US Dollar Index

Heading into the weekend, the US Dollar Index (DXY) climbed to an 18-month high of 103.44, as the market began pricing in the possibility of a 50-basis-point (bps) rate hike by the Federal Reserve in December. The strength in the DXY does not stem from a consensus that a 50-bps hike has become the "base case," but rather from the fact that such a move—previously considered off the table—has now emerged as a subject of discussion. The mere introduction of this "tail risk" has been sufficient to trigger a repricing of the US dollar. Although the probability of a larger-than-expected Fed rate hike in December remains quite low, it has nonetheless provided a significant boost to the dollar.

The market’s repricing was driven more by comments from Fed Governor Waller—made prior to the release of the CPI data—than by the data itself. The Overnight Index Swap (OIS) market has begun to price in some risk of a 50-bps hike on December 9. However, many analysts remain skeptical of a 50-bps move, arguing that most Fed officials would likely view a 25-bps hike as offering a better risk-reward profile; they further note that a scenario involving a "strong non-farm payrolls report combined with a rebound in crude oil prices" could potentially pave the way for more aggressive tightening. From a technical perspective, the prevailing bullish trend suggests further upside toward the 104.00 level. The gap between the market’s current pricing (which accounts for a potential 50-bps hike) and the baseline expectations held by many institutions will likely be reconciled by upcoming non-farm payrolls data and oil price movements. Until then, the strength in the DXY is better understood as a reaction to the introduction of a "tail risk" rather than a confirmation of a new "base case" scenario.

Last week, the US Dollar Index experienced an inflation-driven bullish breakout. Following the release of US CPI and core CPI data for October—both of which exceeded expectations—and a chorus of hawkish remarks from several Federal Reserve officials, the index surged to reach an 18-month high of 103.24. It subsequently consolidated at these elevated levels, ultimately closing above 103. The weekly candle formed a solid bullish bar, signaling a clear upward shift in the index's overall trajectory. Weekly Chart: The price has moved above all short-term moving averages, which are now aligned in a bullish (upward-sloping) configuration. The MACD shows sustained volume above the zero line, confirming a bullish trend. The RSI has risen into a strong zone but has not yet reached extreme overbought levels, leaving room for further upside. Daily Chart: The price has trended upward for several consecutive days, supported by the 20-day moving average. Following a breakout above a previous high, it has entered a "pullback-for-confirmation" phase—suggesting that a technical correction could occur at any time, rather than a one-sided, relentless rally. The primary market theme this week has been a repricing of the Federal Reserve’s tightening path: a 25-basis-point rate hike in December has become the baseline expectation, with the market even beginning to price in the possibility of a 50-basis-point hike. Rising two-year U.S. Treasury yields have widened interest rate differentials, strengthening the U.S. dollar. From a technical perspective, this represents a classic "fundamental catalyst + trend breakout" scenario; the absence of a sharp collapse following the breakout indicates strong buying interest, though the overbought condition signals an increased risk of a pullback.

Technical Outlook for Next Week: Two scenarios are most likely: either the market will digest the overbought conditions through time (via sideways consolidation), or the price will pull back to reset technical indicators. A direct, sustained, and aggressive rally is less probable. The daily chart shows that after breaking above the 10-day and 20-day moving averages (forming a "golden cross") and clearing the upper boundary of a bearish channel, the daily indicators have shifted to a fully bullish configuration. This pushed the price toward 103.44—an 18-month high—effectively completing a retracement of the previous correction phase. This move was further supported by a "double bear trap" that emerged last week at the 101.99 Fibonacci level (the 38.2% retracement of the 96.44–102.72 range). Given the current fundamental backdrop, the U.S. dollar appears poised for further gains, with key resistance—and a potential target—located in the 104.15–104.40 range (corresponding to the high from March 28, 2025, and the 61.8% Fibonacci level). Next is the 104.62 level (the high from March 26, 2025). Meanwhile, the bulls may take a brief breather to prepare for another push upward; the 102.63 area (5-day moving average) and the 102.07 level (the middle line of the Bollinger Bands) are expected to limit any pullback.

For today, one might consider shorting the USD at 103.52, with a stop-loss at 103.60 and targets at 103.00 and 102.80.

