USD

The U.S. Dollar Index is trading above 105.30, slightly higher. Despite recent easing trends, Federal Reserve Chairman Jerome Powell maintains a cautious stance on the unpredictable inflation trajectory, currently affecting market dynamics. Like Powell, Fed officials have also expressed concerns about sticky inflation despite long-term restrictive monetary policies. Without any statements from Fed spokespersons, the dollar is not expected to see any significant fluctuations this week. Considering the volatility at the start of the week, the index has fallen more than 1.4% from its April high, although it has rebounded from the recent low reached last Friday. Nonetheless, in the past few trading days, the bulls are clearly on the defensive, especially following the dovish tone at the last Fed meeting and disappointing U.S. employment data. A significant drop in bond yields in May has bolstered confidence for new interest rate implementations. These developments have evolved into major resistance for the dollar.

The daily chart's technical indicators reflect mixed signals for the Dollar Index. The negative slope and negative territory of the 14-day Relative Strength Index (RSI) suggest that bears may be rising, indicating a bearish momentum. However, despite this negative environment, there are some bullish factors. Notably, considering recent sell-offs and technical configurations, and breaking below the 20-day moving average (105.74), further highlights the short-term bearish momentum. The Dollar Index's short-term technical outlook is bearish-dominated. However, its positions above 104.43 (the 50.0% Fibonacci retracement level from 102.35 to 106.51) and the 200-day moving average (104.23) highlight the potential for a long-term bullish trend to resume. Therefore, on the upside, short-term resistance levels could be observed at 105.53 (the 23.6% Fibonacci retracement level) and 105.80 (weekly chart triangle resistance line).

Today, consider shorting the U.S. Dollar Index around 105.50, with a stop loss at 105.65 and targets at 105.15 and 105.10.

WTI Spot Crude Oil

During the Asian trading session on Tuesday, WTI crude oil prices hovered around $78.00 per barrel. Oil prices slightly declined following an Israeli attack on Rafah in Gaza. Meanwhile, ceasefire negotiations are ongoing but unresolved. During the same session, WTI crude oil prices were slightly above $78.00 per barrel following the Israeli attack on Rafah, leading to a minor increase in oil prices. The ceasefire talks continue without resolution. According to Reuters, the Israeli military targeted Rafah on the southern edge of Gaza, an area providing refuge to over a million displaced Palestinians, through aerial and ground attacks. On Monday, Hamas accepted a mediator's ceasefire proposal, but Israel rejected these terms, stating they did not meet their requirements. The current conflict in the Middle East has heightened concerns about potential disruptions to the region's oil supply, thereby supporting oil prices.

As the market struggles to secure a possible ceasefire agreement, WTI U.S. crude oil prices will fluctuate around $78.50 per barrel, with buying positioned around the $78.50 mark. Recent bearish sentiment in oil led to a continuous decline in WTI from the early week high of $83.00 at the start of May, with U.S. oil prices dropping about 3% since then. WTI has closed down for six consecutive trading days, breaking below the 200-day moving average of $79.80. This continued decline is dragging the barrel price back to last week's volatile low around $77.64, with a breakdown pointing towards $77.26 (125-day moving average), and a trend line extending right from the February 12th low of $75.46 at $77.16. The next level to watch is $75.46 (the low from February 12th). On the upside, the first resistance is at the 200-day moving average of $79.80, and the $80.00 level (a psychological market barrier) is limiting.

Today, consider going long on crude oil near $77.75, with a stop loss at $77.50 and targets at $78.90 and $79.10.

XAUUSD

After falling to $2,310 in the early European session, gold prices rebounded to around $2,330 during the latter part. The benchmark 10-year U.S. Treasury yield remained below 4.5%, providing support for gold prices. However, gold prices fell back to near $2,310 during the U.S. session on Tuesday as demand for the dollar recovered. Yet, the recent U.S. non-farm payroll data has increased bets that the Federal Reserve might cut interest rates later this year. Expectations of an easing cycle could boost gold prices as it becomes a cheaper option for foreign buyers. Additionally, strong buying from central banks and demand from Asian markets will continue to support precious metals in the short term. On the other hand, signs of ongoing tensions in the Middle East might boost safe-haven flows, which would be favorable for gold prices. Minneapolis Federal Reserve President Neel Kashkari is scheduled to speak later on Tuesday. A hawkish tone from Fed officials could support the dollar and pressure gold priced in dollars.

