Dollar Index

After the release of U.S. retail sales data in November, the dollar's rising momentum stalled. Traders did not celebrate as much as they did after the U.S. services PMI was released, with retail sales slightly above expectations. The U.S. Dollar Index is hovering at 107.00, seemingly unable to break above. The U.S. dollar index, which measures the greenback's value against a basket of currencies, edged lower at the start of the week after a flurry of data and headlines put more attention on the upcoming Federal Reserve interest rate decision. The dollar retreated from last week's strong rally as Chinese economic data and stimulus boosted risk appetite. Still, rising U.S. Treasury yields helped limit the dollar's losses. Consumer Price Index (CPI) data released last week showed continued price pressures and failed to ease policymakers' inflation concerns. Despite higher inflation data, markets have fully priced in a 25 basis point rate cut by the Federal Reserve this week, with officials likely to implement a "hawkish rate cut" to lay the groundwork for a pause in rate cuts in January. Overall, the dollar remains sensitive to incoming data and central bank signals.

Recent trends show that the technical indicators of the U.S. dollar index rebounded significantly last week. The 14-day relative strength index (RSI) and MACD indicators show that the U.S. dollar index has rebounded from last week's low so far, once reaching 107.00 (integer mark), and Above 10717 (Monday's high), but lacks range-bound momentum to further break through 107.56 (November 22 high) and 108.00 (market psychological threshold). On Monday, the U.S. dollar index retreated from its recent high of 107.17, reflecting a pause in last week's rally. Nonetheless, the short-term trend outlook remains constructive if the USD Index can remain above the 20-day (106.53), and 9-day (106.51) simple moving averages. With mixed data and a key Fed decision approaching, traders may remain cautious and wait for clearer directional signals before pushing the dollar significantly higher.

Today you can consider shorting the US dollar index near 107.10, stop loss: 107.20, target: 106.65, 106.60

WTI crude oil

Oil prices fell in U.S. trading after an already subdued session. Pemex, the main driver of the recession, reported on Tuesday that its Gulf platforms were back operating at full capacity. WTI oil prices were trading around $70.00 on Tuesday. WTI oil prices were flat as traders awaited Wednesday's Federal Reserve interest rate decision. However, concerns over China's slow global demand growth may temporarily limit crude oil price gains. China's total retail sales of consumer goods in November were lower than expected at an annual rate, raising concerns about weak consumer spending in the country. This in turn suppresses WTI oil prices. At this stage, the market may turn cautious and traders may take profits as they await the Federal Reserve's interest rate decision on Wednesday. The Fed is expected to cut interest rates by 25 basis points at its December meeting. Traders will get more clues from the press conference and dot chart following the monetary policy meeting. Any hawkish comments from Fed officials could boost the dollar and weigh on dollar-denominated commodity prices.

Crude prices gave up gains early in the week after Chinese retail sales data showed slower-than-expected growth. This adds to investor doubts about the overall outlook for 2025, with China's recovery being one of the key factors that will allow overall oil consumption to rise again. China's oil demand could worsen further in 2025 if President-elect Donald Trump further increases all promised tariffs. On the upside, $71.00 (the round number mark), and the 100-day simple moving average at $71.03 serve as solid resistance on the upside. If oil $71.74 (110-day moving average). If this level can be broken, $72.23 (50.0% Fibonacci bounce level), and $72.54 (November 7 high) will become the next key areas. On the downside, the 34-day EMA of $69.26 is the first price target. A breakout would lead to $68.50 (large descending triangle resistance on the daily chart).

Today you can consider going long crude oil near 69.52, stop loss: 69.35; target: 70.80; 71.00

Spot Gold

After a shallow recovery attempt at the start of the week, gold remains under moderate bearish pressure, trading below $2,650 on Tuesday. Growing expectations of a less dovish outlook from the Federal Reserve and rising U.S. bond yields are weighing on gold prices ahead of the year's final Federal Open Market Committee meeting. Spot gold had almost no fluctuations at the beginning of the week and fluctuated within a narrow range. Although gold prices were supported by expectations of interest rate cuts by the Federal Reserve and central bank gold purchases, the market remained cautious in a complex environment and profit-taking limited gold price gains. Gold prices hovered around 1 troy ounce. ounce around $2,650. Demand for the U.S. dollar increased in the short term due to caution ahead of central bank announcements. In the coming days, the U.S. Federal Reserve, Bank of England and Bank of Japan will hold monetary policy meetings and decide on interest rates, while hinting at changes 2025 may bring. At this stage, the persistence of geopolitical risks is one of the reasons for gold's strength. In addition, major Asian central banks have resumed gold purchases.

