US Dollar Index

The US dollar index retreated after failing to revisit 110.00. US President Trump imposed 25% tariffs on Canada and Mexico and 10% tariffs on China. Investors expect Trump's tariffs to be inflationary for the US economy. The US dollar index jumped at the start of the week and surged more than 1% to a nearly three-week high of 109.73 as US President Trump ordered last Saturday (February 1) to impose 25% tariffs on imports from Canada and Mexico and 10% tariffs on goods from China starting on Tuesday (February 4). The US dollar trade is one of the most overweight trades at the moment. It really needs a catalyst to continue to move upward. And the tariff threats and actions over the weekend are what are driving this theme now. These tariff moves follow up on multiple threats made by Trump since shortly after winning the presidential election last year, and could trigger retaliation and potentially a trade war that would bring widespread economic dislocation to all the countries involved. The three countries are the largest trading partners of the United States, which has raised market concerns that the tariffs will lead to a rise in the US dollar exchange rate.

After two consecutive weeks of correction, the US dollar managed to resume its rebound and finally ended the week with significant gains. In fact, after falling to a six-week low at the 107.00 support level in the previous week, the US dollar index rebounded significantly and pushed towards the previous high above the 110.00 barrier. The US dollar index jumped to a three-week high of 109.78 at the beginning of the week, and then pulled back sharply to close at 108.40. The 14-day relative strength index (RSI) of the technical indicator on the daily chart is above 52, indicating that the upside potential still exists. A retest of the recent cycle high of 110.18 on January 13 is possible. Therefore, the first resistance can be focused on 108.80 (January 21 high), and the next level is 109.00 (round mark). On the other hand, the support levels to watch include 108.00 {round mark}, followed by the 50-day moving average of 107.80. As long as the US dollar index remains above 107.80-108.00, the bullish outlook remains intact.

Consider shorting the US dollar index around 108.52 today, stop loss: 108.65, target: 108.10, 108.00

WTI spot crude oil

Oil prices fell in turmoil on Monday (February 3) as the market reacted to US President Donald Trump's tariff plan. WTI crude oil prices rose to around $74.50 per barrel during the Asian session on Monday. However, concerns about potential supply disruptions in Canada and Mexico, the two largest suppliers to the United States, provided support for crude oil prices, although expectations of weak fuel demand limited gains. On Saturday, US President Donald Trump announced a 25% tariff on Canadian and Mexican goods, while China, the world's largest oil importer, will face a 10% tariff. In response, Canada, Mexico and China vowed to retaliate with extensive trade restrictions. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are under pressure from Trump to reverse production cuts. However, OPEC+ representatives told Reuters that the group is unlikely to deviate from its current plan to gradually increase production at its meeting on Monday.

From the recent trend, the 14-day relative strength index, a technical indicator of the daily chart, has begun to recover from the oversold zone, and it is estimated that the short-term decline in oil prices may be limited. The current resistance level is the 14-day average of 74.84 and $75.00 (market psychological level). The next level points to the 250-day average of $75.49, and then the $76.00 integer level. As for the support level, the first position can be considered to be $72.00 (integer level), then $71.09 (100-day moving average).

Today, consider going long on crude oil near 71.80, stop loss: 71.60; target: 72.80; 73.00

Spot gold

On Monday (February 3), gold prices broke through a record high of $2,830 as U.S. President Donald Trump announced tariffs on Canada, Mexico and China and threatened similar measures against the European Union, prompting investors to flock to safe-haven assets. Gold prices attracted a lot of selling at the beginning of the new week and retreated from the record high near $2,817 hit last Friday. U.S. President Donald Trump's decision to impose tariffs on Canada, Mexico and China has pushed the dollar back to a more than two-year high, which is seen as a key factor suppressing commodities. In addition, market speculation that the Federal Reserve may delay cutting interest rates this year due to rising prices and surging consumer spending has also prompted funds to flow out of non-yielding gold. In addition, concerns about the potential economic impact of Trump's trade policies and risk aversion may provide some support for safe-haven gold prices. This in turn makes it wise to wait for strong follow-through selling before confirming a short-term top in gold.

From a technical perspective, the intraday decline found some support near the breakout point of the horizontal resistance of $2,770-2,772 (last Monday's high). This area should now act as a key pivot point, which if breached, could trigger some technical selling and drag gold prices to the next relevant support near $2,750. The corrective decline could extend further to the $2,725-2,730 (last week's low) area. Next is the $2,700 round-figure mark, which if decisively breached could pave the way for deeper losses. On the other hand, the $2,817 area now seems to be acting as an immediate hurdle to set new record highs near $2,830. Given that the oscillators on the daily chart remain comfortably in the positive territory and are still far from entering the overbought zone, some follow-through buying will be seen as a fresh trigger for bullish traders. This in turn will set the stage for the continuation of the recent nice uptrend from the December monthly swing low.

Consider going long on gold before 2,810.00 today, stop loss: 2,805.00; target: 2,825.00; 2,830.00

AUD/USD

On Monday, driven by a stronger U.S. dollar, AUD/USD fell below the 0.6100 support level for the first time since April 2020, and the Australian dollar continued to fall against the U.S. dollar for the sixth consecutive trading day. AUD/USD fell more than 1.5% as market sentiment turned to risk aversion due to U.S. President Trump's decision to impose import tariffs on China, Australia's main trading partner. It then rebounded sharply in a V-shaped manner to return above 0.6200. Meanwhile, Australia's retail sales fell 0.1% month-on-month in December 2024, the first decline in nine months. Although the decline was smaller than the expected 0.7% contraction, it highlighted the weakness in consumer spending and increased market speculation that the Reserve Bank of Australia (RBA) may consider cutting interest rates in February.

