US Dollar Index

The dollar halved its earlier gains after inflation came in lower than expected in November. Traders are increasing bets on the Fed's last rate cut next week. The dollar index is currently trading around 106.50, failing to rise. The dollar is at a new high in its recent rally as U.S. Treasury yields rise and market caution is strong ahead of the release of U.S. inflation data on Wednesday, which measures inflation. The dollar index rose for the third consecutive day, continuing its momentum to break through the 106.00 mark ahead of the release of key U.S. inflation data on Wednesday. Currently, the dollar index continues to stabilize. In the short term, the seasonal weakness of the dollar in December and the fading impact of political turmoil on the market are expected to continue to fluctuate in a narrow range; as for the medium term, the dollar's trend mainly depends on the policies of the new U.S. administration, and it is estimated that the dollar still has room to strengthen against multiple currencies next year.

The dollar index is still trading near 106.00, and technical indicators on the daily chart provide mixed signals. The 14-day relative strength index (RSI) is in positive territory (latest reported around 58), indicating that bullish momentum continues. Moving Average Convergence Divergence (MACD) indicator shows smaller red histogram bars, indicating less bearish pressure. The US dollar index is approaching the 20-day simple moving average (106.45), which is a key level for the short-term direction. Resistance is near 106.70 and 106.72 (last Wednesday's high). Further obstacles will point to 107.00 (round mark). While support remains strong between 106.00. Further targets will point to 105.74 (34-day moving average), and 105.72 (daily chart descending triangle support line) area levels.

Today, consider shorting the US dollar index near 106.65, stop loss: 106.80, target: 106.30, 105.20

WTI crude oil

Momentum has increased as oil prices rise due to rising tensions in the Middle East. OPEC+ will release its monthly OPEC report, and no events are expected. The US dollar index surged on safe-haven inflows as uncertainty over the Federal Reserve's December rate decision increased. WTI crude oil traded near the $68.00 mark during the Asian session on Wednesday. WTI oil prices remained on the defensive amid an unexpected climb in crude oil inventories and a weak demand outlook, especially in China. However, escalating geopolitical tensions in the Middle East may prevent WTI oil prices from falling. The increase in US crude oil inventories last week may weigh on crude oil prices. On the other hand, the Middle East region has seen increased unrest as Syrian President Bashar al-Assad and his family fled to Moscow and received political asylum last week, ending 50 years of brutal dictatorship. Continued geopolitical tensions in the Middle East may help limit WTI oil prices' losses.

WTI crude oil prices found support near $66.80 - $67.00. After forming a "triple bottom" support area consisting of November and December. The price faces resistance near $69.11 (30-day EMA), and $69.22 (23.6% Fibonacci retracement from $77.93 to $66.53). Currently, the main resistance remains near $70.00 (psychological level), and $70.05 (50-day EMA), above which the price is likely to accelerate upward. In the above case, the price can even test $71.15, and $72.55 (38.2% and 50.0% Fibonacci retracement from $77.93 to $66.53, respectively). On the downside, the first major support is near $67.80. A close below $67.80 could result in a deeper decline. The next major support is the November low of $66.61. Any more declines in the coming days could bring oil prices closer to this year's low of $64.75.

Consider going long on crude oil near $69.80 today, stop loss: 69.60; target: 70.90; 71.20

Spot gold

Gold maintains bullish momentum, breaking $2,700 for the first time in two weeks. After the release of US November inflation data, investors fully factored in the Federal Reserve's 25 basis point rate cut in December, pushing gold prices to a nearly three-week high of $2,721. Spot gold maintained its bullish path this week, with weekly gains exceeding the $2,700 threshold amid low market sentiment. On Wednesday (December 11, Beijing time), spot gold rose slightly, trading around $2,700. Supported by rising geopolitical tensions and expectations of a third rate cut by the Federal Reserve next week, the US dollar suffered some small losses in the first half of the day, but the demand for safe assets accelerated in the American session, boosting the performance of the US dollar against high-yielding assets, but had no impact on gold. Concerns about rising tensions in the Middle East are driving safe-haven buying. Poor performance of European stocks and upcoming level 1 events have further driven speculators to take a cautious approach to gold interest. Clues to possible actions at the Federal Reserve meeting next week.