AUD/USD

Last week, the Australian dollar hovered just below the $0.6800 mark, remaining at its lowest level since late January, as the USD strengthened amid growing expectations for Federal Reserve interest rate hikes. Following U.S. inflation data for October that accelerated more than anticipated—coupled with signals from policymakers that they are prepared to tighten policy more aggressively—market expectations for a 50-basis-point hike by the Fed in December have surged. In contrast, weak housing data and a sharp decline in Australian consumer and business confidence have led traders to all but rule out further rate hikes by the Reserve Bank of Australia (RBA) in December. The RBA has already raised rates five times this year, pushing the cash rate to 4.85%—an 18-year high. Market pricing now suggests an 82% probability that interest rates have peaked, with a 25-basis-point rate cut fully factored in by the end of 2027. Meanwhile, a broad sell-off in global equity markets has added pressure on the risk-sensitive Australian dollar.
The AUD/USD pair extended its losses last week, trading just below $0.6800, having previously dipped to a low of 0.6772—its weakest level since the beginning of the year. As the economy slows, market expectations for further interest rate hikes by the Reserve Bank of Australia (RBA) have cooled. However, with the trimmed-mean inflation rate reaching 3.7% year-on-year in the third quarter—exceeding the upper bound of the 2%–3% target range—and services inflation posting its strongest annual gain since the start of 2024, the central bank is likely to remain cautious. For the RBA, the central theme in the coming months will be "patience" rather than "action." While the threshold for further rate hikes has risen due to the economic slowdown, the conditions for a meaningful shift toward lower interest rates are far from being met—at least until there is clear evidence that services inflation is easing. Although market expectations for additional hikes have moderated, any pricing in of rate cuts will require more compelling data from the services sector. The RBA finds itself in an awkward position: slowing growth argues against further tightening, while persistent inflation precludes any signal that rates have peaked. Consequently, the coming months are more likely to be characterized by patience than by policy moves. In the broader global context, both the Federal Reserve and the Bank of Japan are leaning toward rate hikes, and while falling oil prices have helped temper headline inflation, they have had little impact on the pressures within the services sector.

Technical Review: Last week saw a continuation of the downward trend, with the price decisively breaking below the key support level of 0.6855 and hitting a ten-month low of 0.6772. On the weekly chart, the breakdown of the "head and shoulders" neckline points to a sustained bearish trend; all moving averages are aligned in a bearish configuration, with the price consistently trading below short-term moving averages, suppressing any attempted rebounds. On the daily timeframe, the exchange rate remains firmly below the 10, 50, 100, and 200-day moving averages, with the 50-day EMA acting as a strong dynamic resistance level. The MACD remains in negative territory and continues to trend downward, with the green (bearish) bars expanding. The 14-day RSI has fallen toward 32, entering "oversold" territory—suggesting a potential for a short-term corrective rebound—though no clear bullish divergence has emerged to signal a reversal; in short, the market is "oversold, but the trend remains unchanged." Weakening risk appetite, combined with bearish sentiment toward commodities, has served as an additional drag on the Australian dollar. Key conclusions from last week: The bearish trend remains in control, and the breakdown of support has been confirmed. Short-term indicators are in oversold territory, which may trigger a rapid technical rebound; however, such a rebound should be viewed as a corrective move within a bearish trend rather than a reversal.
Technical outlook for the coming week: On the daily chart, the AUD/USD pair is trading slightly above 0.6800, maintaining a short-term bearish bias as it remains below the 55-day, 100-day, and 200-day simple moving averages (SMAs)—a cluster currently situated between 0.7026 and 0.7054. The latest Relative Strength Index (RSI-14) reading is 32.90, hovering just above the oversold zone, suggesting that the downward move may be somewhat overextended. Meanwhile, the Average Directional Index (ADX-14) is around 29.5, indicating that the trend remains significant and has not yet fully dissipated. On the upside, initial resistance lies at the 0.6900 level, followed by the 20-day SMA near 0.6968, which reinforces the broader overhead pressure; further resistance is found at the 0.7000 psychological level. On the downside, initial support appears at 0.6727 (the low from earlier this year), with deeper support at the 0.6700 round number. Should the pair continue its decline, sellers may reassess their positions near the 0.6600 level.

For today, consider going long on the AUD/USD at 0.6777; stop-loss: 0.6765; targets: 0.6820, 0.6840.

