USD

Due to the cooling impact of expectations for a Federal Reserve interest rate cut, the U.S. Dollar Index reversed its three-week decline and instead experienced a slight increase. The U.S. dollar, measured by the Dollar Index, dropped nearly 3% in November as bets on the Federal Reserve having completed raising borrowing costs and anticipating a significant reduction in borrowing costs in 2024 led to a correction in U.S. yields, suppressing the dollar to prevent a hard landing strategy. Speculation in the market about the possibility that the Federal Reserve has already completed its rate hikes weighed on the dollar, despite some Fed officials dismissing the idea of a significant rate cut in the near term. However, other officials have not completely ruled out this possibility. Despite some mixed signals, policymakers have been unequivocal in one aspect: they will rely on overall data to guide their decisions.

Given the Federal Reserve's heightened sensitivity to upcoming information, the U.S. employment report for November, scheduled for release this Friday, will become more crucial and play a key role in shaping monetary policy at the upcoming meeting. After a decline last Friday, the U.S. Dollar Index regained some buying interest and, in early Monday's Asian trading session, briefly tested the 103.00 area before successfully rebounding to the 103.30 region. Meanwhile, speculation about the Fed lowering rates in the spring of 2024 continues to heat up, although some members of the Fed's decision-making body hold different opinions on this matter.

On the daily chart, after bottoming out and rebounding near the three-week low of 102.46 last week, the U.S. Dollar Index is currently consolidating above the low level of 103.50. From a broader perspective, against the backdrop of increasing speculation about a possible rate cut in the first half of 2024, the dollar remains subdued, aiming to counter further deflationary pressures and a gradual cooling of the labor market. However, the resilience of the U.S. economy and continued hawkish remarks from some Federal Reserve rate setters still provide some support for the dollar. At present, if the index continues to rebound and breaks through the 200-day moving average of 103.57, it will open the door to levels such as 104.00 (a psychological barrier) and 104.21 (the high point on November 22). On the contrary, the current focus is on the levels of 103.00 (a psychological barrier) and 102.46 (the monthly low on November 29), followed by 101.74 (the monthly low on August 4).

For today, selling the U.S. Dollar Index near 103.80 could be considered, with a stop loss at 103.95 and targets at 103.40 and 103.35.

WTI Crude Oil

On Monday, December 4th, despite the agreement by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to deepen production cuts, oil prices continued to decline for the second consecutive month. At the beginning of the week, U.S. WTI crude oil traded below $74.00. The resolution of the OPEC+ organization and the uncertainty in the global outlook for fuel demand contributed to the ongoing decline in oil prices. OPEC+ member countries agreed to voluntary production cuts in the first quarter of 2024. However, the voluntary nature of the production cuts agreed upon by OPEC last week raised questions about how the 23 member countries of OPEC+ should allocate the reductions. Additionally, mixed economic data from China may contribute to selling pressure on WTI oil prices. Last week, China's Caixin Manufacturing Purchasing Managers' Index exceeded expectations, but the official manufacturing and services Purchasing Managers' Index from the National Bureau of Statistics fell below expectations. Concerns about the economic recovery outlook in China weighed on crude oil. Going forward, oil traders will closely monitor developments in geopolitical tensions in the Middle East. This Tuesday, the U.S. ISM Non-Manufacturing Purchasing Managers' Index will be released, and employment data, including non-farm payrolls, unemployment rate, and average hourly earnings, will be announced on Friday. These events could have a significant impact on WTI oil prices denominated in U.S. dollars, and traders will seek trading opportunities based on these data.

