US Dollar Index

The US dollar gained across the board ahead of the US trading day. Traders saw few positive signs in early comments from Riyadh. The US Dollar Index broke above 107.00 on US-Russia headlines. The US Dollar Index, which tracks the performance of the US dollar against six major currencies, traded flat on Tuesday as traders were watching for new geopolitical developments. With Riyadh negotiating on a Ukraine-Russia peace deal, the market is assessing the potential outcomes and their impact on risk sentiment. At this stage, the US Dollar Index remains hovering above the 106.00 range as investors await key economic data later this week. In the overall currency market, the US dollar has been struggling to extend its tariff-driven gains. An unexpected decline in US retail sales last Friday raised concerns about the health of the US economy, with investors leaning towards pricing in two rate cuts from the Federal Reserve this year.

From the daily chart, the US Dollar Index has struggled to maintain momentum since losing its 20-day simple moving average (107.76) last week and fell directly below the 107.00 round mark to a year-to-date low of 106.62, which reinforces the bearish outlook. The 14-day relative strength index (RSI) of the technical indicator is still in the negative zone (latest at 41.00), confirming the weakening momentum, while the moving average convergence divergence (MACD) indicates a stable bearish trend. Therefore, the first focus on the downside is 106.62 (this year's low), then 106.45 (100-day moving average), and further to 106.00 (market psychological level). On the upside, once the bulls can push the index back above the 107.00 level, the next resistance may be the 9-day moving average of 107.52. Breaking through this threshold will open the door to the market psychological level of 108.00.

Consider shorting the US Dollar Index around 107.18 today, stop loss: 107.30, target: 106.75, 106.70

WTI spot crude oil

WTI crude oil prices maintained their upward momentum for the second day in a row, trading around $71.70 per barrel in the European session on Tuesday. This came after a Ukrainian drone attacked a major pumping station on a pipeline in southern Russia. US WTI crude oil was trading around $71.20 in early Asian trading on Tuesday. Oil prices recovered amid supply disruptions in the Caspian region. The Caspian Pipeline Consortium said on Monday that drone attacks on pipeline pumping stations in the Krasnodar region in southern Russia have reduced the flow of oil from Kazakhstan to world markets from Western producers. This in turn provided some support to WTI prices. Although these drone attacks have had limited disruptive impact on Russian crude oil exports so far, the increase in the frequency of these attacks is worrying and will, to some extent, trigger some supply risks. Investors will be closely watching developments around a possible Moscow-Kiev ceasefire agreement that could ease sanctions and increase global supply. Potential ceasefire talks in the Russia-Ukraine war may limit the rise of black gold in the short term.

Overall, OPEC+'s production increase plan, Ukraine's attack on Russian oil facilities and Trump's tariff policy have become key factors affecting oil prices in the short term. From a technical perspective, oil prices are currently rebounding after oversold, and are currently above $71.00, but the price has fallen below the moving average support. If the rebound cannot stand at the $72.00 integer mark, the possibility of a second retracement cannot be ruled out. Pay attention to whether technical indicators drive prices down again. As seen from technical indicators, RSI and stochastic index are slightly recovering, which may indicate that oil prices are about to rebound. The current support level is first focused on the $70 mark, further pointing to the low of $68.42 on December 20 last year. The resistance level will first look at the 50-day moving average of $72.46 and $73.08 (50.0% Fibonacci retracement level of $66.80 to $79.37), and the next level points to $73.62 (200-day moving average). A further breakthrough of $73.62 will confirm that short-term crude oil prices will turn from falling to rising, and the bullish target will be set at $74.56 (38.2% Fibonacci retracement level).

Today, you can consider going long on crude oil around 71.60, stop loss: 71.40; target: 72.80; 73.00

Spot gold

Despite the mild rebound of the Geneback Index and the acceptable rise in US Treasury yields on the curve, gold prices still rose to a two-day high of around $2,937 per ounce due to the resumption of tariff concerns. Spot gold fluctuated in a narrow range in early Asian trading on Tuesday, currently trading around $2,898 per ounce. Gold prices rebounded to around $2,900 per ounce on Monday, supported by a weak dollar and trade war concerns triggered by U.S. President Trump's threat to impose reciprocal tariffs. However, Monday was the U.S. President's Day holiday, and the overall market trading was relatively light. Gold still benefits from investors seeking safe-haven assets amid tariff and trade war concerns. Gold is expected to rise to $3,000, which also benefits from continued demand from central banks. Looking beyond the short-term volatility of gold, gold is still in the early stages of a cyclical and long-term bull market. Investor sentiment indicators were quite negative in December last year, but have now entered neutral territory, although these indicators are still far below overly optimistic levels, which usually indicate a topping process.

