US Dollar Index

Measured by the USD Index, the dollar maintained a moderate upward trend at the beginning of the week but remained around the 104.00 level, the lowest since April. The weakness of the dollar is primarily attributed to signs of deflation in the U.S. economy, which has bolstered market confidence that the Federal Reserve may cut interest rates in September. The U.S. political assassination incident last weekend boosted safe-haven currencies such as the dollar. Former President Donald Trump was injured in an attempted assassination at a rally in Butler, Pennsylvania, last Saturday. The attack on U.S. presidential candidate Donald Trump increased political uncertainty and drove some safe-haven inflows, allowing the dollar to recoup some of its losses after hitting a more than three-month low last Friday. Nonetheless, the growing belief that the Federal Reserve will soon initiate a rate-cutting cycle will continue to act as a resistance to the dollar. In fact, the CME FedWatch Tool shows a more than 90% probability that the Fed will lower borrowing costs by 25 basis points (bps) in September. Additionally, the market is pricing in the probability of another rate cut in December, and last week's U.S. consumer inflation data falling short of expectations also boosted market bets. This could hinder investors from making new bullish bets on the dollar.

The daily chart shows that the USD Index broke below its key support level of the 200-day simple moving average of 104.44 last week, exacerbating the negative outlook for the dollar. Furthermore, technical indicators such as the 14-day Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) remain entrenched in negative territory. The index is currently at its lowest level since April, amplifying bearish sentiment. However, after falling more than 0.80% in just two trading days, a slight upward adjustment may occur. The first rebound target is estimated to be 104.44 (200-day simple moving average) and 104.43 (50.0% Fibonacci retracement level from 102.35 to 106.51), with the next level targeting 104.80 (upper boundary of the descending channel). Nonetheless, the overall technical outlook remains bearish. Therefore, if the USD Index falls below the support zone formed by 104.04 (last week's low), 104.00 (round number), and 103.99 (June 4 low), the next targets will be 103.75 (lower boundary of the daily descending channel) and further down to challenge 103.33 (76.4% Fibonacci retracement level).

Today, consider shorting the USD Index near 104.40, with a stop loss at 104.50, and targets at 104.10 and 104.05.

WTI Crude Oil

U.S. WTI crude oil prices have experienced a decline around $82.50, touching a multi-day low during the Monday Asian session, despite a lack of bullish confidence. The commodity is currently trading near $82.00, still confined within a familiar range from the past two weeks. The low point has attracted some dip buying but lacks bullish momentum, remaining within the sideways range of the past two weeks. Concerns about supply disruptions due to ongoing conflicts in the Middle East provide another support factor for oil prices. Nonetheless, following the assassination attempt on former U.S. President Donald Trump and his survival, some dollar buying and safe-haven demand should prevent a significant upward trend in WTI oil prices. Additionally, the economic struggles in China warrant caution among bullish traders. Meanwhile, last week's weak U.S. consumer inflation data has reaffirmed market expectations for the Federal Reserve (Fed) to initiate a rate cut in September. This may deter aggressive bullish bets on the dollar and continue to support oil prices.

The daily chart shows that if WTI crude oil prices can break above $83.00 (round number) and $82.97 (10-day moving average) this week, it will be a bullish signal for traders. Once Fed officials confirm the timing for the first rate cut in September looks favorable, oil prices are expected to initiate a new wave of increases, with the next targets being $84.35 (a resistance trendline extending from the April 5 high of $87.08) and $84.65 (July 5 high). The 2024 high of $87.08 is estimated to be the short-term ultimate target for the bulls. Conversely, $81.81 (23.6% Fibonacci retracement level from $72.62 to $84.65) should now act as the first support level, with the key level being $80.00 (market psychological threshold).

Today, consider going long on crude oil near $81.80, with a stop loss at $81.60 and targets at $82.80 and $83.00.

Spot Gold

Gold has regained traction, trading slightly above $2420 after dipping to $2400 earlier this week. Investors are awaiting Federal Reserve Chairman Jerome Powell's appearance at the Economic Club of Washington. After struggling to find demand early last week, gold turned upward and reached its highest level in over a month at $2439.80. Despite a solid rebound from the $2391 region on Friday, gold prices struggled to capitalize and opened the new week on a weak note. This marks the second consecutive day of declines, supported by a moderately stronger dollar, which typically diminishes demand for dollar-denominated commodities. However, the precious metal remains close to its highest level since May 22 and may continue to be supported by several factors, requiring caution among aggressive bearish traders. Last week's weak U.S. consumer inflation data reaffirmed market bets that the Federal Reserve will begin cutting rates in September and reduce borrowing costs again in December. This may deter aggressive dollar bullish bets and provide some support for the non-yielding gold price. Additionally, the alleged assassination attempt on former U.S. President Donald Trump has increased political uncertainty, likely adding further support.

