USD

The US Dollar Index is currently trading around 105, reflecting a moderate decline during Monday's trading. As Federal Reserve Chairman Jerome Powell mentioned, persistent inflation remains uncomfortably high, which has kept the dollar stable. However, the weak employment report released last Friday provides clues that the cooling of the US economy, potentially required for the Fed to start cutting rates, may have begun. This could trigger further downward movement for the dollar. On Monday, the dollar slightly rebounded, with the Dollar Index trading just above 105.00. The US economy shows mixed signals with strong demand and a tight labor market indicating slow but significant wage growth, fueling inflation. Chairman Powell remains cautious about the uncertain trajectory of inflation, emphasizing that restrictive monetary policy has contained economic overheating. The weak labor market data last Friday has increased the likelihood of a rate cut in September. Due to the weak employment data, market forecasts for a Fed rate cut before September have strengthened. US Treasury yields have plummeted, with 2-year yields dropping to 4.80%, and 5-year and 10-year yields falling to 4.50% and 4.58% respectively, which is unfavorable for the dollar trend.

The technical outlook for the Dollar Index primarily reflects bullish dominance and potential for a downward retracement. The 14-day Relative Strength Index (RSI) shows a negative slope in the negative zone, suggesting increased momentum for bearish selling. However, since the index is still trading above 104.92 and 105.00, the bearish momentum is still insufficient. Additionally, the Moving Average Convergence Divergence (MACD) shows rising red bars, suggesting that bears are regaining ground. Serious consideration should be given to bearish signals when bears push the index below 104.92 and 105.00 again. If the index breaks below last week's low of 104.52 in the short term, it will test the 104.00 level. However, the longer-term moving averages remain a strong support for maintaining the overall bullish outlook. On the upside, attention should be paid to the 105.53 and 105.80 areas.

Today, consider shorting the US Dollar Index around 105.22, with a stop loss at 105.40 and targets at 104.85 and 104.80.

WTI Spot Crude Oil

After news emerged of a potential ceasefire between Israel and Hamas in Palestine, WTI crude oil futures saw a slight increase on Monday. The oil market will continue to closely monitor U.S. weekly production updates, as output may exceed demand. Oil prices closed lower last Friday, marking the largest single-week drop in three months, as investors weighed weak U.S. employment data and the potential timing of a Federal Reserve rate cut. U.S. crude oil futures for June fell $0.84, or 1.06%, to $78.11 per barrel. U.S. crude dropped 6.9% last week. Data released on Friday showed U.S. job growth in April slowed more than expected, and wage growth cooled, prompting traders to increase bets on the Fed's first rate cut of the year in September. Additionally, the next OPEC+ meeting is scheduled for June 1. Three sources from OPEC+ said the group might extend voluntary production cuts beyond June if there is no increase in oil demand.

Technically, the crossing of the 5-day moving average below the 200-day moving average forms a bearish 'death cross,' suggesting further declines in oil prices. The 120-day moving average near $77.88 (77.22), and the trend line from the low of $75.46 on February 12, serve as the first line of defense before testing the real uptrend. Breaking through the support area at $75.12 could lead to a drop to $73.60. Additionally, $79.81 and $79.25 become the first key levels for an upward move. The key barrier is $80.00 (psychological market level). If tensions escalate further, oil prices are expected to rebound to the $82.30 level.

Today, consider going long on crude oil around $78.00, with a stop loss at $77.70, and targets at $78.90 and $79.20.

Top of Form

XAUUSD

Yesterday, gold prices surged to a high of $2,332 amid weaker-than-expected U.S. employment data and heightened geopolitical tensions, which drove U.S. Treasury yields lower, aiding the rise in gold prices. In the Asian trading session on Monday, gold prices briefly lost the crucial support near $2,300, dropping to a low of $2,291.80, but then rebounded above $2,300 with buying support. This week, investors will focus on Federal Reserve speeches and the preliminary reading of the Michigan consumer sentiment index from the U.S. on Friday. Friday's U.S. employment data indicated signs of a slowing U.S. economy. The ISM Services PMI fell into contraction territory, increasing the likelihood of a Fed rate cut, with traders now anticipating a 38 basis point cut by year-end due to the weak U.S. economic data, which propelled gold to $2,332.