Starting this week, gold prices maintained early gains and traded around $2,700. On the daily chart, the 14-day relative strength index (RSI), a technical indicator, gained upward momentum in the positive zone, supporting further gains, reflecting increased buying interest. As gold prices continue to recover above the bullish 9-day (2655), and 20-day (2641.50) simple moving averages. In the short term, risks are also biased to the upside. If gold price holds above $2,700, although the upward momentum is mild, it still challenges $2,721 (November 25 high), and $2,750 (November 5 high). Overall, gold price seems to be expected to continue the upward trend, aiming at the historical high of $2,790.00 area. On the downside, support is around $2,700 (market psychological level), then $2,663.40 (61.8% Fibonacci rebound level from 2790.00 to 2536.80), and $2,666 (last week's high). If it breaks, it will look down to $2,655 (9-day moving average) level.

Consider going long on gold today before 2,716.00, stop loss: 2,712; target: 2,735.00; 2,740.00

AUD/USD

The Australian dollar rebounded from its year-to-date lows with its negative bias intact. Investors are cautious about shorting the dollar as the US dollar data is released. The Reserve Bank of Australia softened its US hawkish tone and increased pressure on the Australian dollar. AUD/USD lingered on Wednesday after falling in the previous session. AUD/USD faces challenges driven by the overall strength of the US dollar. The CME FedWatch tool shows that traders are currently pricing in a nearly 85.8% probability of a 25 basis point rate cut by the Federal Reserve on December 18. The Australian dollar came under pressure after the Reserve Bank of Australia decided to keep the official cash rate (OCR) unchanged at 4.35% at its last policy meeting in December. RBA Governor Bullock stressed that although the upside inflation risks have decreased, these risks still exist and need to remain vigilant. The RBA will closely monitor all economic data, including employment data, to guide future policies.

From the technical analysis of the daily chart, AUD/USD traded around 0.6370 in the middle of the week. AUD/USD fell into the downward channel pattern, and the bearish momentum increased. In addition, the 14-day relative strength index of the technical indicator is slightly above 35, indicating that the bearish tendency is maintained. The recent support level is around 0.6348, the low of the year on August 5. If it falls below this level, the bearish bias will increase, and the AUD/USD currency pair will face downward pressure and will sail around the psychological level of 0.6300. On the upside, the AUD/USD pair may find initial resistance around 0.6400 (round mark), followed by the 9-day moving average of 0.6440, which coincides closely with the upper line of the descending channel. A clear breakout above this range could pave the way for a move to the 0.6500 level.

Today, consider going long on AUD before 0.6358, stop loss: 0.6342; target: 0.6400; 0.6420.

GBP/USD

On Wednesday, GBP/USD fell below 1.2750 again in European trading. As risk sentiment deteriorated heading into the crucial US CPI showdown, the pound lost its appeal amid renewed buying by the US dollar. US inflation data is key to gauging the pace of future rate cuts by the Federal Reserve. GBP/USD traded in a narrow range around 1.2750 during the European session on Wednesday. At this stage, GBP/USD is consolidating before 1.28. Most economists expect the Fed to pause its easing frenzy from its first policy meeting in January 2025, provided that US President-elect Donald Trump's policy of raising import tariffs and lowering tax rates will bring inflation. GBP/USD continues to hover above the 1.27 mark. Earlier, Bank of England Governor Bailey said that inflation is falling faster than previously predicted. If inflation continues to cool, it suggests that interest rates may be cut four times next year. It is estimated that the Bank of England will remain unchanged in December, which supports the trend of the pound to a certain extent.

From the daily chart, the 14-day relative strength index (RSI) of the technical indicator broke through the midline upward. Therefore, GBP/USD has been able to stabilize and fluctuate above 1.2700 in recent weeks and is waiting for an opportunity to test the 1.2800 mark, maintaining resistance at 1.2811 (December 6 high), and below the 200-day moving average of 1.2822. And it constitutes a strong resistance area at the above level. GBP/USD has slowly stumbled back after bottoming out slightly below 1.2500 in late November, but bullish momentum is in trouble. If GBP/USD can break through the area formed by 1.2800 (psychological barrier); 1.2811 (December 6 high); and 1.2822 (200-day moving average) in the short term, the next target will be 1.2900. If it fails to break through resistance levels such as 1.2800, there will be a further decline to 1.2700, and the next level of support is 1.2650.