From a technical perspective, some dip buying before the weekend reiterated strong support near the $2390-$2388 resistance points. Moreover, oscillators on the daily chart remain in the positive territory and are still far from the overbought zone. This suggests that the path of least resistance for gold prices is upward. Therefore, a dip below the $2400 level might still be seen as a buying opportunity and remain limited. However, some follow-through selling could drag gold prices into the $2358 region, with some intermediate support near the $2372-$2371 area. The subsequent decline might expose the 50-day simple moving average support, currently hovering around $2350. On the other hand, last week's swing high near $2424 now appears to be an immediate obstacle. Beyond this hurdle, gold prices are more likely to challenge the historical high near $2450 touched in May and the $2457 level (a trendline extending from the April 12 high of $2431.60).

Today, consider going long on gold near $2419.00, with a stop loss at $2415.00 and targets at $2435.00 and $2438.00.

AUDUSD

The AUD/USD pair, supported by a slight rise in the USD and the bearish performance of risk-related assets, is once again hovering near the critical 0.6800 level, halting its multi-day recovery. During early Monday trading in the Asian session, AUD/USD weakened to around 0.6770, interrupting a four-day rally. The USD rebound provided some support for AUD/USD. Last Friday, the U.S. PPI came in higher than expected but had little impact on the USD. Additionally, the preliminary Michigan Consumer Sentiment Index was 66.0, below the expected 68.5 and the previous value of 68.2. Following the release of relatively weak U.S. inflation data, bets on a Federal Reserve rate cut in September have risen, potentially limiting the USD's upside and boosting AUD/USD. On the AUD side, if labor market data is strong and Q2 inflation rises following the stronger-than-expected May inflation data, it could lead to a rate hike by the Reserve Bank of Australia in August. This supports maintaining the downside risk for AUD/USD. Given that China is one of Australia's closest trading partners, weak economic data from China could drag the AUD lower.

The daily chart shows that if the bulls strengthen and push AUD/USD higher, breaking through 0.6798 (July 8 high), it could test the resistance area composed of 0.6818 (61.8% Fibonacci retracement from 0.7157 to 0.6270) and 0.6825 (a resistance trendline extending from the July 10 high of 0.6895 last year). A breakout could extend the rise towards the December 2023 high of 0.6871, followed by the July 2023 high of 0.6894 (July 14), and then the key 0.7000 level. On the other hand, if AUD/USD maintains a bearish bias, it may be pressured lower, potentially falling to the key psychological level of 0.6700 and 0.6690 (weekly rising wedge lower boundary support line). Further declines could target 0.6659 (110-week moving average).

Today, consider going long on AUD near 0.6745, with a stop loss at 0.6730 and targets at 0.6800 and 0.6810.

GBPUSD

The GBP/USD pair is struggling to build on last week's gains, trading below 1.3000 on Monday. Investors are avoiding large positions ahead of Federal Reserve Chairman Jerome Powell's speech, keeping the pair within its daily range. In the Asian session on Monday, GBP/USD attracted some selling pressure and seems to have ended a three-day rally, rising to near 1.3000, the highest level since July 2023. Currently trading around 1.2965, the pair faces a modestly stronger dollar but seems unable to realize a significant decline. The growing belief that the Federal Reserve will soon start a rate-cutting cycle will continue to act as a resistance to the dollar and provide some support for GBP/USD. Last week's weaker-than-expected U.S. consumer inflation data also bolstered market bets on this scenario, which might hinder investors from placing new bullish bets on the dollar. On the other hand, the probability of the Bank of England cutting rates in August has decreased. Market participants are now focusing on Powell's speech, which, along with U.S. Treasury yields and broader risk sentiment, will influence the dollar's movement. However, the aforementioned fundamental backdrop supports some dip-buying prospects for GBP/USD.

