US Dollar Index

The US dollar index fell to 99.41 on Thursday, declining for the fourth consecutive trading day to its lowest level in nearly three weeks, pressured by market expectations of further interest rate cuts by the Federal Reserve. The market is currently pricing in an approximately 85% probability of a 25 basis point rate cut in December, a sharp increase from 30% a week ago. Three additional rate cuts are also expected by the end of 2026. These expectations were further strengthened after reports that Kevin Hassett, director of the White House National Economic Council, is the leading candidate for the next Federal Reserve chairman, a choice investors see as consistent with President Donald Trump's preference for rate cuts. Meanwhile, midweek data showed an unexpected drop in initial jobless claims and stronger-than-expected durable goods orders. The dollar weakened against most major currencies, with the largest declines against the New Zealand dollar and the Australian dollar. Trading volume is expected to remain low through Friday due to the Thanksgiving holiday.

Trading hours in the US are shortened this week due to Thanksgiving on Thursday and Black Friday. Market behavior tends to differ during long holidays. Stock markets are typically more affected, but the foreign exchange market is also impacted. Regarding the three most important lines for the US dollar index recently, the index has broken below the recent upward trend line, but has held the original upward trend line, the key price level of 99.36, and the psychological level of 99.00. This indicates that from a trading perspective, the dollar still has a chance to rebound. If the dollar index can recover the 200-day simple moving average of 99.71 and the psychological level of 100.00, but considering the fundamentals—namely, the increased bets on a December rate cut based on recent US data and comments from Federal Reserve officials, coupled with the easing of tensions between Russia and Ukraine, the ongoing US government shutdown, and record-high government debt—the dollar index may experience a resistant decline before gradually breaking through these three key support lines.

Today, consider shorting the US Dollar Index around 99.68; Stop loss: 99.80; Target: 99.35; 99.25

WTI Crude Oil

WTI crude oil traded around $59.00 per barrel on Thursday. Prices rebounded slightly from a one-month low on Wednesday as investors weighed the prospect of oversupply against progress in the Russia-Ukraine peace talks ahead of the Thanksgiving holiday. Data from the U.S. Energy Information Administration showed that U.S. crude oil inventories unexpectedly increased by 2.8 million barrels last week, reaching 426.9 million barrels, far exceeding market expectations of a 55,000-barrel increase. John Kilduff, a partner at Again Capital, noted, "There's no doubt we're heading towards a fairly healthy oversupply." Meanwhile, rising expectations of a December rate cut by the Federal Reserve provided support for oil prices. Investors are closely watching the progress of the Russia-Ukraine negotiations. A final peace agreement could push U.S. crude oil prices to around $55 per barrel. Currently, the market is still awaiting clarity, but unless negotiations break down, the downside risk for prices is greater.

The current "stabilization at low levels" in WTI crude oil is more of a technical equilibrium than a trend reversal signal. The fundamentals remain significantly bearish: inventory rebuilding, weakening demand, and potential increases in Russian oil production are creating triple pressure; while a weaker dollar and expectations of interest rate cuts only provide marginal support. In the absence of sudden geopolitical conflicts or unexpected OPEC+ production cuts, oil prices are unlikely to break out of the $57-$60 range. We should be wary of potential amplification of volatility due to insufficient liquidity around the Thanksgiving holiday. If the $58 support level is breached, the next key test level may be the $55 area. Conversely, a firm hold above the psychological level of $60 and a break above the 50-day moving average around $60.22 are needed to alleviate short-term downward pressure. Currently, both technical and fundamental factors are weak, and the rebound lacks volume support, suggesting a continuation of the weak range-bound consolidation in the short term.

