USD

The dollar's rebound during the European trading session did not solidify into a stable continuation before the U.S. trading session. Trump's trade policies are driving the dollar higher. The U.S. Dollar Index broke through the tough resistance level to 106.18. The index, which measures the dollar's value against a basket of six currencies, generally rose during Monday's trading. Traders are now focusing on U.S. inflation data for October, which will be published later this week. Strong inflation data could further boost the dollar, as it increases expectations that the Federal Reserve might slow down its pace of rate easing. The "Trump trade" is also thriving in other corners of the market, as cryptocurrencies lead with Bitcoin breaking records, while the dollar is showing its strength, even though the market has just entered the early stages of a strong dollar rebound triggered by the trade war. So buckle up, the dollar's rise might just be getting started! The dollar continues to maintain the momentum from last week's election, driven by rumors that Trump might impose tariffs that could shake export-oriented economies, while tax cut expectations could boost U.S. economic growth. This provides strong support for the dollar, especially as issues of deflation in China deepen, highlighted by recent weak inflation data from China. The market is facing a perfect storm to keep the dollar strong.

From a technical standpoint, earlier this week, the Dollar Index broke through the key resistance of the previous high at 105.45 to reach its highest level since May at 106.18. This bullish trend is supported by daily chart technical indicators like the 14-day Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), which remain in positive territory. However, the RSI is approaching overbought levels (last reported at 67.50), suggesting the index might undergo a short-term adjustment. Traders should closely monitor the index to see if it can maintain its momentum or if it will fall back in the coming days. If a technical pullback occurs, the targets would be 105.45 and 105.00, the latter being a round number support. The first key level to watch on the upside is 106.00, a strong psychological barrier. If it breaks through this level, 106.52—the April high and a double top—will be the last hurdle before potentially talking about 107.00.

Today, consider shorting the Dollar Index around 105.95, with a stop loss at 106.10 and targets at 105.60 and 105.50.

WTI Spot Crude Oil

Crude oil prices have rebounded from new lows in November and are poised to rise. Market forecasts suggest that oil prices will reach $40 per barrel during President Trump's tenure. As Trump's trade policies sweep through the market, the U.S. dollar index has risen further, pushing up U.S. Treasury yields. On Tuesday, the U.S. crude oil benchmark, West Texas Intermediate (WTI), traded around $68.00 per barrel. Concerns about a tariff-driven trade war initiated by the Trump administration, along with market worries about Chinese demand growth, have led to volatile WTI oil prices. Donald Trump's victory in the U.S. presidential election may continue to impact WTI prices. Trump has announced plans to impose a blanket tariff of 10% to 20% on all imported products and additional tariffs on up to 60% of products imported from China. Renewing the trade war with China could also likely harm China's economic growth and delay the recovery of crude oil demand. The strengthening dollar has contributed to the downward pressure on WTI prices. Economic data released by the Chinese government last weekend showed that consumer price growth in China in October was the slowest in four months, while producer price deflation deepened, raising market concerns about demand growth in the world's second-largest oil consumer.

Crude oil prices have plummeted again, seeking a new weekly low of $67.66. The risk is that any form of communication from OPEC could trigger further declines in oil prices. On the positive side, the $69.85 14-day simple moving average, and the psychological market barrier at $70.00 are considered before the 50.0% Fibonacci retracement level at $72.25 (between $77.93 and $66.57), and the 89-day moving average level of $72.82. If breached, the target points upwards to the 100-day moving average at $73.84, which might be tested given the tense situation in the Middle East, but there's still a considerable way to go. On the other hand, traders need to look towards lower levels, specifically $67.12, which held prices in May and June 2023, to find the first support. If this level is broken, the lowest point to date in 2024 could reach $64.75, followed by the 2023 low of $64.38.

Today, consider going long on crude oil around $67.60, with a stop loss at $67.40, and targets at $68.90 and $69.20.

XAUUSD

After breaking the crucial $2,600 threshold prematurely, gold prices have managed to find some stability, returning to levels below $2,600 amid a continuous rise in the dollar and a rebound in U.S. yields. Following the largest single-week drop in over five months, gold prices fell more than 2% on Monday, diving to the lowest level since October 10 at $2,610 under strong dollar buying pressure. Yesterday, prices fell below $2,600 again as traders anticipate a cautious approach from the Federal Reserve, given hopes that U.S. President-elect Trump's policies will spur economic growth and inflation. This in turn continues to support rising U.S. bond yields, pushing the dollar to a four-month high and severely weighing down the non-yielding yellow metal. However, concerns over Trump's protectionist policies stalling the globalized economy have caused gold's downward trajectory to stall before the $2,600 mark, which in turn has spurred some safe-haven inflows, helping to stabilize gold prices during the Asian session on Tuesday. Yet, under the potential strong bullish sentiment surrounding the dollar, any significant recovery seems challenging to achieve.