The price of crude oil experienced a significant reversal in the trading before last weekend. After briefly reaching a new high since November 7th at $79.57, the price eventually closed below the key levels of the daily chart, breaking through the large downward channel axis at $74.70 and the lower boundary of the small downward channel at $75.50. The downward momentum continued into the beginning of this week. According to technical charts, oil prices have been oscillating at low levels recently, but given the recent MACD indicator crossing above the signal line, it is expected that oil prices will stabilize in the short term. The current support is first seen at $72.35 (low on November 16th), and thereafter, $70.00 will be a long-term soft target for traders to watch. Estimated resistance levels are $75.09 (Monday's high), $77.44 (23.6% Fibonacci retracement level from $93.94 to $72.35), and $77.84 (200-day moving average), with the next level expected at $80.00 (psychological barrier).

For today, considering a long position in crude oil near $73.05, with a stop loss at $72.75 and targets at $74.60 and $75.00.

Spot Gold

On Monday, December 4th, the financial markets suddenly experienced a surge, with spot gold soaring to a historic high of $2146.05 at one point, only to subsequently experience a significant pullback of nearly $126. Earlier in the Asian market session, spot gold surged to a historic high of $2149 before pulling back and consolidating. Gold prices retraced below $2100 as the intense volatility settled with the onset of the non-farm payroll week. The recent rise in gold prices can be attributed to various factors, as buyers continued to build on the momentum from the previous Friday. Over the weekend, new geopolitical risks emerged between Yemen and the United States, benefiting gold prices from the influx of fresh safe-haven funds. These tensions heightened the ongoing conflict between Israel and Hamas. Gold is traditionally seen as a safe-haven asset and often benefits from escalating geopolitical tensions. Additionally, the scarcity of liquidity at the opening of the Asian week was also one of the reasons for the sharp rise in gold prices, as the market believed that this trend was triggered by stop-losses after breaking through the previous historical highs at $2081 and the psychological level of $2100. Meanwhile, a recent survey by the World Gold Council showed that 24% of central banks intend to increase gold reserves in the next 12 months, as their outlook on the U.S. dollar as a reserve asset becomes increasingly pessimistic. This encouraging news also signals an upward trend in gold prices.

After reaching a historic high of $2149 on Monday, indicating that the probability of a significant correction still exists, especially with the relative strength index (RSI) still in the overbought zone. If it falls below the intraday low of $2072, the recent retracement may intensify. The next strong support is at $2009.50 (October 27th), breaking below which may reopen the door to test $2000. However, any decline may still be limited and considered a buying opportunity, while the golden cross remains in effect. The 10-week moving average closed above the 34-week moving average on the weekly chart, confirming the golden cross last Friday. Gold prices must close above $2081 and $2100 to continue rising towards the $2200 level. The weekly chart shows a strong upward trend in gold, pointing towards testing the upper trendline around $2128. However, if the weekly closing price of gold is below $2000, it indicates that gold may not be ready to test new historic highs. The technical indicators on the weekly chart are bullish. Nevertheless, considering the level of gold, the upside is not without risks and may be influenced by significant consolidation. If gold prices fall below $2000, it may extend the decline to $1975, with the next strong support level at $1950. On the upside, if gold breaks through $2081, it will open up space to test $2100. Further upward movement will point towards $2128.

For today, considering a long position in gold before $2025, with a stop loss at $2022 and targets at $2040 and $2045.

AUDUSD

In the Asian market on Monday, the Australian Dollar/US Dollar attracted some selling pressure after reaching a five-month high of 0.6690, and has since dropped to the intraday low. The Australian Dollar/US Dollar is currently trading around 0.6620. The escalating tensions in the Middle East have led investors to become cautious, fearing a respiratory disease similar to the pandemic outbreak in China, which has dampened the recent global stock market rally. This has, in turn, boosted the safe-haven currency, the U.S. Dollar. Powell's speech last Friday was perceived as dovish by the market, raising expectations that the Federal Reserve may enter an interest rate cut earlier next year. In contrast, investor expectations for Australian policies are far less dovish. Futures indicate a low likelihood of an interest rate cut in Australia before December next year, while the possibility of another rate hike remains almost evenly balanced. Given the previous hawkish stance of Australian monetary policymakers towards inflation, the market believes that the Reserve Bank of Australia (RBA) is likely to delay rate cuts compared to the Federal Reserve and the European Central Bank. The Australian Dollar is noticeably lifted by these market factors.