GBP/USD

Last week, the GBP/USD pair fell toward the 1.3200 area, where it has since consolidated—hovering near its lowest level in over four weeks—as the US dollar maintains a bullish tone. The U.S. Dollar Index, which tracks the greenback against a basket of currencies, remains firm near its April 2025 highs, driven by growing expectations of Federal Reserve interest rate hikes and uncertainty surrounding the situation in the Middle East. Following U.S. consumer inflation data for October that came in higher than anticipated, several Federal Reserve officials have adopted a more hawkish tone, reinforcing market bets on further policy tightening. Furthermore, traders have begun to price in the possibility of a substantial 50-basis-point rate hike by the Fed in December, pushing the yield on the benchmark 10-year U.S. Treasury note back above the 5% threshold.

The British pound remains under pressure, trading below $1.3300—hovering near its lowest level since mid-October—as investors digest U.K. economic data that exceeded expectations. Meanwhile, the prospect of further monetary tightening by the Federal Reserve continues to bolster the U.S. dollar. Oil prices have also stabilized, with Brent crude regaining momentum following a sharp recent decline. Data from the Office for National Statistics (ONS) shows that the U.K. economy grew by 0.7% in the third quarter, an improvement from the 0.5% growth recorded in the previous quarter and in line with forecasts. The annual growth rate accelerated from 1.4% to 1.9%, while GDP expanded by 0.2% in September—surpassing expectations. This economic resilience has strengthened market expectations for further monetary tightening by the Bank of England; the market anticipates another rate hike before the end of the year, with additional increases expected by March. In the United States, stronger-than-expected inflation data and hawkish remarks from Fed officials have solidified expectations for a December rate hike, while also increasing the probability of a 50-basis-point increase.

A review of last week’s technical performance: it was a week characterized by an initial rally followed by a pullback, ultimately breaking key support levels and weakening. At the beginning of the week, the exchange rate faced pressure in the 1.3380–1.3420 range, with bulls making multiple unsuccessful attempts to reclaim the 100-day moving average. Subsequently, driven by U.S. inflation data—which bolstered expectations for Federal Reserve rate hikes—and a strengthening U.S. dollar, the pair broke below its short-term uptrend line and a critical 4-hour support level at 1.3314. It then fell through 1.3250, entering a phase of accelerated decline. The RSI has entered oversold territory and shows signs of a minor bullish divergence; however, no definitive signal of stabilization or reversal has emerged, leaving the pair in an "oversold yet weak-trend" state. On a weekly basis, the pair closed with a bearish candle, erasing previous gains and shifting from a phase of recovery back toward testing the lower boundary of its range; key support levels to watch below lie in the 1.3200–1.3180 zone. Core conclusion: The bulls failed to break through this week, leading to a weakening market structure. While the bears are currently in control, the short-term oversold condition increases the risk of a rapid technical rebound, making it less favorable to chase short positions at this stage.

Looking at the technical outlook for next week, the RSI for GBP/USD is in oversold territory, suggesting that—even with a bearish broader trend—blindly chasing short positions is ill-advised; it is better to wait for a rebound that encounters resistance before entering short. Furthermore, the MACD remains below the zero line, with a negative reading and a weak trajectory. If a clear bullish candlestick pattern (such as a hammer or an engulfing pattern) emerges near 1.3210, there may be an opportunity to trade a short-term rebound. From a technical perspective, the breach of the 1.3300 level—as well as the 61.8% Fibonacci retracement of the rally from the October lows—serves as a key trigger for bearish traders. Additionally, the spot price remains below the 5-day simple moving average (SMA) of 1.3302, further confirming the negative outlook. This, combined with the recent failure to break above the 1.3500 level, suggests that the path of least resistance for the GBP/USD pair remains to the downside. The target is 1.3216 (the 78.6% Fibonacci retracement level), followed by the next relevant support—a structural floor defined near 1.3138, which also aligns with a recent cyclical low. On the upside, any corrective rebound will first encounter resistance at the 61.8% Fibonacci retracement level of 1.3278, followed by the 50% level at 1.3321 and the 38.2% retracement level at 1.3364—all of which reinforce the broader downward pressure.

For today, one might consider going long on the GBP at 1.3210, with a stop-loss at 1.3200 and targets at 1.3260 and 1.3270.