From a technical perspective, gold/dollar remains bullish. The daily chart shows that the pair is consolidating at the lower end of Friday's range, but is also developing above all moving averages, with the 14-day simple moving average providing dynamic support around $2,868.00. Meanwhile, the technical indicator 14-day relative strength index (RSI) has retreated from an extremely overbought reading but has lost downside momentum in the positive territory (latest at 68). The initial upside target provides immediate resistance at the previous all-time high of $2,942.70, and a break of $2,960 is expected. The next relevant resistance is at the psychological level of $3,000. On the other hand, if the bears decisively break below last Friday's low of $2,877, it may trigger a new downside with the target of $2,868 (14-day EMA). Further downside, $2,836.60 (50.0% Fibonacci retracement of 2730.50 to 2942.70), and $2,834.60 (20-day EMA) may act as support.

Consider going long on gold today before 2,930.00, stop loss: 2,925.00; target: 2,950.00; 2.955.00

AUD/USD

AUD/USD halted its three-day recovery on the back of a stronger USD, doing well to hold trading above 0.6300 despite hawkish cuts from the Reserve Bank of Australia. The Australian dollar recovered some of its intraday losses following the Reserve Bank of Australia’s policy decision on Tuesday. The central bank decided to cut the official cash rate (OCR) by 25 basis points to 4.10%, the first rate cut in four years and in line with widespread expectations. Signs of slowing inflation in Australia may have factored into the February rate cut. December data showed easing price pressures, with the latest quarterly consumer price index rising less than expected in the fourth quarter of 2024. The RBA’s preferred inflation gauge, the trimmed mean CPI, rose 0.5% quarter-on-quarter, below expectations of 0.6%, while the annualized rate fell to 3.2% from 3.5%. AUD/USD found support after US President Donald Trump decided to delay the implementation of reciprocal tariffs. In addition, the US retail sales report was disappointing, fueling speculation that the Federal Reserve may cut interest rates later this year, although inflation concerns remain, and the US dollar weakened.

On Tuesday, AUD/USD traded around 0.6340, showing an upward trend within an ascending channel, indicating a bullish bias in the market. The 14-day relative strength index (RSI) of the daily chart technical indicator remains above the 50 level (latest at 61), further supporting the bullish outlook. On the upside, AUD/USD may challenge the upper line of the ascending channel at 0.6390, followed by the key psychological resistance level of 0.6400. A break below this level will directly target 0.6423 {100-day moving average). Support levels include the 9-day moving average at 0.6310, and 0.6300 (psychological mark), followed by 0.6254 (February 13 low).

Consider going long on AUD today before 0.6340, stop loss: 0.6325; target: 0.6380; 0.6400.

GBP/USD

GBP/USD remains under moderate bearish pressure, trading around 1.2600 on Tuesday. Earlier in the day, the pair edged higher in early reaction to UK labor market data, which showed unemployment stabilizing at 4.4% in the three months to December. GBP/USD broke a five-day winning streak and traded around 1.2600 during Tuesday's Asian session. British Prime Minister Keir Starmer said on Monday that any peace deal in Ukraine would require "U.S. support" to prevent another Russian attack, according to Reuters. Starmer stressed that Ukraine's future is a key issue for Europe and that it is urgent for Europe to share responsibility in resolving the situation. Downside risks for GBP/USD could be related to a stronger U.S. dollar on rising U.S. Treasury yields. The dollar index, which tracks the greenback against six major currencies, rose slightly after falling in the previous three trading days, trading around 106.90. Federal Reserve Governor Michelle Bowman said on Monday that rising asset prices may have slowed the Fed's progress on inflation.

GBP/USD briefly fell below 1.2600 (psychological level) in Asian trading on Tuesday. Short-term trends suggest that the currency is still climbing steadily, but the pair's movement is still limited below the 100-day moving average around 1.2664. Sterling buying has pushed the pair up from the January low of 1.2099, and the current bull market has pushed GBP/USD up 4.4%. Therefore, GBP/USD will return above 1.2634 (Monday's high) in the future. Further upside, buyers will target the 100-day simple moving average of 1.2664 and 1.2700 (round mark). If the bears can dominate the market again, they will first challenge the 75-day simple moving average of 1.2543 and 1.2500 (round mark), and a deeper decline may challenge the next downside target of 1.2460 of the 50-day moving average.