From a technical perspective, the daily chart for GOLD/USD shows it moving around the opening price, within a tight range. The same chart shows that gold prices are unable to clearly break above the flat 20-day simple moving average (2655.501), while the technical indicator 14 remains flat within neutral levels. Indicating the current lack of clear directional bias. The 100-day (2603) and 200-day (2466) moving averages maintain an upward slope below current levels, limiting gold’s bearish potential. Therefore, the upward resistance can be considered at the 50-day area of ​​$2,671.20 and $2,673 (the central axis of the horizontal channel on the daily chart). A breakout would challenge the $2,700 level. On the downside, 2,640.00 is the first level of support, a break of which could lead to a retest of $2,624 (89-day EMA). The last line of defense for gold buyers lies at the $2,600 level.

Today you can consider going long gold before 2,640.00, stop loss: 2,636.00; target: 2,660.00; 2,665.00

AUD/USD

Ahead of the Fed's policy announcement, market sentiment was cautious, with AUD/USD falling sharply to around 0.6340. The Fed is expected to signal fewer rate cuts in 2025. A deterioration in Australian consumer sentiment has boosted dovish bets on the Reserve Bank of Australia's February meeting. The Australian dollar traded flat after signs of strain on domestic consumer confidence, with December data showing the currency fell as consumers grew increasingly pessimistic about the economic outlook. In addition, traders expect the Federal Reserve to cut interest rates on Wednesday, with attention mainly focused on the Fed's forecast for 2025. The Westpac Australian Consumer Confidence Index fell 2% to 92.8 points in December, reversing two months of positive momentum. The index rose 5.3% in November. Traders are likely to focus on U.S. retail sales data due later in the North American session.

AUD/USD continues to trade around 0.6340 on Tuesday. Analysis of the daily chart shows that bearish bias prevails as the pair is confined within a descending channel pattern. Additionally, the 14-day relative strength index (RSI), a technical indicator, is hovering around 34, indicating continued bearish momentum is active. AUD/USD continues to face initial support at 0.6336 (1-year low), and 0.6348 (yearly low on August 5), last seen on August 5. A move below this level could put downward pressure on the AUD/USD pair, taking it closer to the 0.6300 (round-number mark) area. Regarding resistance, the AUD/USD pair tested the 9-day moving average at 0.6384, followed by 0.6400 (round number mark), and the 14-day moving average at 0.6420, which is aligned with the upper limit of the descending channel. A decisive break above this channel could push the pair towards the 0.6470 (38.2% Fibonacci bounce level from 0.6687 to 0.6336) levels.

Today you can consider going long Australian dollar before 0.6320, stop loss: 0.6310; target: 0.6360; 0.6370.

GBP/USD

GBP/USD gave up early gains and traded fairly flat on the day. UK data showed the ILO unemployment rate held steady at 4.3% in the three months to October, while annual wage inflation climbed to 5.2%. Poor U.S. retail sales limited dollar demand. Breaking a three-day losing streak, GBP/USD briefly fell to near the 1.2600 level last week before recovering more than 0.5% on Monday and briefly touching the 1.2700 level. The UK's services purchasing managers' index hit an 11-month low in December, but manufacturing sub-indicators rose, boosting the pound. Sterling traders will focus on Tuesday's UK wages and labor data, with quarterly earnings expected to average an annualized rate of 5%. Markets are awaiting the Federal Reserve's interest rate decision on Wednesday, with traders keeping a close eye on the Fed's latest Summary of Economic Projections (SEP) or policymakers' interest rate forecasts. Sterling traders will be watching for updates on UK consumer price index (CPI) inflation data on Wednesday, while the pound market is waiting to see the Bank of England's latest interest rate decision due to be released on Thursday.

A more general bearish trend is emerging on the daily chart for GBP/USD, with resistance remaining at the 40-day SMA at 1.2769 and the 200-day SMA at 1.2818. Maintaining downward-biased moving averages reinforces bearish sentiment as bears continue to dominate the market after GBP/USD failed to regain key resistance levels. Technical indicators The Moving Average Convergence and Divergence (MACD) indicator remains subdued, and the bar shows limited bullish momentum, indicating that upward attempts may face strong resistance. GBP/USD has recently exceeded the small positive line, indicating a mild rebound after the sharp decline in the previous trading day. However, the rebound remains limited, with GBP/USD facing key resistance at the 1.2700 mark. This price action points to indecision among traders, highlighting the risk of another bearish move. If bears regain control, last week's lows of 1.2608, and 1.2600 (the market's psychological threshold) will be tested, below which a test of 1.2563 (76.4% Fibonacci retracement of 1.2487 to 1.2811) will be tested. On the other hand, if GBP/USD breaks effectively above 1.2700, the 40-day EMA at 1.2769 and the 200-day EMA at 1.2818 will be tested.