The daily chart suggests that GBP/USD appears suitable for "buying on dips" this week. The 14-day Relative Strength Index (RSI) is near the overbought zone, indicating more upside potential. However, if GBP/USD continues its pullback from the 2024 high, it could test Thursday's low of 1.2848. A sustained break below this low could challenge the bullish commitment near the previous key resistance around 1.2800. On the upside, a daily close above the year-to-date high of 1.2990 is needed to trigger a meaningful rally towards the psychological level of 1.3000, where the high from July 27, 2023, is located. The final line of defense for sellers is at the static resistance around 1.3050.

Today, consider going long on GBP near 1.2950, with a stop loss at 1.2935 and targets at 1.2995 and 1.3000.

USDJPY

The USD strengthened and the JPY weakened following the failed assassination attempt on former U.S. President Donald Trump. Speculation about potential intervention by Japanese authorities may cause volatility in the yen. It's estimated that Japanese authorities have spent between 3.37 trillion to 3.57 trillion yen to curb the yen's rapid depreciation. On Monday, the yen edged lower as safe-haven demand rose due to the assassination attempt on Trump, strengthening the USD. If this event increases Trump's chances in the upcoming election, it might drive a "Trump victory trade," potentially strengthening the USD and steepening the U.S. Treasury yield curve. Amid speculation about intervention by Japanese authorities, the yen could face potential volatility. According to data released by the Bank of Japan on Friday, it's estimated that Japanese authorities might have spent between 3.37 trillion and 3.57 trillion yen on Thursday to curb the yen's rapid depreciation. The yen had been hovering near a 38-year low before rebounding last Thursday after data showed a slowdown in U.S. consumer prices for June, weakening the USD. This development increased investor expectations that the Federal Reserve might cut rates as early as September.

At the beginning of the week, USD/JPY is trading around 158.00. Daily chart analysis suggests that the bullish trend is weakening as the pair breaks below the lower boundary of the ascending channel at 160.90. Additionally, the 14-day Relative Strength Index (RSI) is below 50 at 42, indicating a decline in momentum. Further declines could put bearish pressure on USD/JPY, potentially testing the 157.36 (last week's low) and 157.02 (61.8% Fibonacci retracement level from 160.23 to 151.85) areas first. A break below these levels could approach the support near 156.04 (50.0% Fibonacci retracement level). On the upside, a return to around 159.90 (lower boundary of the ascending channel) and 159.94 (21-day moving average) might improve sentiment for USD/JPY, targeting 161.80 (last week's high) and 162.20 (123.6% Fibonacci retracement level).

Today, consider going short on USD near 158.20, with a stop loss at 158.50 and targets at 157.20 and 157.00.

EURUSD

EUR/USD hit a monthly high above 1.0900 but is facing downward pressure again as the USD struggles to recover before key data releases on Tuesday. In the early Asian session on Monday, EUR/USD attracted some selling around 1.0885. The pair is falling amid risk-off sentiment, leading to a new round of USD buying. The Fed might cut rates early, with concerns about maintaining a robust labor market. The recent political assassination attempt in the U.S. boosted safe-haven currencies like the USD, negatively impacting EUR/USD. Former President Donald Trump was injured in an assassination attempt during a rally in Butler, Pennsylvania, last Saturday. On the euro side, officials expect price pressures to remain close to current levels throughout the year, reducing expectations for further ECB rate cuts. ECB President Christine Lagarde emphasized a cautious approach this month, stating, "A strong labor market means we can take our time to gather new information, but we also need to be mindful of the fact that growth prospects remain uncertain."

EUR/USD has been up for three consecutive weeks, closing slightly above 1.0900 last weekend. The pair has risen 2.3% from the June 26 low of 1.0666 to the high of 1.0911, with intraday price movements forming a "double top" technical resistance close to the early June peak of 1.0916. On the daily chart, the pair is running slightly below the top of the ascending channel at 1.0930. Thus, a break above 1.0930 and 1.0933 (61.8% Fibonacci retracement from 1.1139 to 1.0601) could lead to 1.0970 (a resistance trendline extending from the May 16 high of 1.0896), and further challenge the psychological level of 1.1000 in the short term. Conversely, despite closing with gains in 10 out of the last 12 trading days, the bullish momentum is nearing exhaustion and a bearish correction might occur towards the key support zone of 1.0870 (50.0% Fibonacci retracement) and 1.0850 (lower boundary of the ascending channel). Further declines could challenge the psychological level of the 200-day moving average at 1.0805.

Today, consider going long on EUR near 1.0880, with a stop loss at 1.0865 and targets at 1.0935 and 1.0940.

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