US Dollar Index

The US dollar plunged on Monday as European leaders were willing to guarantee a peace deal in Ukraine. US manufacturing data did not have much to do with the ISM and S&P Global PMI. The US dollar index was expected to evaporate its gains on Friday and quickly retreat. The US dollar index, which measures the value of the greenback against a basket of six major currencies, remained stable above 107.00 on Friday after personal consumption expenditures (PCE) inflation data for January met forecasts, easing market concerns about an unexpected inflation spike. The dollar held onto its recent gains as President Donald Trump reiterated that tariffs on Canada, Mexico and China will be implemented on March 4. Meanwhile, risk sentiment improved as US stocks erased earlier losses and moved higher. The dollar's recent decline reflects a slowdown in key economic fundamentals, sparking new concerns among market watchers about a potential economic downturn. Indeed, investor confidence has weakened, sentiment indicators have fallen, and unexpected reversals in January - such as a significant decline in retail sales and a contraction in personal consumption - have only added to the unease.

After three consecutive weeks of losses, the US dollar rebounded strongly last week, with the US dollar index breaking through the key 107.00 mark before the weekend. If the recovery gains momentum, the US dollar index may challenge the 34-day simple moving average of 107.66, then the 107.00 round mark), and may even reach last week's high of 107.65 and the 65-day simple moving average of 107.75 area. A break above this level may open the door to the next psychological resistance level of 108.00. If sellers regain the upper hand, the index may find the first support at 106.50, followed by last week's low of 106.15 and finally at the key 106.00 {market psychological mark} level. Staying above this level is crucial to maintain bullish momentum.

Consider shorting the US dollar index around 106.70 today, stop loss: 106.82, target: 106.20, 106.10

WTI spot crude oil

WTI crude oil on the New York Mercantile Exchange fell to nearly $69.00 during European trading hours on Monday. Oil prices faced strong selling pressure as investors were cautious, fearing that U.S. President Donald Trump would impose an additional 10% tariff on China on March 4 for dumping drugs into its economy through the Canadian and Mexican borders. WTI crude oil prices recovered recent losses from the previous session during Monday's Asian session, trading around $70.00 per barrel. Crude oil prices rose as tensions escalated between U.S. President Trump and Ukrainian leader Volodymyr Zelensky in peace deal negotiations, which heightened concerns about the Russia-Ukraine conflict. However, gains in oil prices may be limited as concerns over weak global demand grow as U.S.-China trade tensions escalate. Over the weekend, U.S. President Donald Trump announced an additional 10% tariff on Chinese imports from Tuesday, adding to the 10% tariff already imposed last month. On the other hand, eight international oil companies operating in Iraq's Kurdish region said on Friday that they would not restart oil exports through Seyhan despite Baghdad's announcement that the resumption of exports was imminent.

Driven by the recovery of short-term profit-taking, US crude oil may continue to rise to the 25-day simple moving average of $71.32 and $71.47 per barrel (last Friday's high). Breaking through this resistance area will look to $72.72 {February 21 high}. Further gains may mean opening the way to the 200-day simple moving average of $73.26. It is not clear whether the rebound will continue. The 14-day relative strength index (RSI) of the technical indicator is still in the negative zone near below 40. If this rise fails, it may confirm that the rebound from $68.30-68.50 has been completed, and the WTI crude oil price will pull back to $67.50 (the low of December 10 last year) and $66.80 (the low of December 2024).

Consider going long on crude oil near 68.00 today, stop loss: 67.80; target: 69.40; 69.50

Spot Gold

Gold continues to retreat from multi-week lows near $2,833 set on Friday, trading above $2,880 in the first half of Monday. Uncertainty surrounding the Trump administration's trade policy and a pullback in US yields following weak PMI data supported gold prices. Gold prices attracted some buying near $2,860 in early trading on Monday. Uncertainty and the ongoing Russia-Ukraine conflict continue to support the precious metal. Traders will be watching the US ISM Manufacturing Purchasing Managers' Index (PMI) for February, which will be released later on Monday. Over the weekend, US President Trump on Friday criticized Ukrainian President Volodymyr Zelensky for his "lack of respect" and canceled the signing of a mineral deal that would have brought Ukraine closer to resolving the conflict with Russia. Investors will be closely watching the latest developments surrounding Russia. Any signs of escalating tensions could drive gold prices higher, a traditional safe-haven asset. On the other hand, renewed demand for the dollar may limit gold's upside. U.S. inflation data was in line with expectations, suggesting that the Federal Reserve may take a cautious stance on further rate cuts.