Gold's bullish mid-term outlook remains intact, as the daily chart shows it is above the key 34-day moving average at $2,295.80 and the psychological level of $2,300. However, in the short term, gold has been constrained by a descending trend channel since mid-April, and further consolidation is possible. Additionally, the 14-day Relative Strength Index (RSI) hovers near the 50 midpoint, indicating market indecision. Gold's first upward barrier is near $2,332.20 and $2,340.50. Decisively breaking above these levels would restore a positive short-term outlook. The next barrier is between $2,350 and $2,355, the convergence point of the April 26 high and the upper boundary of the descending trend channel. If the bullish momentum breaks this level, it could reach the psychological threshold of $2,400. On the downside, any further selling below $2,300 - $2,295.80 could lead to a drop to $2,288.80 and $2,277.30. If these are not supported, further declines to $2,256.70 - $2,255.10 are anticipated.

Today, consider going long on gold just before $2,320, with a stop loss at $2,316.00, and targets at $2,340.00 and $2,345.00.

AUDUSD

On Monday, the AUD/USD maintained a bullish inclination, continuing its multi-day rally above the 0.6600 level ahead of the Reserve Bank of Australia's key interest rate decision. In the early Asian session, the AUD/USD continued to rise near and above 0.6600. Investors are closely watching the RBA's interest rate decision on Tuesday. Last Friday, the U.S. Bureau of Labor Statistics reported a slowdown in the U.S. job market for April that exceeded expectations, leading investors to increase bets on the Federal Reserve beginning to cut interest rates in September and now expect the Fed to cut borrowing costs twice this year instead of just once as predicted before the data was released. This has pressured the USD and boosted the AUD/USD. In Australia, given the persistently high inflation levels, the RBA is likely to keep the key interest rate at a 12-year high of 4.35% on Tuesday. Market participants will look for more clues from the post-meeting press conference by the RBA. Industry insiders expect the interest rate peak in November 2023 to reach 4.35%, followed by a decrease to 3.10% by December 2025.

On Monday, the AUD/USD traded around 0.6620. The pair remains within a symmetrical triangle pattern, and the 14-day Relative Strength Index (RSI) is above 50, indicating bullish sentiment. The AUD/USD may retest last week's high near the 0.6648 level. Breaking this level could lead to exploration up to 0.6676. On the downside, the AUD/USD might find immediate support at the psychological level of 0.6600, followed by the 200-day moving average at 0.6542. Breaking below this could pressure the pair, testing the whole number level of 0.6500, and nearing the symmetrical triangle's lower boundary at 0.6505.

Today, consider going long on the Australian Dollar just before 0.6605, with a stop loss at 0.6590, and targets at 0.6650 and 0.6655.

GBPUSD

Following last Friday's volatility, GBP/USD rose on Monday to just below 1.2600. A weak U.S. jobs report for April and improved risk sentiment made it difficult for the dollar to strengthen. Last week, GBP/USD continued its upward trend, breaking through 1.2600 for the first time since mid-April to a near one-month high of 1.2634. Meanwhile, GBP/USD continued to face buying pressure after opening strong last week. The Federal Reserve showed a dovish stance (or at least not as hawkish as expected) at last week's meeting and Chairman Jerome Powell's subsequent press conference, intensifying selling pressure on the dollar. Geopolitical issues, mainly in the Middle East, seem to have entered a wait-and-see mode, and potential ceasefires among the conflicting parties are gradually progressing. The Bank of England is expected to keep interest rates unchanged at its meeting on Thursday. On Friday, the UK's first quarter GDP release will also be a focal point for traders.

Technically, the GBP/USD's May high so far of 1.2634 is an upcoming resistance level. Currently, GBP/USD is around 1.2550, and breaking this level could revisit the psychological market level of 1.2600, and the 50.0% Fibonacci retracement from 1.2893 to 1.2299 at 1.2596. Subsequent levels could reach 1.2666. On the downside, initial support is at the psychological level of 1.2500. Breaking this level could expose the May 2 low of 1.2474, and the 14-day moving average at 1.2471, followed by the latest pivot low at 1.2466. A break below these levels could target the 23.6% Fibonacci retracement from 1.2893 to 1.2299 at 1.2439, and further attention may be needed at the psychological level of 1.2400.

