US Dollar Index

The dollar is on track to fall nearly 1% this week so far. As expected, the release of the slightly weak December CPI triggered a surge in risk sentiment. The dollar index briefly dipped below 109.00 and is looking for support. The dollar is again on the defensive at the start of the week, testing a two-day low of 109.18, before retreating after the release of the December Producer Price Index (PPI). Traders are nervous about possible comments from President-elect Donald Trump on the tariff news. Second, the dollar index fell below 110.00 to 109.00 before seeking support to rebound. The weak yields caused the 10-year benchmark to fall from a 14-month high to around 4.80%, reflecting market uncertainty after the PPI. The CME FedWatch tool shows that traders have already priced in the possibility of no change in interest rates at the January meeting, highlighting the Fed's data-dependent attitude and potential Trump-driven volatility.

The US dollar index fell below the 110.00 mark this week, pressured by profit-taking and poor CPI data. Despite this pullback, the broader uptrend remains intact, hovering near multi-year highs. The 14-day relative strength index (RSI) indicator on the daily chart is still quite far from the overbought area (latest at 62), suggesting that there may be a short-term or shallow correction before the uptrend. If short-term profit-taking intensifies, the index may fall further to 108.63 (20-day moving average), and then 108.00 (market psychological level). Strong fundamentals and the Fed's solid guidance suggest that the dollar may soon find support, thus maintaining its long-term bullish bias. Therefore, the upper resistance can focus on the 109.75 (Tuesday's high), and 110.00 (round mark) area levels.

Consider shorting the dollar index near 109.25 today, stop loss: 109.40, target: 108.70, 108.60

WTI spot crude oil

The US crude oil benchmark West Texas Intermediate opened at a nearly 7-month high of $79.37 on Wednesday. WTI prices rose sharply as new US sanctions on Russian oil exports could tighten global supply. A US government agency predicts that US oil demand will remain stable in 2025, which may limit the upside of the black gold. On the other hand, WTI prices may face some selling pressure as global oil production exceeds demand. , US oil demand will remain at 20.5 million barrels per day in 2025 and 2026, while domestic oil production will rise to 13.55 million barrels per day, higher than the agency's previous forecast of 13.52 million barrels per day this year. The smaller-than-expected decline in US crude oil inventories last week pointed to weak demand for WTI.

From a technical perspective, last Friday's breakout above the 10-day simple moving average from late December last year (69.70 at the time) also adds credibility to the constructive outlook. Therefore, any subsequent declines may be seen as buying opportunities and are more likely to remain buffered. Therefore, the upside resistance can continue to focus on $80.00 (market psychological level), and the next level will point to the $82.18 (last July 18 high) level. The first downside support is in the $77.80 (early week high), $77.90 (last October 8 high) area, then $75.54 (250-day moving average), and $75.91 (93.98 to 64.75 38.2% Fibonacci rebound level) level.

Consider going long on crude oil near 78.80 today, stop loss: 78.65; target: 80.00; 80.20

Spot Gold

Gold prices recovered initial weekly losses, rising slightly for the second day in a row, approaching the $2,700 mark amid overall dollar weakness. Risk appetite limited demand for safe-haven metals. Gold prices struggled to capitalize on the previous day's rebound from a one-week low and encountered fresh supply during the Asian session on Wednesday. Global risk sentiment was supported by easing concerns about U.S. President-elect Donald Trump's damaging trade tariffs and received an additional boost from Tuesday's weaker-than-expected U.S. inflation data. This in turn was seen as a key factor that weakened demand for safe-haven precious metals. In addition, an upbeat U.S. monthly jobs report released last Friday reaffirmed the Federal Reserve's hawkish outlook and kept U.S. Treasury yields elevated, which helped to drive funds out of non-yielding gold prices. Meanwhile, the U.S. dollar struggled to attract buyers, hovering near the weekly low hit on Tuesday. This, coupled with geopolitical risks, should support gold/dollar ahead of the release of U.S. consumer inflation data.

Technical indicators on the daily chart are gaining positive momentum and support the prospect of some dip buying around the 2,662 (10-day EMA) – 2,660 (round number) area. However, some follow-up selling could drag the gold price to the next relevant support at 2,336 – 2,635 area. The downside trajectory could further extend to the 2,615 – 2,614 confluence support, including the 100-day moving average (2638.60) and a multi-week rising trendline. A decisive break below the latter would tip the short-term bias in favor of bearish traders and pave the way for deeper losses. On the other hand, the immediate hurdles are $2,698 (Jan. 10 high), and the psychological $2,700 mark. Some follow-up buying would set the stage for the continuation of the uptrend that has lasted for more than three weeks and lift the gold price to the December monthly swing high around the $2,726 area.

Consider going long on gold today before 2,690.00, stop loss: 2,687.00; target: 2,710.00; 2,715.00

AUD/USD

AUD/USD rose for the third consecutive day on Wednesday, breaking through the 0.6200 mark, exposing the sustainability of the ongoing recovery, at least for a short time, with immediate resistance around 0.6300 ahead of the release of Australia's key employment report on Thursday. The Australian dollar stabilized against the US dollar on Wednesday after two consecutive days of gains. AUD/USD benefited from risk-on market sentiment, thanks to strong Chinese trade data, Beijing's efforts to stabilize the yuan, and rising commodity prices. Investor confidence increased as US President-elect Donald Trump's economic team considered gradually raising import tariffs. This optimism boosted risk-sensitive currencies such as the Australian dollar and led to its appreciation. Traders assessed that data showed that consumer confidence fell for the second consecutive month, possibly due to the depreciation of the Australian dollar against the US dollar.