The daily chart shows that gold prices rebounded from strong support near $2,833 again on Friday, prompting a quick reversal. However, the rebound is likely to gain momentum only if it sustains above the 20-day simple moving average of $2,898 and the psychological market barrier area of ​​$2,900. The 14-day relative strength index (RSI) of the technical indicator continues to rise after defending the 50 level, indicating that buyers may remain in control in the short term. If gold prices rise above the $2,898-2,900 resistance level, the February 26 high of $2,930 will come into the investors' sights. The next upside target will be the all-time high of $2,956. On the other hand, if the sellers regain control, the immediate support is at the psychological level of $2,850, and a break below it will retest the last week's low area of ​​$2,833. Further declines will threaten the psychological barrier level of $2,800.

Consider going long on gold today before 2,890.00, stop loss: 2,885.00; target: 2,910.00; 2.915.00

AUD/USD

AUD/USD managed to regain a glimmer of hope on Monday after six consecutive days of declines and retested the 0.6250 area, all on the back of a sharp pullback in the US dollar, ahead of the release of the Reserve Bank of Australia minutes. The Australian dollar ended a six-day losing streak on Monday, boosted by a weaker US dollar, after the release of personal consumption expenditures (PCE) inflation data for January, which was in line with expectations on Friday, eased concerns about an unexpected inflation spike in the United States. Australia's TD-MI inflation gauge fell 0.2% month-on-month in February, reversing a 0.1% rise in January. This marked the first decline since August last year and followed the Reserve Bank of Australia's (RBA) decision to cut the cash rate by 25 basis points to 4.1% at its first monetary policy meeting of the year, reflecting the continued slowdown in underlying inflation. However, on an annual basis, the indicator rose by 2.2%, slightly lower than the previous increase of 2.3%. The Australian dollar was also supported by optimistic Chinese economic data.

Daily chart analysis shows that AUD/USD traded around 0.6220 on Monday. The pair remains under pressure, trading below the 9-day (0.6307) and 14-day (0.6317) moving averages. At the same time, the 9-day and 14-day moving averages formed a bearish "death cross" pattern, indicating weakening short-term momentum. In addition, the 14-day relative strength index (RSI) remains around 40, further strengthening the bearish outlook. On the downside, AUD/USD is currently testing the psychological support level of 0.6200. A break below this level may push the price towards the 0.6164 (January 17 low), and 0.6163 (76.4% Fibonacci retracement level of 0.6087 to 0.6409) support areas. Initial resistance is met with immediate resistance at the 0.6248 area (i.e. 50% Fibonacci retracement level). A sustained strong break above this level could trigger a short-term covering rally that could allow the AUD/USD pair to recapture the 0.6286 (38.2% Fibonacci retracement level), and 0.6290 (25-day moving average) levels. A decisive breakout would suggest that the AUD/USD pair has formed a short-term bottom and pave the way for further gains towards 0.6317 (14-day moving average).

Today, consider going long on AUD before 0.6210, stop loss: 0.6200; target: 0.6250; 0.6260.

GBP/USD

A further upward impulse pushes GBP/USD back above the 1.2700 mark, which is a long way from its year-to-date highs on the back of a sharp decline in the US dollar. The GBP/USD pair attracted some bargain-hunting buyers during the Asian session on Monday and now seems to have stopped the retracement from above 1.2700 level, or the two-month high hit last week. The intraday gains have taken the spot price back above the 1.2600 round-figure mark, supported by mild weakness in the US dollar. Increasingly pessimistic outlook for the US economy, coupled with bets on further policy easing by the Federal Reserve, failed to help the US dollar capitalize on the three-day recovery from the two-month low. On the other hand, the British pound continued to perform relatively well amid expectations of less aggressive policy easing by the Bank of England. Nonetheless, concerns about US President Donald Trump's reciprocal tariffs and their impact on the British economy may hinder the British pound bulls from making new bets. Moreover, geopolitical risks may limit further losses for the US dollar and suppress gains in the GBP/USD pair.