USD/JPY

Last week, the Japanese yen hovered near the psychological threshold of 160 against the US dollar. In previous trading sessions, the yen had weakened, falling to a low of 169.20—its weakest level in over two months—which raised the prospect of potential currency market intervention. Atsushi Mimura, Japan’s top currency official, issued a warning, noting that the possibility of joint intervention by Japanese and US authorities to support the yen—similar to actions taken this summer—should not be ruled out. The recent weakness in the yen has been driven primarily by broad-based US dollar strength; higher-than-expected US inflation data, combined with increasingly hawkish rhetoric from Federal Reserve officials, has led the market to anticipate a faster pace of interest rate hikes by the Fed. Meanwhile, domestic data from Japan showed that producer prices rose by 7.1% year-on-year in October—exceeding the market expectation of 6.5% and accelerating from the 6.8% increase recorded in September. These figures have further reinforced market expectations that the Bank of Japan (BOJ) will tighten its monetary policy. There is a widespread market consensus that the BOJ will raise interest rates next month and continue its tightening cycle into next year.

Late last week, as the USD/JPY pair traded near the 160 level, BOJ board member Toyoaki Asada delivered remarks emphasizing that, with inflation having largely reached the 2% target, any further rate hikes must be approached with caution regarding their pace, so as not to undermine the progress made on underlying inflation. This stance contrasts with the high probability the market has priced in for a rate hike in December, highlighting internal divisions within the BOJ board regarding the speed of policy normalization. The USD/JPY pair’s proximity to the 160 level is shaped by a combination of factors: expectations regarding cross-border interest rate differentials, the divergence in policy paths between the BOJ and the Fed, and market speculation about potential official currency interventions. Consequently, the immediate impact of Asada’s comments has been relatively limited. Meanwhile, the Federal Reserve has recently kept interest rates unchanged, with some officials remaining concerned about the trajectory of inflation. The divergence in policy paths between the BOJ and the Fed, alongside market focus on potential currency-related measures by Japanese authorities, continues to influence the yen’s performance. Asada clarified that the BOJ does not directly control exchange rates, nor did he offer an opinion on an "ideal" level for the currency. The USD/JPY pair is currently trading near the 160 level, with its range-bound fluctuations reflecting an interplay between policy expectations and various risk factors.

For much of last week, the pair remained within a long-standing consolidation range of 157.00–159.00. Driven by a higher-than-expected U.S. CPI, rising U.S. Treasury yields, and heightened expectations for Federal Reserve rate hikes, the pair broke above the upper boundary of this range (158.75–159.00) mid-week. It climbed as high as 159.92—nearing the 160 psychological threshold—before encountering profit-taking. The price subsequently retreated below 159 to consolidate, with the weekly candle closing as a large bullish bar with a short upper shadow. On the daily chart, the price remains firmly above all major moving averages, which are aligned in a bullish configuration. The RSI has risen into a strong territory without yet reaching extreme overbought levels, while the MACD remains above the zero line; however, the expansion of the red histogram bars has begun to slow, suggesting a potential easing in upward momentum and emerging divergence at these high levels. A key observation from last week is that the 160 level is no ordinary resistance; it is widely recognized by the market as a "red zone" that could trigger intervention by Japan’s Ministry of Finance. As the price touched this area for the first time, speculative long positions were actively reduced, leading to a notable increase in selling pressure—making the failure to hold above this level a typical, risk-averse pullback.

Looking ahead to next week’s technical outlook: If the price continues to repeatedly test the 160 level while the RSI shows signs of "stalling" at a high level, one should be wary of a bearish divergence. Should such a divergence occur—compounded by a bearish candle breaking below key support—a rapid pullback could follow. On the daily timeframe, the USD/JPY pair maintains a short-term bullish bias, holding above both the 100-day simple moving average (158.97) and the 50.0% Fibonacci retracement level (158.49). The spot price has managed a modest recovery above the 61.8% retracement level of 159.79, turning it into immediate support and suggesting that upward pressure persists. The next key resistance level lies at the 78.6% retracement mark of 161.64. A sustained break above this level would pave the way for a retest of the cycle high at 164.00. On the downside, as seen on the daily chart, a fall below the 61.8% Fibonacci retracement level of 159.79 could find support near the 100-day simple moving average (SMA) at 158.97—a development that would reinforce the broader bullish structure. Further down, support levels are found at the 50.0% retracement mark of 158.49, followed by lower SMA levels at 157.20 and 155.59.

