of State Marco Rubio warned that any final agreement could still be days away. Meanwhile, the US military stated it conducted a self-defense strike in southern Iran, while the Iranian Revolutionary Guard claimed to have fired upon F-35 fighter jets and multiple drones allegedly entering Iranian airspace. Despite this, gold prices remain nearly 15% lower than at the start of the conflict, as concerns about an energy-driven inflationary shock have increased expectations that major central banks may maintain tight monetary policy for a longer period.

In addition to macroeconomic factors, the technical outlook for the gold market is also bearish. Vikoff points out that short-term chart signals triggered some technical selling, with investors taking profits near key resistance levels, further amplifying the price decline. Overall, the gold market is currently under pressure from both interest rate hike expectations and geopolitical conflicts. In the short term, a stronger dollar, a high-interest-rate environment, and technical selling together create significant downward pressure, with significant resistance above $4,500. However, the complexity and uncertainty of the Middle East situation still provide potential support for gold. This week's gold price movement largely depends on the market's reaction to the long-term Fibonacci retracement level of $4,541.80. If the price holds above this level, the next target is $4,744.34; if it continues to fall below this level, it means that selling pressure is dominant and buying power is insufficient, and the price may gradually test $4,454 (the low of May 20th) and $4,436 (the lower Bollinger Band). Only the strong support level of $4,381 (the 200-day moving average) remains as the last important support level.

Consider going long on gold at 4,455 today, with a stop loss at 4,450 and targets at 4,500 and 4,520.

AUD/USD

The AUD/USD pair rose for the second consecutive day, trading around 0.7160 in Asian trading on Wednesday. The pair fell as the Australian dollar weakened following the release of domestic inflation data. Data released by the Australian Bureau of Statistics on Wednesday showed that the Consumer Price Index (CPI) rose 4.2% year-on-year, lower than the market consensus of 4.4%. The Reserve Bank of Australia's core CPI, excluding extreme values, rose 0.3% month-on-month and 3.4% year-on-year in April. With safe-haven demand waning and the US dollar weakening slightly, the downside for AUD/USD may be limited, as traders remain hopeful that the US and Iran may reach an agreement despite tensions in the Middle East. The US military confirmed a self-defense strike in southern Iran, while the Iranian Revolutionary Guard claimed it hit US F-35 fighter jets and several drones suspected of violating Iranian airspace. The Iranian Revolutionary Guard also stated that it reserves the right to carry out "legitimate and explicit" retaliation against any US violation of the ceasefire.

The AUD/USD exchange rate is trading between its short- and medium-term trend references, below the 20-day simple moving average (0.7189) but still above the 50-day simple moving average (0.7102), keeping the recent movement broadly neutral. The 14-day Relative Strength Index (RSI) is around 50, indicating a lack of direction after the recent pullback from overbought territory, suggesting that prices may consolidate rather than immediately continue their trend. AUD/USD is currently testing immediate resistance at the 20-day simple moving average (0.7189). A successful break above this short-term moving average is expected to boost upward momentum. This potential strength could support a move towards the upper boundary of its current rectangular range around 0.7270, with the next major target at 0.7277, the high from May 6th. Conversely, a pullback in AUD/USD could expose the pair to the 23.6% Fibonacci retracement level at 0.7124. If this support level is broken, the exchange rate may test the 50-day simple moving average at 0.7102.

Consider going long on the Australian dollar today at 0.7130, with a stop loss at 0.7120 and targets at 0.7180 and 0.7200.

GBP/USD

The GBP/USD pair attracted some bargain hunting during Wednesday's Asian session, halting the previous day's pullback from near a two-week high, just above the psychological level of 1.3500. The spot price is currently trading around the mid-1.3400 range, although upside appears limited against the backdrop of ongoing geopolitical uncertainty. The latest US attack on Iran has dampened hopes for an impending agreement to end the three-month-long Middle East conflict. The Iranian Foreign Ministry condemned the US attack, saying it violated the ceasefire agreement that has been in effect since early April. Furthermore, the Islamic Revolutionary Guard Corps (IRGC) has threatened retaliation, and geopolitical risk premiums persist. These factors, coupled with hawkish expectations from the Federal Reserve, are likely to continue to drive the safe-haven dollar and limit the gains of the GBP/USD pair. In addition, political turmoil in the UK and increasing calls for Prime Minister Keir Starmer's resignation, in the absence of relevant market-driven macroeconomic data from either the UK or the US, have also prompted investors to remain cautious about further appreciation of the GBP/USD pair.