From a technical perspective, the Australian Dollar/US Dollar has recently consistently surpassed the crucial 200-day moving average at 0.6580, and last Friday's closing price also broke through 0.6870 (upper boundary of the downward channel), providing a new trigger point for bullish traders. In addition, the daily chart's oscillation indicator is in the positive zone, still far from the overbought area. This suggests that, amid dovish expectations from the Federal Reserve, the resistance to the upside for the Australian Dollar/US Dollar is minimal. Meanwhile, further downside for the Australian Dollar/US Dollar may find support around the 0.6600 level, located near the oscillation low of last week at 0.6570-0.6565. However, if subsequent selling pressure emerges, it could press the Australian Dollar/US Dollar further towards the support level at 0.6520, then potentially down to the psychological level of 0.6500. If the Australian Dollar/US Dollar breaches the mentioned support levels, the bullish outlook may not hold, and a short-term bearish bias may prevail. On the other hand, the 0.6700 integer level currently constitutes adjacent resistance. Afterward, the Australian Dollar/US Dollar may climb towards the next relevant resistance around 0.6740, with the ultimate goal of reclaiming the major level at 0.6800.

For today, considering a long position in the Australian Dollar before 0.6600, with a stop loss at 0.6580 and targets at 0.6675 and 0.6685.

GBPUSD

In the Asian session on Monday, the British Pound/US Dollar remained below the 1.2700 level. However, the downside for the British Pound/US Dollar seems limited as market speculations suggest that the Federal Reserve will end its tightening policy cycle, putting pressure on the U.S. dollar and providing a "tailwind" for the British Pound/US Dollar. Market sentiment turned cautious after Federal Reserve Chairman Jerome Powell made dovish remarks last Friday. Although Powell emphasized the Fed's willingness to tighten policy further if necessary, the market believes that the rate hike cycle has come to an end, further depressing the U.S. dollar. On the British Pound side, Bank of England Governor Andrew Bailey stated last week that the central bank is committed to achieving the 2% inflation target at all costs, but he has not seen enough progress and therefore lacks confidence. With no economic data scheduled for release in the UK this week, the British Pound/US Dollar is still influenced by U.S. dollar fluctuations. The highlight of the week will be Friday's U.S. non-farm payroll data, with an expected increase of 180,000 jobs in November. Traders will be looking for trading opportunities in the British Pound/US Dollar based on these data.

The British Pound/US Dollar has seen a strong rally in the past three weeks, recording significant gains. Meanwhile, investors are turning to higher-risk currencies, contributing to the overall weakness of the U.S. dollar. Given the recent price developments, the British Pound is hovering around the upper resistance level of 1.2720, defined by the 61.8% Fibonacci retracement from 1.3143 to 1.2037. If the bulls successfully break this upper limit, there may be a rebound beyond the 1.2765 (upper boundary of the rising wedge) and 1.2768 (140-week moving average) areas. A breakthrough could target 1.2882 (76.4% Fibonacci retracement from 1.3143 to 1.2037). Conversely, if bullish momentum fades, and bears begin to regain control, investors may see prices retreat towards 1.2590 (50% Fibonacci retracement). The British Pound/US Dollar may stabilize near this technical bottom after a pullback, then resume its upward trend, but breaking below this area could intensify bearish pressure, opening the door to the trendline support and slightly above the 200-day moving average at 1.2473, and the 1.2459 (38.2% Fibonacci retracement) area.

Today, it is recommended to go long on the British Pound before 1.2615, with a stop loss at 1.2600 and targets at 1.2670 and 1.2680.