On Wednesday, AUD/USD traded above 0.62000 and seemed to be showing signs of strength as it was above the 20-day simple moving average of 0.6214. The 14-day relative strength index (RSI), a technical indicator on the daily chart, rebounded sharply above the 43 level (latest at around 44.20), indicating a recovery from oversold conditions. The immediate resistance facing AUD/USD is at the 30-day moving average of 0.6265, followed by 0.6288 (the 7th high of this month). The more important resistance level is at the psychological level of 0.6300. On the support side, AUD/USD may test the support level of 0.6161 (Tuesday's low), and a break will point to the 0.6100 (round mark) level.

Consider going long AUD today before 0.6205, stop loss: 0.6190; target: 0.6265; 0.6288.

GBP/USD

The British pound rose slightly on Wednesday, having fluctuated in a wide range of 1.2154-1.2306 during the session, but remained stable at the current exchange rate. GBP/USD is trading at 1.2241, and a close below Tuesday's high of 1.2249 will be in the cards. GBP/USD is caught in a short-term technical consolidation around 1.2200 as key inflation indicators look large in the mid-week session following US and UK growth data. Although the weak CPI data sparked a new round of investor hopes that inflation will not only cool, but will be enough to force the Federal Reserve to cut interest rates again. While the data were both below expectations, the numbers did not do as much good for investor sentiment as many had hoped as inflationary pressures continue to simmer behind the scenes, albeit at a boiling point slightly lower than economists had predicted. With inflation indicators still well above the Fed's annualized target, the lower-than-expected PPI and CPI data are a difference in terms of expectations for lower interest rates.

On Tuesday, GBP bidders were able to turn things around and anchor bids around 1.2200, but the pair is still deep in bear territory after hitting a 15-month low at 1.2099 earlier this week. The pair has lost nearly 4% in January alone, and if things don't improve soon, GBP/USD will close the fourth consecutive month of losses. Downside support is therefore at 1.2140 (early week low), and 1.2099 (15-month low). As for overhead resistance, watch out for 1.2250 (Tuesday's high), the next level will point to the 1.2300 (market psychological level), and 1.2321 (9-day moving average) area.

Today, we recommend going long GBP before 1.2228, stop loss: 1.2215, target: 1.2280, 1.2300

USD/JPY

USD/JPY fell sharply as US consumer inflation data showed slowing core inflation. Hawkish comments from the Bank of Japan Governor boosted the yen; US 10-year Treasury yields fell 12 basis points. The upcoming Fed speech and US economic data are crucial for further market direction. The yen strengthened across the board on hawkish comments from Bank of Japan Governor Kazuo Ueda and dragged the USD/JPY pair into the lower 157.50 area in the last hour. With inflationary pressures in Japan expanding, this opens the door for another rate hike in January or March and boosts the yen. However, some investors believe that the Bank of Japan may wait until the spring negotiations before pulling the trigger. In addition, the recent widening of the US-Japan yield gap, driven by the Fed's hawkish turn, may hinder traders from making aggressive bullish bets on the low-yielding yen.

From a technical perspective, bulls may wait for sustained strength and a breakout above the 158.00 mark before making fresh bets. Given that oscillators on the daily chart remain in positive territory and are still some distance from overbought zones, USD/JPY could retest multi-month highs around the 158.85-158.90 area. Sustained buying above the 159.00 mark will set the stage for further gains, with the target of the 160.00 psychological mark. On the other hand, 156.00 now seems to protect the upcoming downside, followed by the 154.73 (50-day moving average) mark. This should help limit the downside for USD/JPY around the 154.00 mark.

Today, it is recommended to short the US dollar before 156.70, stop loss: 156.90; target: 155.80, 155.60

EUR/USD

Despite breaking through the 1.0300 mark earlier, the daily upward momentum of EUR/USD weakened, falling back to the 1.0280-1.0290 range amid a marginal pullback in the US dollar. EUR/USD rebounded at the beginning of the week, rising above 1.03 on the day as euro bidders hoped that a potential deal in France would avoid a complete collapse of European governments. The market sentiment has improved, further boosting the euro exchange rate after the US CPI inflation growth rate was lower than expected. The market space economic data on the European side remains limited, which has left eurozone traders with overall US dollar flows. Despite the lower-than-expected CPI, inflationary pressures remain, although their intensity is slightly lower than many economists predicted. As inflation indicators continue to exceed the Fed's annual target, the lower-than-expected CPI results make little difference to the prospects of rate cuts.

EUR/USD bounced above 1.0300 on Tuesday, but remained oscillating at high levels on Wednesday, with the daily chart showing that EUR/USD remains deeply trapped on the bearish side of the chart. Earlier this week, the pair briefly fell below 1.0200, hitting a 26-month low. EUR/USD is trading well below its 50-day moving average (1.0427), having previously faced technical resistance from the falling key moving average in November. 1.0183 (Jan. 13 low), and 1.0200 (psychological level) may prove to be convenient short-term technical floors for bulls to conduct a recovery. As for the upside, EUR/USD may encounter major resistance near the 25-day moving average (1.0340), followed by 1.0400 (market psychological level), and finally point to the 50-day moving average (1.0427).

Today it is recommended to go long on Euro before 1.0280, stop loss: 1.0268, target: 1.0330, 1.0340.

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