Today, it is recommended to go long on GBP before 1.2600, stop loss: 1.2585, target: 1.2650, 1.2660

USD/JPY

The yen retreated after hitting a one-week high against the dollar. Increased bets on the Bank of Japan's imminent rate hike this year should limit further declines in the yen. The narrowing of the US-Japan yield gap may also provide support for the lower-yielding yen. The yen attracted some sellers during the Asian session on Tuesday, and the dollar's slight rise helped USD/JPY recover from the 151.25 area or a one-week low. Investors welcomed the delay of US President Donald Trump's implementation of reciprocal tariffs. This in turn is seen as a key factor in weakening the safe-haven yen. However, any significant depreciation of the yen remains elusive due to rising expectations of further rate hikes by the Bank of Japan, which was further supported by strong fourth quarter GDP data released on Monday. Meanwhile, hawkish BoJ expectations have led to a sharp rise in Japanese government bond yields, reaching multi-year highs. In addition, the recent decline in US Treasury yields has led to a narrowing of the US-Japan yield differential as the market expects further rate cuts from the Federal Reserve. This may further discourage traders from making aggressive bearish bets around the low-yielding yen.

From a technical perspective, USD/JPY fell below 152.82 (23.6% Fibonacci rebound from 158.88 to 150.93) late last week and subsequently fell below the very important 200-day simple moving average (152.67), which favors bearish traders. In addition, the 14-day relative strength index (RSI) indicator on the daily chart remains in negative territory (40.95), suggesting that the path of least resistance for USD/JPY is to the downside. Therefore, any further gains towards the 152.67-152.82 mark could be seen as a selling opportunity. Next up is the 20-day simple moving average, currently around the 153.75 area, a breakout of which could trigger a short-covering rally above the 154.00 mark. On the other hand, the 151.25 area or the Asian session low now appears to act as an immediate support, ahead of the 151.00-150.90 area or the yearly low hit earlier this month. A successful break below the latter would expose the 150.00 psychological mark.

Today's recommendation to short the dollar before 152.25, stop loss: 152.45; target: 151.40, 151.30

EUR/USD

EUR/USD added to the weekly correction, falling to a three-day low near 1.0435 in response to the resurgence of buying appetite for the dollar, while investors are preparing for the release of the Federal Open Market Committee minutes on Wednesday. EUR/USD is trading in a relatively tight range below 1.0500 at the start of the new week. Volatility was limited in the latter part of the day as the US financial markets were closed on Monday for the Presidents' Day holiday. The persistent selling pressure surrounding the US dollar helped EUR/USD to record strong gains last week. Easing concerns over US President Donald Trump's aggressive trade policies improved market sentiment and weighed on the dollar. Before the weekend, US data showing a 0.9% month-on-month decline in US retail sales in January failed to rally the dollar. The economic calendar will not feature any high-level data releases in the first half of this week. On Wednesday, the Federal Reserve will release the minutes of its January policy meeting. Meanwhile, market participants will be keeping a close eye on the Trump administration's trade policy developments with the European Union.

EUR/USD retreated on Monday, marginally trading above 1.0450 after an impressive rally of more than 1.50% last week, marking a four-day winning streak. The pair remains comfortably above the 20-day simple moving average (1.0410), suggesting that dips could attract fresh buying interest. The 14-day relative strength index (RSI) of the daily chart has dropped below 55, but remains in positive territory, suggesting that the rally may not be over yet. Meanwhile, the moving average convergence divergence (MACD) histogram remains flat with green bars, suggesting consolidation rather than a strong bearish move. For the bulls to regain full control, EUR/USD needs to reclaim 1.0500 and build above this psychological level. The next level can point to 1.0557 (100-day moving average), and 1.0600 (market psychological level). On the downside, immediate support is at 1.0410 (20-day simple moving average), followed by a retest of the round number level near 1.0400. Further to the 1.0386 (100-day moving average) level.

Today, it is recommended to go long on the euro before 1.0432, stop loss: 1.0420, target: 1.0480, 1.0490.

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.