Today, consider going long on the British Pound just before 1.2545, with a stop loss at 1.2525, and targets at 1.2595 and 1.2605.

Top of Form

USDJPY

Despite a weak U.S. dollar, USD/JPY maintained gains near the 154.00 level. Weak U.S. data put pressure on the dollar. Speculation about Japan's intervention to support the yen remains firm. The USD/JPY pair ended three consecutive days of declines during Monday's Asian trading session. A mild dollar rebound and comments last week by U.S. Treasury Secretary Janet Yellen on potential Japanese intervention measures drove the pair's rise. The pair is currently trading just below 154.00. Over the weekend, Yellen noted significant fluctuations in the yen exchange rate last week but declined to comment on whether Japan intervened to support the yen. Over the past two years, her comments on Japan's future intervention measures have varied, often emphasizing the G7 agreement to support market-determined exchange rates. Yellen stressed that intervention should only aim to reduce market volatility, not to manipulate exchange rates. Meanwhile, Japanese Finance Minister Shunichi Suzuki has not confirmed any intervention measures, according to Bloomberg. Weak U.S. employment data has led to speculation that the Fed will cut rates in September, putting selling pressure on the dollar.

On the daily chart, USD/JPY has seen a significant drop from near 160.20 to a near-month low of 151.85 following intervention since April 1990, falling more than 5.0% in just five trading days, easing the overbought conditions indicated by various technical indicators. Currently, it finds temporary support near 152.00 - 151.85. A further effective break below 152.00 - 151.85 could extend the dollar's decline to the April 5th low of 150.80. Subsequent levels include the March 21st low of 150.26. Breaking this level could lead the pair towards the psychological level of 150.00. Conversely, if it holds above 153.33 and the whole number at 153.00, there might still be potential for USD/JPY to test higher levels. The next attack could target the 154.95 position. The next resistance level is then at 156.96.

Today, consider going short on USD/JPY just before 154.15, with a stop loss at 154.40, and targets at 153.00 and 152.80.

Top of Form

EURUSD

As the U.S. dollar exhibits uncertain movements, EUR/USD opened this week on a higher note, prompting the pair to attempt a move just below the 1.0800 region, where the 200-day moving average (1.0795) converges. In the early Asian session on Monday, EUR/USD strengthened for the fourth consecutive day to near 1.0765. The weakness in the U.S. dollar provided some support for EUR/USD. Traders are awaiting the German and Eurozone Hamburg Commercial Bank Purchasing Managers' Index (PMI) data, as well as the Eurozone Producer Price Index (PPI) data later in the day. Weaker-than-expected U.S. employment data increased the likelihood of a Fed rate cut in September. The Chicago Mercantile Exchange FedWatch Tool shows that financial markets have raised the probability of a rate cut in September from 55% last week to nearly 90%, thereby pressuring the dollar and boosting EUR/USD. On the other hand, economists say that the prospect of a divergence in rate cut policies between the European Central Bank and the Fed might weigh on the euro.

Following the non-farm payroll data release, EUR/USD reached a high of 1.0812 last week but retreated to the 1.0760 price area before the close. Technically, the weekly chart shows EUR/USD rebounding from the flat 100-week moving average near 1.0680, forming support. However, EUR/USD seems to struggle to rebound after a mildly bearish 20-week moving average, which poses resistance around 1.0820 and 1.0812. Technical indicators have rebounded from recent lows but remain in negative territory. Overall, further upward movement is still pending confirmation. Daily chart technical indicators lean towards a continuation of the uptrend, though not yet confirmed. EUR/USD is indeed above the 20-day moving average at 1.0700, but nonetheless, a EUR/USD rebound will soon face resistance near the bearish 200-day moving average. Thus, short-term downward support to watch is at 1.0700, with a break below leading to 1.0670 and 1.0601 , as well as 1.0600.

Today, consider going long on EUR/USD just before 1.0750, with a stop loss at 1.0730, and targets at 1.0800 and 1.0810.

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