From a technical perspective, the overnight break below the 50-day moving average (at $2,648.50) is viewed by bears as a new trigger. Additionally, the 14-day Relative Strength Index (RSI) on the daily chart is trending lower below the 40 level, gaining negative traction while still far from the oversold zone, suggesting that the path of least resistance for gold prices is downwards. Despite this, the overnight plunge paused at the round number support of $2,600 and the 38.2% Fibonacci retracement level from $2,286.80 to $2,790 at $2,597.90, briefly touching a low at $2,586, which should act as a key pivot point. A convincing break below this level would pave the way for a continuation of the correction from recent historical peaks, potentially dragging gold towards a convergence zone at $2,540-$2,539. This includes the 50% Fibonacci retracement level and the 100-day moving average; a decisive break here would again confirm a short-term peak in gold/dollar. On the other hand, the $2,632-$2,635 region now seems to be an immediate overhead resistance, and a short-covering move could lift gold prices to a resistance at $2,647.50 (the 76.4% Fibonacci retracement of the rise from the October 10 low of $2,603.50 to the historical high of $2,790). If gold prices continue to strengthen, they might ascend to the $2,684-$2,685 area, further challenging the major resistance zone at $2,700.

Today, consider going long on gold around $2,593.00, with a stop loss at $2,590.00, and targets at $2,635.00 and $2,640.00.

AUDUSD

The further rise of the U.S. dollar has restrained the momentum of commodity prices and the risk complex on Tuesday, pushing the Australian dollar/U.S. dollar (AUD/USD) near its November low around 0.6500. Under the continued influence of what's being termed the "Trump trade," the dollar extended its gains from last Friday, opening strongly and pushing the Dollar Index near a four-month high of 105.70. In this environment, the Australian dollar remains on the defensive, having retreated below the 0.6600 area and continuing below the critical 200-day moving average at 0.6630, which opens the door for further short-term declines. Additionally, further pullbacks in copper prices and minor fluctuations in iron ore prices also put downward pressure on the Australian dollar. Moreover, data from China over the weekend showing that consumer price acceleration in October was the slowest in four months and increased deflationary pressure from producers highlight the ongoing economic challenges faced by China. Looking ahead, while the prospect of interest rate cuts by the Federal Reserve might boost AUD/USD, the expected inflationary impact of the Trump administration's economic policies should provide strong support for the dollar, thereby limiting the upside potential of the currency pair.

From the daily chart, once AUD/USD resumes an upward trajectory, it should first aim to reach the psychological barrier at 0.6600 and the support provided by the 200-day moving average at 0.6630. If it moves higher, AUD/USD will test the resistance at the November peak of 0.6687 (from November 7). The 14-day Relative Strength Index (RSI) on the daily chart is at 40, in the negative territory, while the Moving Average Convergence Divergence (MACD) is flat and red, indicating that selling pressure is slowly easing. If bears dominate, the next points of contention will be the October low at 0.6536 (from October 30), followed by 0.6511 (the low from November 6), and the psychological mark at 0.6500.

Today, consider going long on the Australian dollar around 0.6520, with a stop loss at 0.6505, and targets at 0.6570 and 0.6580.

GBPUSD

The ongoing rebound of the dollar has maintained a subdued trajectory for the risk complex earlier this week, causing the British Pound/U.S. Dollar (GBP/USD) to fall to a new low near 1.2720, and exposing it to a greater risk of correction in the short term. As selling pressure in risk-related sectors intensifies, GBP/USD has dropped and revisited the three-month low range of 1.2720 - 1.2730, continuously influenced by the strong start of the dollar this week. GBP/USD opened weakly on Monday and, despite a lack of sustained selling, has remained below the 1.2900 level in unclear fundamental conditions. The dollar holds steady below the four-month highs touched last week, as markets anticipate that policies of U.S. President-elect Trump will spur inflation and limit the Fed's ability to aggressively loosen policies. Although a hawkish stance from the Bank of England helps to limit the downside for GBP/USD, this factor is again seen as a bearish influence on the pair. Moreover, risk appetite tempers the gains in the safe-haven dollar, providing some support for the GBP/USD pair.

The daily chart for GBP/USD shows that the pair is trading just above a key support level marked at 1.2700. This key moving average has been providing support; if the pair closes below this level, there is potential for further downside. The 200-day moving average around 1.2818 has been trending downward, indicating a bearish outlook for the medium term. A price drop below the 200-day moving average also indicates that bears maintain control, and any recovery towards this level could encounter strong resistance. The MACD indicator below the chart supports the bearish inclination, with the MACD line crossing below the signal line, indicating a downward momentum. The histogram has slightly turned negative, reflecting an increasing bearish sentiment. However, the MACD remains near the zero line, indicating no strong momentum in either direction. In the short term, a decisive break below the 200-day moving average could trigger further declines, potentially opening the door to the next support zone around 1.2700 and further down to 1.2650. On the other hand, if GBP/USD manages to hold above this key level and regain momentum, it could rebound to 1.2818 (200-day moving average) and 1.2900 (round figure).