The daily chart shows that GBP/USD is holding above the key 110-day simple moving average of 1.2667, having recovered at the beginning of the week. The pair's pullback is reflected in the technical indicator 14-day relative strength index (RSI) on the daily chart pointing to a recovery of 62 levels. Although the leading indicator remains above the midline, its latest downside move brings a bearish signal for the pair. If sellers apply additional pressure, the immediate downside target is 1.2640, the 9-day simple moving average. Further downside, the psychological market level of 1.2600 will provide some support for buyers. On the other hand, the first resistance level can be focused on 1.2785 {200-day simple moving average}, and then above 1.2800 level is recognized as a key level to release the continued upward trend.

Today's recommendation is to go long GBP before 1.2690, stop loss: 1.2680, target: 1.2750, 1.2760

USD/JPY

The yen attracted dip buyers after falling to a one-week low against the US dollar. Bets on further rate hikes by the Bank of Japan continue to be a tailwind for the yen. The yen hit a weekly low of around 151.00 against the dollar in early Asian trading on Monday, although the downside for the yen remains limited amid hawkish BoJ expectations, and it immediately rebounded to 150.00. In fact, investors have begun to price in the possibility of further rate hikes from the BoJ, which has pushed the benchmark 10-year Japanese government bond (JGB) yield to its highest level since November 2009. In addition to this, some selling in the US dollar also weighed on the USD/JPY pair. Meanwhile, Bank of Japan Governor Kazuo Ueda warned last week that uncertainty over U.S. President Trump's tariff plans and their impact on the global economic outlook requires vigilance in formulating monetary policy. This, in turn, has curbed further bets on yen bulls and provided some support to the pair.

From a technical perspective, the USD/JPY pair has stalled near horizontal support at the 151.00 level, failing to extend last week's rebound, and the level has now turned into resistance. Moreover, although the oscillators on the daily chart have recovered from their lows, they are still in negative territory. This in turn suggests that the path of least resistance for spot prices remains to the downside. Therefore, the possibility of a subsequent pullback to the psychological level of 150.00 appears quite obvious. Further selling below the 149.80-149.75 area will be seen as a new trigger for bearish traders and drag the pair back to around 149.00, heading for the 148.60-148.55 area, which is a multi-month low. However, a sustained strong break above the 150.00 level may trigger a short-term covering rally and push USD/JPY to the intermediate resistance level of 151.70-151.75, further extending towards the 152.00 round number mark. The momentum may further extend to the 200-day simple moving average, which is currently located in the 152.39 area.

Today, we recommend shorting the US dollar before 149.70, stop loss: 149.90; target: 148.80, 148.60

EUR/USD

EUR/USD reversed part of its recent decline and broke through the 1.0500 mark in response to the strong selling pressure that the US dollar was once again subjected to on Monday, all of which occurred amid a solid recovery in the risk complex. EUR/USD paused its three-day downtrend during the Asian session on Monday, trading around 1.0440. The pair's rebound was driven by a weaker US dollar after the personal consumption expenditures (PCE) inflation data for January released on Friday met expectations, easing concerns about an unexpected surge in US inflation. The US dollar index weakened after three consecutive days of gains, however, the dollar's downside may be limited as US Treasury yields improve, with the current 2-year and 10-year Treasury yields at 4.02% and 4.24%, respectively. At the same time, escalating US-China trade tensions may support fund flows into the US dollar as a safe-haven asset, which may limit the gains of EUR/USD. Despite the stronger inflation report, the European Central Bank is expected to continue easing monetary policy at its meeting on Thursday. Investors now await the Eurozone HICP inflation data to be released later in the day.

The daily chart shows that sellers of EUR/USD have limited gains throughout the week at the 100-day simple moving average, which currently provides dynamic resistance around 1.0511. Technical indicators are flat, with the Momentum above the 100 level and the RSI around 55. It is worth mentioning that the pair is forming consecutive lower lows and lower highs, which is usually a sign of bearish strength. Further declines will expose the 1.0320 area, followed by the 1.0260 (Jan. 16 low), and the 1.0261 (76.4% Fibonacci retracement) level. Once the latter is broken, the 1.0200 threshold will come into view. On the other hand, a break above the 100-day simple moving average of 1.0511 could test the 1.529 level, the high of February 24, while a clear break would expose the psychological level of 1.0600.

Today, it is recommended to go long on the euro before 1.0472, stop loss: 1.0460, target: 1.0520, 1.0530.

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