Today, we recommend going long on GBP before 1.2735, stop loss: 1.2725, target: 1.2780, 1.2800

USD/JPY

USD/JPY rose 0.37%, boosted by November CPI data, which confirmed analysts' expectations. The headline US CPI rose slightly, but the core data remained stable, supporting the Fed's possible interest rate adjustment. The yen rose during the Asian session on Wednesday as Japan's producer price index (PPI) strengthened, opening the door for the Bank of Japan to raise interest rates in December. However, bulls were less confident as investors were skeptical about the Bank of Japan's intention to further tighten monetary policy. In addition, the further recovery in US Treasury bond yields also curbed the gains of the lower-yielding yen. In addition, the recent rise in the US dollar to a near one-week high hit on Tuesday should help limit the downside of the USD/JPY currency pair. Traders may also avoid making aggressive directional bets, choosing instead to wait for the release of US consumer inflation data. This crucial US data will provide clues on the Fed’s rate cut path and provide some meaningful impetus ahead of key central bank activity risks next week.

Mid-week, USD/JPY moved above the psychological 152.00 level, which coincides with the 200-day moving average (152.01), and bulls need to remain cautious. Moreover, the neutrality of daily oscillators suggests that it is prudent to wait for sustained strength above the above level before establishing a position to extend the recent rebound from the near two-month low. USD/JPY could then climb to the 152.70 (23.6% Fibonacci retracement of 139.58 to 156.75) area. Then there is the 153.00 round number, a break of which would extend the rise to the 61.8% Fibonacci retracement level, around 153.70. On the contrary, a break below the 151.55-151.50 area may be seen as a buying opportunity and find suitable support around the 151.00 mark. However, some follow-up selling may test the 38.2% Fibonacci retracement level of 150.10, and 150.00 (market psychological level) area. Failure to hold the above support levels may push USD/JPY back towards the 149.55-149.50 area.

Today, it is recommended to short the US dollar before 152.70, stop loss: 152.90; target: 151.80, 151.60

EUR/USD

The EUR/USD pair remained under pressure during the US session on Wednesday, trading below 1.0500. The dollar remained resilient against rivals as data showed annual CPI inflation edged up to 2.7% in November. EUR/USD consolidated around 1.0500 for now. Political uncertainty has added to euro volatility amid turmoil in French politics, with President Emmanuel Macron saying he will announce a new prime minister in the coming days. Interest rate futures market prices show that the market has cut expectations for a 50bp rate cut by the ECB by the end of the year to less than 10%, but expectations for continued rate cuts remain unchanged. Thursday's ECB policy decision is fully priced in for a 25bp cut, and while the euro could fall further ahead of the meeting, the spot is still trading above 1.0500 this morning, suggesting that there may not be much room for a significant drop in the short term unless the ECB is unexpectedly dovish and eases policy more aggressively than the market is positioning.

The daily chart highlights that the EUR/USD maintains a medium-term bearish trend as it remains blocked by the 50-day moving average of 1.0717 and the 200-day moving average of 1.0839. The EUR/USD pair has been trading in a tight range of 1.0450 - 1.0630 since November, following a sharp decline to a one-year low near 1.0332. Recent attempts to retake the 1.0600 mark have failed, highlighting the current bearish momentum. The broader downtrend remains intact, with lower highs and lower lows dictating price action since late October. Despite brief intraday attempts to push higher, the EUR/USD pair has failed to sustain above 1.0600 (psychological level), and 1.0630 (Dec 6 high). Currently, the key psychological support level of 1.0500 has come back into focus. If it falls below this level, it may break through the November low of 1.0450 and 1.0400 (round mark).

Today, it is recommended to go long on the euro before 1.0485, stop loss: 1.0470, target: 1.0550, 1.0570.

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