US Dollar Index

On Wednesday, the US dollar seemed unable to recoup losses against most major currencies earlier this week. While the ADP and S&P Global PMI data were upbeat, the ISM data contradicted itself. The US dollar index continued to test the main support level of 107.35, which remained intact throughout the day. The US dollar index, which measures the value of the US dollar against a basket of currencies, lost momentum this week after it struggled to re-touch the 110.00 level, falling below 108.00. Recent developments include President Trump's imposition of a 10% tariff on Chinese imports, while tariffs on Canadian and Mexican goods have been suspended for 30 days following negotiations. Investors are concerned that these tariffs could add to inflationary pressures in the US economy. Meanwhile, traders are gearing up for Friday's US non-farm payrolls data, which is expected to influence the direction of the Federal Reserve's monetary policy.

Driven by the good situation at the beginning of this week, the US dollar index failed to challenge 110.18, and was constrained by 109.80, showing that the US dollar index is losing its appeal and fell below 108.00 to 107.66, a near ten-day low in the middle of the week. Technical indicators reflect the growing downward pressure. The 14-day relative strength index (RSI) has fallen below 50, indicating a shift in bearish momentum. In addition, the index has fallen below the market psychological level of 108.00, increasing the possibility of further declines. If the selling pressure persists, the next key support area is around 107.35 (Wednesday's low), and 107.00 (round mark), while the resistance level is still at 108.00. A continued rebound to re-cross 108.44 (20-day moving average) may strengthen bullish sentiment, which may lead to a deeper rebound to the 109.00 mark.

Consider shorting the US dollar index around 107.72 today, stop loss: 107.86, target: 107.30, 107.20

WTI spot crude oil

WTI crude oil prices have been in negative territory for the third consecutive trading day, trading around $72.20 per barrel in the Asian session on Wednesday. Crude oil prices may fall further as concerns about the US-China trade war intensify. China's Ministry of Commerce announced an additional 10% tariff on crude oil from the United States. On Tuesday, crude oil prices fluctuated sharply, with WTI falling as much as 3% to its lowest point since December 31 after China retaliated against the new 10% US tariff. However, oil prices rebounded as supply risks appeared to be related to US President Donald Trump's increased economic pressure on Iran. On Monday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) reiterated plans to gradually increase oil production from April and removed the US Energy Information Administration (EIA) from its list of monitoring sources.

From a technical perspective, WTI crude oil's daily line fell sharply, and the volatility increased, but the moving average did not turn downward. There is no clear direction in the short term, because the price rebounded after breaking through the important support, waiting for a second retracement. The 14-day relative strength index and stochastic index of technical indicators have begun to rise 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 integer level of $73.00. If it breaks, it will look at the 30-day moving average of $73.83 and the high of $74.52 at the beginning of the week. The support level is first seen at $70.42 (low on Tuesday), and the key point is $70.00 (market psychological level).

Consider going long on crude oil near 70.80 today, stop loss: 70.60; target: 72.00; 72.20

Spot Gold

Gold prices rose further to a new all-time high near the $2,882 mark, driven by a weaker dollar, lower U.S. Treasury yields across the board, and safe-haven demand supported by tariff concerns. Gold prices maintained their record-breaking gains in early trading on Wednesday, hitting another all-time high of $2,862. Traders braced for the upcoming release of U.S. private sector employment data and U.S.-China trade talks for gold price action. Buying interest in the traditional store of value gold has remained unabated so far this week, helped by growing uncertainty over U.S. President Trump's tariff policy and its impact on global growth and inflation prospects. The Trump administration's one-month delay in tariffs on Canada and Mexico and the U.S.-China trade war have kept investors nervous, especially as Chinese traders return from a week-long Lunar New Year holiday. On the other hand, the U.S. President expressed uncertainty about whether the ceasefire between Hamas and Israel will last. Gold tends to benefit during times of geopolitical instability and market turmoil.