Today, consider going long on crude oil around 58.80; Stop loss: 58.65; Target: 60.20; 60.50

Spot Gold

On Thursday (November 27th, Beijing time), spot gold traded around $4,160 per ounce in early European trading. Gold prices continued their upward trend on Wednesday, climbing to a more than one-week high, boosted by market expectations that the Federal Reserve will cut interest rates next month. The continued rise in market expectations for a December rate cut by the Fed has become a key factor driving gold prices higher. According to the CME FedWatch tool, traders believe there is now an 85% chance of a rate cut by the Fed next month, far higher than the 30% a week ago. Analysts pointed out: "The market focus has shifted from the dollar to a December rate cut." Despite the dollar index remaining stable, gold continues its upward momentum. Although the number of initial jobless claims in the US fell last week, indicating that layoffs are still at a low level, the labor market still faces challenges under continued economic uncertainty.

As the market continues to digest economic data and central bank policy signals, gold's safe-haven properties continue to attract investor attention. Any further declines are likely to find considerable support in the 4,132-4,130 area. A break below this level could see gold prices accelerate towards $4,114.50 (the 14-day simple moving average) and the $4,100 level. Further selling pressure will expose the next converging support levels, including the 20-day simple moving average on the daily chart at 4,076 and the upward trendline extending from late October, currently around 4,040. A decisive break below the latter could shift the short-term bias to bearish traders and drag gold prices towards the psychological level of $4,000. On the other hand, the 4,174-4,173 area, or the near two-week high reached on Wednesday, now appears to be a direct hurdle. A break above this level could see gold prices target a return to the psychological level of $4,200. A sustained strong break above the latter would pave the way for further momentum extension, testing the monthly swing high around the 4,245 area.

Consider going long on gold around 4,152 today; Stop loss: 4,147; Target: 4,175; 4,180

AUD/USD

The Australian dollar rose on Thursday, extending its gains for the fifth consecutive trading day. The pair strengthened as bets on a December rate cut by the Federal Reserve intensified. Data released by the Australian Bureau of Statistics on Thursday showed that private capital expenditure rose 6.4% quarter-on-quarter in the third quarter, up from 0.2% in the second quarter and exceeding the expected 0.5%. On Wednesday, the ABS reported its first “full” monthly consumer price index, showing a 3.8% year-on-year increase in October. This figure exceeded the market consensus of 3.6% and the previous reading of 3.5%. The Australian dollar strengthened after the first monthly CPI data increased caution regarding the Reserve Bank of Australia's policy outlook. The RBA is expected to keep the official cash rate at 3.6% in December, as inflation remains above the RBA's 2-3% target range. RBA officials noted a slight increase in the unemployment rate, but the labor market remains healthy and is expected to continue to do so.

On Thursday, the Australian dollar/US dollar pair traded around 0.6530. Daily chart analysis shows the pair has rebounded to a near three-week high of 0.6540, indicating a neutral-to-bullish short-term trend. The pair has broken above the 20-day simple moving average at 0.6504 and the psychological level of 0.6500, suggesting strengthening upward momentum. The upside target is at 0.6533 (the 50-day simple moving average). A successful break above this moving average would support the AUD/USD pair testing 0.6580 (the November 13 high). Further gains would bring the pair closer to the psychological level of 0.6600. On the downside, the AUD/USD pair could retreat to the psychological level of 0.6500, aligning with the 10-day simple moving average at 0.6489. If the pair breaks below this overlapping support area, it may test immediate support near the 200-day simple moving average around 0.6462.

Consider going long on the Australian dollar today around 0.6520; Stop loss: 0.6510; Target: 0.6570; 0.6560

GBP/USD

GBP/USD traded in a volatile session on Thursday, hovering around 1.3230. The pair initially appreciated as bets on a December rate cut by the Federal Reserve weighed on the dollar. Market expectations for a rate cut increased after the White House narrowed its search for the next Fed chair to National Economic Council Director Kevin Hassett. Investors believe Hassett supports President Donald Trump's preference for lower interest rates. Additionally, GBP/USD was supported by the pound in the latest UK budget, announced by Chancellor Rachel Reeves, which included a £26 billion tax increase, following last year's £40 billion increase. UK Chancellor of the Exchequer Rachel Reeves stated that the government has £22 billion in fiscal leeway to handle unexpected shocks. However, the Office for Budget Responsibility noted that this leeway remains "limited" relative to its forecasts.