For today, consider going short on the USD at 160.10; stop-loss: 160.30; targets: 159.40, 159.20.

EUR/USD

Last week, the Euro extended its decline, falling below the 1.1100 level against the US Dollar to reach its lowest point since March 2025. Meanwhile, growing expectations that the Federal Reserve will further tighten policy in December have provided support for the US Dollar. Elsewhere, the recent slide in oil prices has slowed, with Brent crude stabilizing following attacks on shipping in the Strait of Hormuz. The market continues to digest US inflation data that came in higher than expected, fueling speculation that the Federal Reserve may hike interest rates again next month—potentially by a more aggressive 50 basis points. In Europe, persistent political and fiscal uncertainty in France, combined with concerns over a weakening growth outlook and speculation regarding a successor to the European Central Bank (ECB) President, have further weighed on market sentiment. Regarding policy, European Central Bank (ECB) Chief Economist Philip Lane has suggested that another interest rate hike in December could be appropriate. A growing number of policymakers have expressed support for this view, fueling calls for a third rate increase this year.
Retail traders who were bullish on the EUR/USD pair just days ago have received a stark reminder: market sentiment can shift abruptly when compelling evidence emerges. While those betting on a rise in the EUR/USD might believe that the pair is significantly oversold, now is not the time to fight the prevailing price trend. Instead, opportunities should be sought through a careful assessment of the pair’s short- to medium-term outlook. Meanwhile, although WTI crude oil prices have shown a downward bias over the past week and a half, the ripple effects of higher energy costs have already permeated various sectors of the U.S. economy. While the trend of high inflation in the U.S. may eventually be addressed in the medium term, it will be extremely difficult to convince the market to lower its expectations for further interest rate hikes by the Federal Reserve. This is precisely why the EUR/USD pair has experienced a firm decline.

Last week was characterized by a weak, oscillating downward trend driven by a strengthening U.S. dollar, with the price repeatedly testing support levels. U.S. inflation figures, which came in higher than expected, reinforced a hawkish outlook for the Federal Reserve and pushed U.S. Treasury yields higher; the widening interest rate differential between the U.S. and the Eurozone further pressured the euro. Additionally, expectations regarding potential ECB rate cuts—compounded by concerns over French sovereign debt—further limited any rebound. On a weekly basis, the pair closed lower and remained under persistent pressure, trading below the 5-, 10-, and 20-week moving averages. With the weekly RSI consistently remaining below 50, the bears maintain control over the broader timeframe. This week, the price dipped toward the 1.1100 level; while a brief breach triggered some minor buying, the subsequent rebound lacked strength, failing to establish a foothold above 1.1200. The RSI has approached the oversold zone multiple times, triggering sporadic rebounds from lows; however, each rally has stalled and reversed upon hitting the 1.1200–1.1230 resistance area—a classic "weak rebound followed by a new low" pattern. In short: the primary bearish trend remains intact, with 1.1100 serving as a critical short-term threshold. Holding above this level would lead to a period of consolidation and bottom-building, while a decisive break below it would open the door for further downside.

Technical Outlook for Next Week: EUR/USD is currently trading at levels not seen since early May 2025. From a technical standpoint, this is highly significant; a breach of 1.1050 could expose the pair to a much deeper decline. Notably, the last time EUR/USD sustained such low levels was following President Trump’s re-election, a period marked by heavy sell-offs as financial institutions reacted with anxiety. The current price sits within a range previously observed in October 2024. While EUR/USD has certainly traded lower in the past, speculators are now asking: has the pair truly entered oversold territory? Is there still potential for an upward correction? Has the worst of the news already been priced in? The momentum characteristics of EUR/USD are now clearly evident, necessitating a "sell-into-strength" strategy for any existing positions. Although the price appears low, we have witnessed such depths before. Traders of all sizes will see their convictions tested over the coming days and the week ahead. Immediate resistance lies at 1.1100 (a round-number level) and 1.1117 (the 5-day moving average); sustained trading above these points would signal an initial improvement in buying interest. Further up, we find 1.1172 (the median line of the Bollinger Band) and 1.1200 (a key psychological level). Should the price break above these levels only to face renewed selling, it would indicate that the downward pressure has not yet meaningfully eased. Recent support lies at 1.1047 (the low since early May 2025). Continued trading below this level would indicate that selling pressure remains active. The next level to watch is 1.1000 (a psychological support level).