The daily chart shows that the 14-day relative strength index (RSI) of the technical indicator remains in overbought territory, currently close to 76. If buyers stall at high levels, a pullback may occur before the uptrend resumes. If a correction occurs, gold prices may challenge the $2,800 round mark, and a break below this level will test the February 3 low of $2,772. Further declines will put the January 30 low of $2,754 at risk. On the upside, gold prices need to close above $2,862 (Wednesday's high) on a daily basis to refresh the all-time high near $2,900 and point to the psychological level of $3,000.

Consider going long on gold before 2,858.00 today, stop loss: 2,855.00; target: 2,880.00; 2,885.00

AUD/USD

The weekly recovery in AUD/USD remained strong on Wednesday, with spot prices approaching the key resistance level of 0.6300, while the selling bias in the US dollar continued. AUD/USD edged lower in the Asian dry session as risk aversion rose amid concerns over rising US-China trade tensions. The Judo Bank Purchasing Managers Index (PMI) released on Wednesday failed to provide support for AUD/USD. The Australian Judo Bank Composite PMI rose to 51.1 in January from 50.2 in December, reflecting a modest increase in private sector activity. The Australian dollar could depreciate further as the possibility increases that the Reserve Bank of Australia may consider a rate cut in February. The Reserve Bank of Australia has kept the official cash rate (OCR) at 4.35% since November 2023, stressing that inflation must "sustainably" return to the target range of 2%-3% before easing policy. The Australian dollar faces challenges as market volatility remains an issue and investors keep a close eye on the trade war between the United States and China.

On Wednesday, AUD/USD traded close to 0.6300, remaining above a descending channel pattern on the daily chart, suggesting a possible bullish turn. The 14-day relative strength index (RSI) of the technical indicator is just above the 55 level, reflecting neutral momentum. A sustained break of the RSI above 50 may confirm a stronger bullish trend. On the upside, AUD/USD may explore 06300 (market psychological level), and 0.6301 (50-day moving average), a break of which will directly target the seven-week high of 0.6330 recorded on January 24. A break below will see 0.6355 (70-day moving average). On the other hand, AUD/USD may find immediate support at 0.6250 near the 9-day moving average, followed by the 0.6200 round number. A pullback into the channel will reinforce the bearish bias and could push the pair towards 0.6170 (Tuesday's low).

Consider going long AUD before 0.6273 today, Stop Loss: 0.6260; Target: 0.6310; 0.6320.

GBP/USD

After trading near highs of 1.2550 earlier, GBP/USD is now losing some steam, flirting with the 1.2500 region amid the day's solid gains and continued selling pressure around the US dollar. The GBP/USD pair struggled to capitalize on the strong gains of the past two days, consolidating around a one-week high during Wednesday's Asian session, below the psychological mark just below 1.2500. However, downside remains cushioned by follow-through selling in the US dollar. In fact, the US Dollar Index, which tracks the performance of the greenback against a basket of currencies, hovered near weekly lows on the prospect of further easing by the Federal Reserve. Meanwhile, global risk sentiment remains supported by optimism as US President Trump’s decision to postpone tariffs on Canadian and Mexican imports has helped ease concerns about the trade war and its impact on the global economy. This is seen in the generally positive tone in the stock market, another factor that weakened the safe-haven dollar and provided a tailwind for the GBP/USD pair.

From the daily chart, GBP/USD has made a "V"-shaped rebound from the low of 1.2250 at the beginning of the week to a near one-month high of 1.2550. It is currently trading around 1.2500, but the pair may remain capped below 1.2500 in the short term as the 55-day moving average (1.2507) puts pressure on recent price action. A successful breakout to the upside could see GBP/USD bids return to the .2544 (65-day moving average) and 1.2600 (market psychological level) levels. If the 1.2500-1.2507 area fails to break upward this week, it is possible to return to the lows near 1.2450 (9-day moving average) and 1.2400 (round mark).