From the recent technical trend, AUD/USD fell below 0.6200 (market psychological barrier) and the previous low of 0.6131 at the beginning of the week. It is currently hovering around the 0.6100 barrier and once fell below the 0.6100 low. In the US market, the currency pair made a V-shaped rebound and returned to above 0.6200. At this stage, the currency pair is in the downward channel mode on the daily chart, and is strong. The 14-day relative strength index (RSI) of the technical indicator has returned to the area near 45. On the downside, AUD/USD may test the support levels of 0.6164 (January 17 low) and 0.6200 (market psychological barrier). , and further test the market psychological barrier of 0.6000. On the other hand, if the currency pair tries to rebound, it may return to test 0.6257 (10-day moving average), and then 0.6300 (market psychological barrier).

Consider going long AUD today until 0.6215, Stop Loss: 0.6200; Target: 0.6250; 0.6260.

GBP/USD

The US dollar is now fading its earlier gains, driven by fresh headlines on tariffs, prompting GBP/USD to break above the key 1.2400 mark on Monday. GBP/USD fell for the fifth consecutive session, hovering around 1.2270 during Monday's Asian trading hours. The pair has fallen by around 1% as the US dollar index, which measures the greenback against six major peers, strengthened after US President Donald Trump imposed tariffs on China, Canada and Mexico. On Saturday, the US announced that it would impose a 25% tariff on Canadian and Mexican goods, while Chinese exports will face a 10% tariff. The pound faces additional downside risks as traders expect the Bank of England to restart its policy easing cycle, possibly cutting interest rates by 25 basis points to 4.5% in February. Investors are closely watching the Bank of England's monetary policy decision next Thursday.

At the beginning of the week, GBP/USD fell sharply to 1.2270, a drop of more than 1.0%. During the rebound of the currency pair, it encountered strong selling pressure in front of 1.2523 (last month's high) and the 60-day simple moving average near 1.2525, and then turned downward to make a correction. It showed a downward trend and fell below the key support of 1.2400. And further weakened below the 1.0300 mark to 1.2250, a two-week low. The next support level will be the 1.2200 integer support level, and then challenge the swing low of 1.2099 on January 13. As for the upside, the first focus is at 1.2505 (50-day moving average) and 1.2500 (market psychological barrier), and the next level is 1.2523 (January 27 high).

Today, we recommend going long on GBP before 1.2435, stop loss: 1.2420, target: 1.2480, 1.2490

USD/JPY

USD/JPY fell from a high of 155.86 to close at 154.51 amid tariff-induced volatility. The ISM manufacturing purchasing managers index rose, indicating that business activity remains strong despite global trade concerns. The Bank of Japan maintained an optimistic outlook, ready to respond to Trump's protectionist policies. The yen fell against its US counterpart for a second day on Monday and moved away from the more than one-month high hit last week. Concerns about the economic impact of US President Trump's trade tariffs largely overshadowed the hawkish content of the Bank of Japan's opinion summary, weakening the yen. In addition, the broad-based rebound in the US dollar pushed the USD/JPY pair to just below 156.00, or a four-day high, during the Asian trading session. In addition, a new wave of global risk aversion trades and a narrowing of interest rate differentials between Japan and the rest of the world may provide support for the safe-haven yen.

From a technical perspective, last week’s nice rebound from the 153.76 (50% Fibonacci retracement of the rally from 148.65 in December to 158.88 in January) level and the subsequent rise favors bullish traders. That said, any further strength above the 156.00 round number mark is likely to face some hurdles near last week’s swing high, around the 156.25 area. Sustained strength above the aforementioned hurdles could spark a fresh short-covering rally and push the USD/JPY pair to the 156.47 (23.6% Fibonacci retracement)-156.50 area, with the next level to come in the form of the 157.00 round number mark and the 157.60 horizontal hurdle. On the other hand, the 154.55-154.50 horizontal area now appears to be protecting the upcoming downside, with the next move at the 154.00 round number mark. This is closely followed by the January monthly low hit last Monday, around the 153.70 area.

Today, it is recommended to short the US dollar before 154.95, stop loss: 155.15; target: 154.10, 154.00

EUR/USD

On Monday, the euro/dollar rebounded sharply from the low of 1.0200 to above 1.0330, and fell below a three-week low in early Asian trading. The spot price has now fallen back to the more than two-year low hit in January, and it seems easy to continue the months-long downtrend. The US dollar surged across the board in response to US President Donald Trump's weekend decision to impose 25% tariffs on Canada and Mexico and an additional 10% tariff on China. This marks the beginning of a new global trade war and eases investors' interest in high-risk assets. Anti-risk flows provided good support for the safe-haven dollar, which proved to be a key factor in exerting downward pressure on the EUR/USD pair.

The daily chart shows that the EUR/USD pair continues its downward trend that started on January 27, trading around 1.0240 during the Asian trading session before rebounding above 1.0300. However, the pair is still confined within a descending channel pattern and the bearish momentum may continue. The 14-day relative strength index (RSI), a key indicator of momentum, is declining towards the 40 level, indicating that the pair continues to be under selling pressure. And strengthens the bearish outlook. EUR/USD may test yesterday's support at 1.0240, and then 1.0177, which is a 27-month low set on January 14. A break below this level may push the pair towards the 1.0 parity support. A decisive break below this point may intensify the bearish sentiment. On the upside, EUR/USD may face initial resistance at the 34-day moving average of 1.0367, and further to 1.0400 (round mark).

Today it is recommended to go long on Euro before 1.0320, stop loss: 1.0310, target: 1.0360, 1.0370.

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.