Technically, although gold prices have been weak recently, the constructive outlook remains unchanged, as the daily chart shows gold prices above the key 50-day moving average of $2,246.00. In the short term, gold prices have been hovering within a downward trend channel since mid-April. Nonetheless, the path of least resistance is upwards, as the 14-day Relative Strength Index (RSI) remains in the bullish region around 53.0. The upper boundary of the downward trend channel converging with the April 26 high in the $2,350-$2,355 area will be gold's first upward target. Beyond that, the next hurdle will be near the psychological barrier of $2,400, followed by the historic high near $2,431.30. On the other hand, the $2,300 round number is the initial support level for gold. Key competitive levels are at the 50.0% Fibonacci retracement level of $2,288.80, and $2,275, representing the low from May 3 and the lower boundary of the downward trend channel.

Today, consider going long on gold around $2,310, with a stop loss at $2,306.00 and targets at $2,330.00 and $2,335.00.

AUDUSD

During the early European session on Tuesday, the Australian dollar weakened against other currencies as investors evaluated the monetary policy decision and comments from Reserve Bank of Australia Governor Michele Bullock. The AUD/USD pair failed to sustain its upward trend from multiple trading days, falling back slightly below 0.6600 due to a strong rebound in the USD and a general risk-off sentiment. After the Reserve Bank of Australia decided to keep the interest rate steady at 4.35%, the Aussie halted its winning streak. However, market speculation about a possible hawkish turn by the RBA grew after last week's inflation data exceeded expectations. In the policy statement, the RBA noted that inflation is continuing to ease, although at a slower pace than expected. In the post-meeting press conference, RBA Governor Bullock stated that the current interest rate level should be sufficient to bring inflation back to the target, adding that she sees no need for further tightening.

The daily chart shows that on Tuesday, the AUD/USD traded just below 0.6600. The pair is consolidating within a symmetrical triangle pattern, with the 14-day Relative Strength Index (RSI) above 50 (57.90), suggesting a bullish inclination. The AUD/USD could test the major support level near 0.6648 (close to last week’s high). Breaking above this level could prompt the pair to retest 0.6676 (the 61.8% Fibonacci retracement of 0.6871 to 0.6362), and March's high of 0.6667, followed by the psychological level of 0.6700. On the downside, the AUD/USD might find immediate support at the psychological level of 0.6600, followed by the 9-day moving average at 0.6556. If the pair falls below this moving average, it could face further pressure, testing the pullback support at the psychological barrier of 0.6500, and the lower trend line of the symmetrical triangle near 0.6505 might act as another support level.

Today, consider going long on the Australian dollar near 0.6580, with a stop loss at 0.6565 and targets at 0.6630 and 0.6640.

GBPUSD

As traders prepare for the Bank of England's monetary policy decision on Thursday, the British pound fell sharply against the U.S. dollar. Over the past few days, the GBP/USD pair has been trading within the range of 1.2500-1.2595. The pair erased most of its intraday gains during the U.S. closing session at the beginning of the week. It dropped on Tuesday, touching a low of 1.2500. Initially, improved risk sentiment made it difficult for the dollar to find demand. However, comments by Federal Reserve officials during the U.S. session helped Treasury yields rebound, allowing the dollar to remain resilient against its counterparts. In the absence of fundamental drivers and significant data releases, risk sentiment could influence the GBP/USD's trajectory for the rest of the day. U.S. stock index futures were mixed. A bullish opening on Wall Street might limit the dollar's gains, helping the GBP/USD hold its ground. According to the latest developments, the Israeli military has taken control of the Palestinian side of the Rafah crossing. Ceasefire talks are expected to be held in Egypt later in the day. If geopolitical tensions ease, risk capital might return to the market.