Today, it is recommended to go long on GBP before 1.2488, stop loss: 1.2475, target: 1.2540, 1.2550

USD/JPY

USD/JPY plummeted to a near two-month low of 152.12 as rising Japanese wages boosted the Bank of Japan's rate hike bets. The dollar fell to a weekly low under the bets of the Federal Reserve's rate cut, which also led to the decline. Data released in the Asian session on Wednesday showed that Japan's real wages rose, attracting new yen buying, which further confirmed the bet that the Bank of Japan will raise interest rates again. This is in stark contrast to the market's expectation that the Federal Reserve will reduce borrowing costs twice before the end of this year. The narrowing of the interest rate gap between Japan and the United States further benefits the low-yielding yen. Apart from this, the weaker US dollar dragged USD/JPY to the December low of 153.17. Meanwhile, investors remain concerned that Japan will also be the ultimate target of US President Donald Trump's trade tariffs. This, coupled with risk-on sentiment, may prevent traders from establishing new bullish bets around the safe-haven yen. Nevertheless, the fundamental backdrop supports the prospect of further appreciation of the yen.

From the recent trend point of view, the mid-week break and confirmation of the 154.00 mark may be seen as a new trigger for bearish traders. Moreover, the 14-day relative strength index (RSI), a technical indicator on the daily chart, is gaining negative momentum and has not yet entered the oversold zone (latest at 35). This in turn suggests that the path of least resistance for the USD/JPY pair is to the downside and supports the prospect of further depreciation. Therefore, a subsequent drop to the 152.00 mark, a breakout to see the 300-day simple moving average in the 151.53 area, looks like a distinct possibility. And further testing 150.00 (market psychological mark). On the other hand, any attempted rebound may now face immediate resistance around the 153.00 round number. However, follow-up buying could trigger a short-covering rally and push the USD/JPY pair to the intermediate barrier of 154.70-154.75, passing through the 155.00 psychological level. Meanwhile, further gains may be seen as selling opportunities and limited around the 155.25-155.30 area.

Today, it is recommended to short the US dollar before 152.85, stop loss: 153.00; target: 151.60, 151.50

EUR/USD

The further decline of the US dollar, in conjunction with the further recovery of the risk complex, helped EUR/USD to re-break through the 1.0400 mark, adding to Tuesday's gains and climbing to multi-day highs. EUR/USD rebounded strongly this week from around 1.0210 (the lowest level on February 3) and fluctuated around the weekly high of 1.0442 hit earlier this Wednesday. Spot prices are currently trading in the 1.0400-1.0405 zone with little change throughout the day amid mixed fundamental signals. In fact, the market is pricing in the possibility of two rate cuts from the US central bank this year. Apart from this, rising risk sentiment has kept the safe-haven dollar under pressure near weekly lows, which in turn is seen as a tailwind for the EUR/USD pair. Moreover, the ECB dovish stance overshadowed the Eurozone’s January Harmonized Consumer Price Index (HICP) annual rate increase to 2.5%, which is seen as weakening the euro and limiting any meaningful upside for the EUR/USD pair. Apart from this, speeches from influential FOMC members will boost demand for the dollar and provide fresh impetus to the EUR/USD pair.

EUR/USD is operating in an uncertain wave this week. The pair has found initial support at the weekly low of 1.0210 (February 3), and a breakout of this area again could bring the 2025 low of 1.0177 back into view. If breached, the spot could point towards the psychological parity level. On the positive side, the relative strength index (RSI) rebounded to around 56, indicating that momentum is gradually increasing, so the initial resistance is at 1.0447 (65-day moving average), and the further obstacle is at 1.0500 (integer mark), breaking this level points to 1.0533 (January 23 high.)

Today, it is recommended to go long on the euro before 1.0390, stop loss: 1.0380, target: 1.0440, 1.0450.

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