On the daily chart, GBP/USD is trading near the 1.3230-1.3220 range. The 50-day simple moving average (SMA) is trending downwards at 1.3286, and the 1.3300 level (psychological level) is limiting the pair's upside and maintaining a slight bearish bias. The pair remaining below this indicator suggests the rally remains fragile. The slow stochastic oscillator (14,5,5) has risen to 71.9, indicating overbought momentum after the recent rally. Momentum suggests upward weakness as the stochastic oscillator approaches extreme territory, potentially foreshadowing a pause or a slight pullback. A daily close above 1.3286 (the 50-day SMA) and 1.3300 (the psychological level) would shift the bias to bullish and allow for further gains. A break below the 34-day simple moving average at 1.3218 and the psychological level of 1.3200 would likely result in a sideways trend towards the 25-day simple moving average at 1.3161.

Consider going long on GBP/USD around 1.3226 today; Stop loss: 1.3213; Target: 1.3260; 1.3270

USD/JPY

The yen briefly broke through 156 yen per dollar on Thursday, reversing losses from the previous session, as markets continued to closely watch for potential intervention. Traders saw the US Thanksgiving holiday as a possible opportunity for officials to step in to support the yen, although the mere threat of intervention had already helped curb its recent decline. Investors also assessed the outlook for the Bank of Japan's policy, as reports indicated the central bank was preparing for a possible rate hike next month, driven by concerns about persistent inflation, a weaker yen, and easing political pressure. Externally, the yen also benefited from a generally weaker dollar as traders increased their bets on further rate cuts by the Federal Reserve.

The USD/JPY pair's midweek rally encountered resistance near the 5-day simple moving average, currently around 156.67. The psychological level of 157.00 should be key levels for this pair. A strong break above this level would allow the spot price to reclaim 157.89 (last week's high) and the 158.00 level, potentially climbing further to the intermediate resistance of 158.45-158.50, heading towards the 159.00 area. On the other hand, a break below the overnight low of 155.09 (the 20-day simple moving average) could pave the way for a deeper decline, dragging USD/JPY to the psychological level of 155.00. A decisive break below the latter would be seen as a new trigger for short sellers and lay the foundation for a continuation of the downtrend from around 158.00.

Today, consider shorting the US dollar near 156.50; Stop loss: 156.75; Target: 155.60; 155.50

EUR/USD

The EUR/USD pair paused its upward trend during Thursday's European session, breaking below the 1.1600 level to reach a low of 1.1576. This momentum was supported by a general selling bias around the dollar, bringing the spot price close to the key resistance level of the technically important 50-day simple moving average at 1.1623. Furthermore, a mixed set of economic indicators released this week offered little relief to expectations. This, along with optimistic market sentiment, was seen as weakening the safe-haven dollar, which in turn provided a tailwind for the EUR/USD. On the other hand, the euro was supported by the cautious monetary policy outlook of the European Central Bank. ECB Vice President Louis de Guindos stated on Wednesday that his view on economic growth was slightly optimistic and that the current interest rate level was correct.

The EUR/USD rebound this week appears to be continuing, with the target being a break above the 1.1600 level as soon as possible. In fact, the next upside target is the November high of 1.1656 (November 13th), with higher targets at 1.1700 (the psychological level) and 1.1728 (October 17th). However, caution is still advised until sustained strength is maintained above the 50-day simple moving average barrier near the current 1.1623 area, in order to prepare for any further gains towards the 1.1700 level. Furthermore, relatively thin trading volume due to the US Thanksgiving holiday also raises some concerns for bullish traders. On the other hand, a break below the November low of 1.1558 (the 9-day simple moving average) could bring the key 1.1500 level into view.

Consider going long on the Euro today near 1.1583; Stop loss: 1.1570; Target: 1.1640; 1.1650

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