For today, consider going long on the EUR at 1.1010, with a stop-loss at 1.1000 and targets at 1.1060 and 1.1070.

WTI Crude Oil

For most of last week, WTI crude oil traded below $90 per barrel. U.S. President Trump stated that the United States no longer needs to reach an agreement with Iran, dampening hopes for a diplomatic resolution to the conflict. Trump also instructed Vice President J.D. Vance to prioritize domestic affairs over negotiations with Tehran. Meanwhile, Iran maintains that Washington must lift its maritime blockade and sanctions before any direct peace talks can take place. Mohsen Rezaei, Secretary of Iran’s Supreme National Security Council, further emphasized that Tehran has no intention of moving its enriched nuclear material out of the country. Despite these developments, oil prices are on track to decline for the second consecutive week as crude exports from the Middle East continue to recover. The Democratic Party's victory in the U.S. midterm elections has also fueled expectations for a potentially swifter resolution to the conflict.

The downward momentum has lacked follow-through as traders await further developments in the Middle East crisis. Investors remain hopeful about potential behind-the-scenes efforts to secure a ceasefire between Russia and Ukraine. Furthermore, the risk of a further escalation in Middle East tensions has diminished ahead of next week’s U.S.-China summit; however, this has not helped oil prices sustain the positive momentum seen the previous day. In fact, U.S. officials have recently downplayed the necessity for further military strikes against Iran. Additionally, production increases by OPEC+—specifically from Saudi Arabia and Iraq—have exerted downward pressure on crude prices. Nevertheless, a geopolitical risk premium has re-emerged following a fresh warning from President Trump regarding Iran, in which he stated that those responsible for any attacks on U.S. officials would "cease to exist." Moreover, attacks on Saudi Arabian energy infrastructure and the standoff between the U.S. and Iran in the Strait of Hormuz have provided further support for crude oil prices. Review of Last Week’s Technical Performance: WTI crude oil experienced a sharp sell-off, plunging approximately 12.36% for the week—a notably large bearish candle, rarely seen in recent years. The primary driver was the rapid unwinding of the geopolitical risk premium associated with the Middle East, as the market began pricing in an easing of the conflict. On Friday, the price closed just below $90; a slight uptick toward the end of the session resulted in a small, stabilizing candle at a low level—this should be viewed as a pause in the decline rather than a confirmation of a reversal. On a weekly timeframe, the long, bearish candle marks a retreat from recent highs, breaking through several medium-term moving averages and shifting the weekly trend from bullish to bearish. The price has exited its previous upward channel; the weekly MACD has turned downward with expanding green (bearish) bars, and the RSI has fallen rapidly toward the lower end of the neutral range. While not yet in extreme oversold territory, bearish momentum remains exceptionally strong. Key characteristics of last week included a rapid decline, heightened liquidity volatility, and the widespread triggering of trend-following short positions by Commodity Trading Advisors (CTAs). Although there was some tentative buying interest at lower levels, confidence remained weak, limiting the scope of any rebounds—each attempt to rally was quickly met with renewed selling pressure.

Technical Outlook for Next Week: On the daily chart, WTI remains constrained below the 23.6% Fibonacci retracement level of $88.04 and the 10-day simple moving average (SMA) near $89.10. Momentum indicators suggest that any upward attempts will likely struggle to break through these overhead resistance levels, reinforcing a short-term bearish bias. Specifically, the Relative Strength Index (RSI) sits at 40.75, indicating a slightly negative momentum, while the Moving Average Convergence Divergence (MACD) is flattening out below the zero line. Immediate resistance is found at the 10-day SMA of $89.10, followed by the psychological level of $90.00. Further resistance lies at the 50.0% Fibonacci retracement level of $93.60 and the area around $93.70 (the 16-day SMA). On the downside, a key structural support level lies at the 200-day simple moving average (SMA) of $86.66. A break below this area would likely reinforce the prevailing bearish bias, confining crude oil prices to a consolidation range with a downward tilt, anchored near the recent cycle low of $83.06.

For today, consider going long on crude oil at $87.55, with a stop-loss at $87.35 and targets at $90.00 and $91.00.