Today it is recommended to go long before 1.2690, stop loss: 1.2680, target: 1.2740, 1.2750

USD/JPY

The dollar fell after a six-day rally. The widening gap between U.S. and Japanese government bond yields could limit U.S. attempts to the downside. The yen continued to trade lower against the U.S. dollar during the Asian session on Tuesday, as markets grew increasingly convinced that the Bank of Japan may keep interest rates on hold this week. In addition, U.S. Treasury yields have surged recently on expectations that the Federal Reserve will take hawkish interest rate cuts, which is seen as another factor weighing on the low-yielding yen. On top of this, overall market risk appetite is positive, weighing on demand for the safe-haven Japanese yen, even as a modest decline in the U.S. dollar limits the upside for the USD/JPY pair. Traders also appear reluctant to make aggressive directional bets and may choose to stay on the sidelines ahead of key central bank event risks this week. The Federal Reserve is due to announce its policy decision on Wednesday and the Bank of Japan on Thursday. 153.65 (61.8% Fibonacci rebound level from 156.75 to 148.65)

From a technical point of view, USD/JPY broke through the November high of 156.75 to the December low of 148.65 and the Bonacci rebound level of 153.65 on Monday, and simultaneously broke through the 154.00 integer mark, which can be regarded as a key trigger for bulls factor. Additionally, the daily chart oscillators are just starting to gain bullish momentum and support the prospects for further USD/JPY strength. Therefore, some follow-through buying after the early-week swing highs (around the 154.45-154.50 area) should pave the way for a regain of the psychological 155.00 mark. USD/JPY is likely to rise towards the mid-155.00 level before hitting the 156.00 mark and then the 156.25 resistance zone. On the other hand, the 61.8% NATCH rally is near the 153.65 area, which currently appears to provide downside support, followed by the overnight low near the 153.35 area. This is closely followed by the 153.00 mark, below which the USD/JPY pair could accelerate its decline towards the key 200-day simple moving average support near the 152.13 area.

Today it is recommended to short before 153.75, stop loss: 153.90; target: 152.90, 152.80

EUR/USD

On Tuesday, EUR/USD held around 1.0500 during the US trading session. The negative turn in risk sentiment restored safe-haven demand for the dollar earlier in the day, while tepid US retail sales data put short-term pressure on the greenback. EUR/USD started the week with a slow bullish momentum, trading above the recent consolidation range high of 1.0500, but with a clear lack of upside momentum. The relatively limited European data this week has left EUR traders with a glut of data from the US. The market largely ignored the statements of several ECB officials at the opening of Monday. The market is looking forward to the Fed's interest rate decision on Wednesday, and traders will pay close attention to the Fed's revised Summary of Economic Projections (SEP) and policymakers' interest rate forecasts. The US PMI for December was mixed: the services PMI hit a multi-year high, while the manufacturing PMI fell further below 50.0, indicating a contraction in the economy. From a technical perspective, EUR/USD is expected to extend its recent decline.

The daily chart of EUR/USD reflects an overall bearish trend as the pair continues to trade below the 30-day moving average at 1.0555 and the 50-day moving average at 1.0677. The continued selling pressure, as the moving averages maintain their downward bias, prevents the pair from making significant gains in the short term. The MACD indicator remains subdued with its signal line hovering below zero, suggesting weak momentum and cautious buyers. At this stage, the pair has not been able to convincingly break above the 1.0550, and 1.0555 (30-day moving average) resistance zones, suggesting limited upside potential in the short term. If buyers find support, a retest of 1.0600 (psychological level) is likely. On the downside, if the pair fails to sustain this rebound, it could face renewed selling pressure with the support at 1.0453 (13 Dec low) likely to come into focus. The overall outlook remains bearish to 1.0400 (round mark) before a clear breakout of key resistance levels.

Today, it is recommended to go long on the euro before 1.0478, stop loss: 1.0465, target: 1.0530, 1.0540.

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