USDJPY

At the Monday opening, the Japanese Yen strengthened against the US Dollar, continuing the strong upward momentum from last Friday and extending gains from the recent three-week low of 146.22. The escalation of conflicts in the Middle East, coupled with market concerns about the resurgence of respiratory diseases in China, dampened preferences for high-risk assets. This is because the market speculates that the policy stance of the Bank of Japan will undergo a significant shift early next year, becoming a key factor in boosting the yen's relative safe-haven status. Meanwhile, yen bulls seem unaffected by recent dovish remarks from Bank of Japan policymakers, who indicated that it is too early to discuss exiting negative interest rates. On the other hand, the Federal Reserve is expected to stay put in its December policy meeting, and bets on a rate cut starting in the first half of 2024 continue to weaken the trajectory of the US Dollar. Even though Federal Reserve Chairman Jerome Powell tried to temper rate cut expectations last Friday, it failed to provide any breathing room for the US Dollar or alleviate the bearish pressure on the US Dollar/Japanese Yen.

Dragged down by the overall correction of the US Dollar, the US Dollar/Japanese Yen has had a run of bad luck in recent weeks. Entering the early part of this week, the currency pair turned downward, breaking below the 120-day moving average at 146.41, setting a low of 146.22 on September 11th. If this breakthrough holds, prices may slide towards the channel support at 146.00 (a market integer level). If the weakness persists, the possibility of a decline towards the key psychological level of 145.00 and 144.57 (50% Fibonacci retracement level from 137.24 to 151.91) cannot be ruled out. In the case of a bullish reversal, the first technical resistance may impede the upside at 147.22 (100-day moving average) and 148.02 (89-day moving average). Breaking through this upper limit may pose a challenge for the bulls; however, an upside breakout could trigger a rebound towards 150.90.

Today, it is recommended to short the US Dollar around 147.50, with a stop loss at 147.80 and targets at 146.70 and 146.50.

EURUSD

In the early Asian trading session on Monday, the weakness of the US Dollar and the decline in US Treasury yields boosted a rebound in the Euro/US Dollar pair. However, it closed with a fourth consecutive decline before reaching 1.0800. Federal Reserve Chairman Powell's speech provided some support for the view that the Fed has ended the rate-hiking cycle and will shift to a more accommodative stance in 2024. However, Powell added, "It is now premature to confidently assert that the Fed has achieved a sufficiently restrictive stance or speculate when the Fed might ease policy." On the European side, Francois Villeroy de Galhau, the Governor of the Bank of France and a European Central Bank (ECB) policymaker, stated last week that the ECB is not ready to consider lowering borrowing costs now but may consider it later in 2024. Nevertheless, the decline in inflation marked the first clear articulation of a 2% inflation target by the ECB since the summer of 2021, which may signal an adjustment in monetary policy. In other news, an attack on a US warship and a merchant vessel in the Red Sea on Sunday heightened concerns about the escalation of conflict between Israel and Hamas, which could further drive safe-haven fund flows, favoring the US Dollar currency pair.

The Euro/US Dollar experienced a retracement in the latter part of the past week, but the downward momentum eased near the support zone around 1.0800 (a psychological level). If this technical bottom holds, bulls may gain confidence to reload, paving the way for a rebound towards 1.0959 (61.8% Fibonacci retracement level from 1.1275 to 1.0448) and 1.0985 (trendline extending from the March low of 1.0516). If the strength continues, a retest of the November high at 1.1017 may be possible, and a breakthrough could push towards horizontal resistance near the monthly peak in August at 1.1065, ultimately targeting the key level of 1.1100. On the other hand, if market sentiment notably shifts in favor of bears and the pair accelerates its decline, support may extend from 1.0835 to 1.0820, a crucial area where the 200-day moving average is currently located. Further downside movement would shift market attention to 1.0742 (89-day moving average), and once this threshold is breached, a retreat to the level of 1.0692 (November 14th low) may be possible.

Today, it is recommended to go long on the Euro around 1.0815, with a stop loss at 1.0800 and targets at 1.0885 and 1.0895.

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