The daily chart shows the 180-day moving average (1.2527) aligning with the 38.2% Fibonacci retracement level of 1.2526 (from 1.2893 to 1.2299). If GBP/USD confirms this level as support this week, the next resistance levels could be at 1.2600 (a psychological market level), 1.2596 (the 50.0% Fibonacci retracement level), and then 1.2666 (the 61.8% Fibonacci retracement level). If GBP/USD stays below 1.2550, buyers might remain cautious. In this case, support could be found at the psychological level of 1.2500. Breaking below this level could expose the May 2nd low of 1.2474, the 14-day moving average of 1.2480, followed by the 23.6% Fibonacci retracement level at 1.2439, with further attention on the psychological level of 1.2400.

Today, consider going long on GBP/USD around 1.2495, with a stop loss at 1.2475, and targets at 1.2545 and 1.2550.

USDJPY

After a decline last week due to potential intervention and weak U.S. employment data, the USD/JPY rebounded. Mild criticism from Janet Yellen regarding intervention measures may have helped the currency pair rise. Japanese monetary officials continue to threaten intervention, making the path upwards "bumpy." The USD/JPY extended its gains for a second consecutive trading day, trading near 154.60 during the European session. A correction in the U.S. dollar provided support, bolstering the USD/JPY. However, due to the weak U.S. non-farm payroll data released last Friday, investor optimism increased, and the USD/JPY may face resistance. In Japan, Japan's top currency diplomat, Masato Kanda, hinted earlier on Tuesday that measures might be taken to address excessive market volatility. Last week, the yen rose due to market speculation that Japanese authorities would intervene. Data from the Bank of Japan suggests that the Japanese authorities may have allocated approximately 6.0 trillion yen on April 29 and 3.66 trillion yen on May 1 to support the yen.

On the daily chart, the USD/JPY is undergoing a short-covering rebound near 152, supported there, but the pressure from the potential intervention persists. Whether USD/JPY will resume its upward trend, the key resistance above is still pressured by a barrier zone consisting of 154.95 (the 38.2% Fibonacci retracement level from 146.47 to 160.20), 155.00 (a whole number), and 155.16 (14-day moving average). If breached, it could continue to probe upwards towards 155.44 (9-day moving average) and 156.28 (last Friday's high). If the short-covering rebound is resisted near the 154.95 - 155.00 - 155.16 area, further declines are expected under the psychological impact of fear of intervention. The targets then shift to 153.83 (Tuesday's low), 153.33 (the 50.0% Fibonacci retracement level from 146.47 to 160.20), and the 153.00 (whole number) level.

Today, consider shorting the USD around 154.95, with a stop loss at 155.20, and targets at 154.00 and 153.80.

EURUSD

The resurgence of buying bias for the dollar has pressured risk-related assets, causing the EUR/USD to retreat to the 1.0750 area after failing to retest the 1.0800 region. On Tuesday morning in Europe, the pair was consolidating around 1.0750. The recent technical outlook for the currency pair shows a weakening of its bullish momentum. With the lack of significant data releases early in the week, the EUR/USD struggled to find a direction. Although improved risk sentiment made it hard for the dollar to find demand, hawkish comments from Federal Reserve officials helped limit the EUR/USD's losses. Data from Germany showed that factory orders contracted by 0.4% in March, below the market expectation of a 0.5% growth, which weighed on the euro. Meanwhile, if major Wall Street indices continue to rise on the back of Monday's gains, it will be difficult for the dollar to maintain its resilience against its counterparts, thus potentially lifting the EUR/USD.

The EUR/USD rose on Monday and approached the 1.0800 level, just a step away from breaking through the 50-day (1.0792) and 200-day (1.0795) moving averages. Bears must ensure that the price stays below these technical indicators to halt bullish momentum; any slip-up could trigger a rebound to 1.0812 (last week's high), followed by the key Fibonacci barrier at 1.0870 (the 50.0% Fibonacci retracement level from 1.11393 to 1.0601). If a bearish turn occurs at the current level, traders should closely watch 1.0728 (the 23.6% Fibonacci retracement level) as a key support area. Below these thresholds, focus would shift to the 20-day moving average at 1.0695, and then 1.0645. Retesting this latter area might see the pair stabilize before attempting another rally. However, if it breaks through, a drop towards the 1.0600 mark is not out of the question.

Today, consider going long on the EUR/USD around 1.0730, with a stop loss at 1.0715, and targets at 1.0780 and 1.0790.

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