Spot Gold

Last week, gold prices recovered to just below $3,900 per ounce following a three-day decline in the latter half of the week—a period during which the metal had plunged to a one-year low of $3,852. A strengthening U.S. dollar and rising Treasury yields reflect growing market expectations for more aggressive interest rate hikes by the Federal Reserve. This shift in sentiment was driven by U.S. consumer inflation data that exceeded expectations, alongside hawkish remarks from Fed officials—some of whom suggested that a 50-basis-point hike might be necessary to curb inflation. The market currently assigns an approximately 85% probability to a 25-basis-point hike by the Fed in December, and a 15% probability to a 50-basis-point increase. Traders are also increasingly anticipating further rate hikes next year. Meanwhile, oil prices rebounded after President Trump stated that the U.S. no longer needs a deal with Iran, which placed additional pressure on gold.
The global gold market experienced a rare and intense sell-off. Spot gold plummeted nearly 3% in a single day, touching a low of $3,852.30 per ounce—its weakest level since October 2025. On the surface, this correction in gold appears to be a natural reaction to a stronger U.S. dollar and heightened interest rate expectations. However, a deeper look at market interdependencies reveals that the primary catalyst was a sudden shift in the situation in the Middle East. President Trump’s explicit statement on social media that "the U.S. does not need a deal with Iran" effectively extinguished previous market optimism regarding a potential de-escalation of the conflict. While this statement may appear simple, it triggered a chain reaction across crude oil, U.S. Treasuries, the U.S. dollar, and gold—leaving the latter particularly vulnerable as it found itself squeezed between its role as a safe-haven asset and the pressure from rising interest rates. Consequently, the recent sharp decline in gold prices was not driven by a single factor, but rather by a confluence of events: the collapse of hopes for peace in the Middle East, a rebound in oil prices that fueled inflation expectations, a more hawkish stance from the Federal Reserve, and a strengthening U.S. dollar. Donald Trump’s remark that he "doesn't need a deal" served as a critical catalyst, rapidly shifting market sentiment regarding the trajectory of the conflict. This shift rippled through to the interest rate and currency markets—via the medium of oil prices—ultimately exerting a triple-pronged downward pressure on gold.

Last week, the market saw an initial period of weakness, followed by an accelerated breakdown. Early in the week, prices fluctuated within the 4080–4120 range, with bulls failing to defend the psychological 4000 level. As inflation expectations reignited and U.S. Treasury yields climbed, gold prices tumbled, breaching both the 4000 and 3900 marks. By Friday, the price hit a low near 3852—a new low for the year—with the weekly candle likely to close as a large bearish bar, underscoring the dominance of the bears. The price is currently trading below the 50-week moving average, and the weekly RSI continues to decline, reaching extreme oversold territory. There are no clear signs that the downward momentum is waning; the previous rebound structure has been invalidated, giving way to a downward channel. On the daily timeframe, the moving averages are in a fully bearish alignment, and the RSI has fallen to the 39 level. While there is a technical need for a short-term correction following such an oversold condition, there are no confirmation signals for a reversal—such as a bullish divergence or a high-volume, trend-reversing candle. Every minor rebound has been suppressed by the moving averages, characterizing a classic "sell-the-rally" bearish market. Technical Outlook for Next Week: Last week’s primary market theme was the persistence of U.S. inflation, which reinforced expectations that interest rates will remain higher for longer—a dynamic that weighed on non-yielding gold. On the daily chart, the spot gold price has retreated below a previously broken trendline, with the focus now shifting toward the key psychological support level of 3,800. Furthermore, momentum indicators remain weak; the Relative Strength Index (RSI) is hovering near 38, while the Moving Average Convergence Divergence (MACD) remains in negative territory. This suggests that, despite some early signs of exhaustion, downward pressure remains dominant. Consequently, any potential recovery is likely to encounter initial resistance near the 3,960 level, followed by the psychological barrier at 4,000 and the 20-day Simple Moving Average (SMA) at 4,023.80. To alleviate the current bearish outlook and pave the way for a broader corrective rebound, the price would need to decisively clear these hurdles, potentially advancing toward the 4,100 mark and eventually targeting resistance at 4,150. On the downside, the 3,865–3,855 range—coinciding with the year-to-date lows—may serve as an interim demand zone. A breakdown below this area would likely extend the downtrend established since the August swing high, potentially pushing the price toward 3,700.

For today, consider going long on gold at 3,872; stop-loss: 3,866; targets: 3,950, 3,960.