GBP/USD is trading around 1.3440. The pair continues its rebound, approaching the 5-day simple moving average at 1.3453, indicating a slightly constructive short-term trend. A broader downtrend resistance line, broken at around 1.3612, still limits the upside of the medium-term structure, while the Relative Strength Index (RSI) (14) is around 49, suggesting neutral momentum after the recent rebound from the lows. On the downside, the May 22 low of 1.3413 is a key support level; a daily close below this level would expose the risk of further pullback, targeting the May 20 low of 1.3375. The initial resistance level is defined by the breakout area of ​​the downtrend line around 1.3612. Only a clear break above this resistance would indicate sufficient momentum for the bulls to push prices further up to 1.3700.

Consider going long on GBP at 1.3420 today, with a stop loss at 1.3410 and targets at 1.3480 and 1.3490.

USD/JPY

USD/JPY fell below 159 against the dollar on Wednesday, hovering near a one-month high, after Bank of Japan Governor Kazuo Ueda warned of escalating inflation risks but did not hint at a possible rate hike at the next monetary policy meeting. Ueda emphasized the need to closely monitor the impact of rising oil prices on Japan's underlying inflation trend, although he offered little guidance on how these pressures would affect next month's policy decision. Meanwhile, Bank of Japan Deputy Governor Ryozo Himeno reiterated the central bank's commitment to further rate hikes, while emphasizing that the timing and pace would depend on the impact of the Middle East conflict on Japan's economic and inflation outlook. Investors also continue to focus on developments in the Middle East, as signs of progress on the US-North Korea-Iran agreement are overshadowed by renewed hostilities, making the overall outlook more uncertain.

The dollar traded at 159.40 against the yen, having recovered about two-thirds of the ground lost after the suspected intervention on April 30. Momentum indicators are neutral to bullish. The 14-day Relative Strength Index (RSI) has begun to rise above the key 55 level. The Moving Average Convergence Divergence (MACD) indicator remains slightly negative but is close to zero. Bulls may encounter significant resistance around Wednesday's high of 159.60, followed by the 160.00 level, which is considered the trigger point for Tokyo's intervention. A break above this level would shift focus to the April 30 high of 160.72. Initial support lies in the 158.65-158.75 range, which supported the pair last week. A break below this area would entice bears to attack the previous resistance zone around 158.00, and subsequently challenge the May 14 low of 157.30.

Consider shorting the US dollar today at 159.65, with a stop loss at 159.80 and targets at 158.70 and 158.60.

EUR/USD

On Wednesday, EUR/USD was flat around 1.1635. However, renewed tensions in the Middle East following Iran's threat of retaliation for attacks on US launch sites and ships could limit upside for the major currency pair. Tensions between Washington and Tehran have escalated again after US President Trump stated that negotiations with Iran to extend the ceasefire and reopen key waterways are underway. Uncertainty and signs of ongoing conflict in the Middle East could boost safe-haven currencies like the US dollar and put downward pressure on the major currency pair. On the other hand, hawkish comments from the European Central Bank could support the euro. European Central Bank (ECB) policymaker François Villeroy de Gallo said on Tuesday that the central bank "will take necessary measures" to maintain its inflation target. ECB Governing Council member Isabelle Schnabel noted that even if a peace agreement is reached with Iran, the central bank should raise interest rates in June, as the conflict has lasted far longer than expected and high energy prices are impacting the broader economy.

From a technical perspective, the euro/dollar exchange rate is holding 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) is slightly positive, suggesting improved momentum. This, in turn, supports further intraday appreciation, although hawkish bets from the Federal Reserve may limit dollar losses and suppress spot prices. Therefore, any subsequent gains are more likely to encounter immediate resistance near the Fibonacci retracement level, around the 1.1675-1.1680 area. Next is the confluence point at 1.1710, which includes the 200-period simple moving average and the 50% retracement level on the 4-hour chart. This area should limit the short-term bias, and a break above it could see EUR/USD target the 61.8% retracement level around 1.1740. On the downside, immediate support is at 1.1600 (psychological support level); deeper support lies at 1.1577 (lower Bollinger Band) and the 1.1500 area. A break below this level would reopen a broader bearish phase.

Consider going long EUR/USD today at 1.1620, with a stop loss at 1.1610 and targets at 1.1670 and 1.1680.

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