Today, it is suggested to go long on the British Pound at 1.2730, with a stop loss at 1.2720, and targets at 1.2780 and 1.2790.

USDJPY

The Japanese yen has struggled to capitalize on its modest mid-session rebound against the U.S. dollar. Tariff concerns associated with Trump and rising U.S. bond yields have weakened the lower-yielding yen. Traders are now looking forward to statements from Federal Reserve speakers and key economic data releases for new momentum. During the Tuesday Asian session, the yen remains weak against the dollar and appears poised for further softening. Japan’s fragile minority government is expected to make it difficult for the Bank of Japan to tighten monetary policy. Moreover, the Bank of Japan’s October meeting minutes revealed divided opinions among policymakers on whether to hike interest rates again. This, coupled with concerns about President-elect Donald Trump reinstating aggressive tariff policies, supports the yen. Meanwhile, Trump's expansionary policies and corporate tax cuts should bring upward pressure on inflation, potentially limiting the Fed's room to ease policy. This continues to support rising U.S. Treasury yields and validates the bearish outlook for the lower-yielding yen. On the other hand, the dollar has maintained its positive trend following Trump's victory in the U.S. presidential election, indicating that the path of least resistance for USD/JPY is still upwards.

From a technical perspective, the recent breakthrough above the 200-day moving average (151.69), with an overnight close above 152.40 (the lower boundary of the upward channel), and 152.60 (Monday's high), favors a bullish outlook. Additionally, the 14-day Relative Strength Index (RSI) remains in the positive zone, still far from the overbought area, confirming the bullish near-term prospects for USD/JPY. Consequently, USD/JPY is likely to rebound to the vicinity of 154.70, challenging multi-month highs. Following this, the psychological barrier at 155.00 is next, and if USD/JPY breaks through this level, it could accelerate momentum towards the intermediate resistance levels of 155.65-155.70, and then the round figure at 156.00. On the downside, USD/JPY may test the major level at 153.00 and support levels between 152.70-152.65 before forming support. Further consolidation or a decline might still be viewed as a buying opportunity near the 152.00 point and would likely be capped near the 200-day moving average.

Today, consider shorting the U.S. dollar against the yen at 154.80, with a stop loss at 155.00, and targets at 154.10 and 154.00.

EURUSD

The dollar's continued rebound is performing well on another trading day, exerting pressure on risk-related assets, and pushing EUR/USD to a new low for 2024 near 1.0595 ahead of key data releases in the United States. EUR/USD has been falling for the third consecutive trading day, trading around 1.0640 during the Tuesday Asian session. Market expectations that the fiscal policies to be introduced by U.S. President-elect Trump could negatively impact the European economy are adding pressure on the Eurozone. Expectations that the European Central Bank may adopt more aggressive rate cuts than the Federal Reserve are also weighing on the euro. Politically, German Chancellor Olaf Scholz has expressed willingness to advance the parliamentary confidence vote by several weeks, potentially setting it before Christmas. This could pave the way for early general elections. Following the confirmation of Trump's victory in the U.S. elections, the dollar continues to strengthen. Analysts believe that if Trump's fiscal policies are enacted, they could stimulate investment, spending, and labor demand, potentially exacerbating inflation risks. This could lead the Federal Reserve to adopt a more hawkish monetary policy, further supporting the dollar.

The daily chart shows EUR/USD displaying strong bearish momentum, recently extending its decline after breaking below the 200-day moving average at 1.0868. Currently positioned below the 5-day moving average at 1.0711 and the 9-day moving average at 1.0786, it confirms the bearish trend both in the short and long term. This downward trajectory suggests that bears are firmly in control, nearing the next support level around 1.0606 (the low of April 17), and the psychological mark at 1.0600. If it continues to close below this support level, it could potentially accelerate downward momentum to 1.0566 (near a one-year low). Additionally, it's worth noting that the MACD line is still relatively close to the signal line, indicating that if bulls intervene at key support levels, momentum could still shift. A potential bullish crossover in the MACD would be the first sign of a possible trend reversal. If EUR/USD finds buying interest around the current levels, it may retest the resistance zones of the 5-day moving average at 1.0711 and the 9-day moving average at 1.0786. A break above could further aim for the psychological mark at 1.08.

Today, consider going long on the euro at 1.0610, with a stop loss at 1.0600, and targets at 1.0685 and 1.0700.

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