US Dollar Index

The dollar was flat ahead of the US trading session on Thursday. US President Trump will speak at the World Economic Forum in Davos. The dollar index has recovered above 108.00, but still faces slight selling pressure. Trump reiterated tariffs, but no concrete action was seen, and uncertainty supports the dollar. In the short term, the possibility of a two-way fluctuation in the dollar index cannot be ruled out. On the one hand, if the US tariff policy is suspended, long dollar trades may face liquidation risks; on the other hand, the rapid implementation of tariffs is expected to weaken risk sentiment and support the dollar. The dollar traded flat in the middle of the week after two consecutive days of decline at the beginning of the week, as the adjustment aims to continue. The market is trying to measure the impact of the 10% tariff on Chinese goods announced by President Trump on Tuesday. The dollar index tested the 108.00 mark and has a chance to fall to the lower end of 107.00. On the Fed side, the bank is in a media blackout, there is no high-level economic report, and the market has no guidance to bet on the next move of the data-dependent Fed.

From the daily chart, the momentum of the US dollar index is bearish, while the 14-day relative strength index, a technical guide, is showing a downward trend. Risks remain skewed to the downside. After the bears conquered the 20-day simple moving average (108.74), the outlook turned somewhat bearish as the US dollar index is now vulnerable to further declines. If the US dollar index hopes to revive its bullish trajectory, it must convincingly overcome the 20-day SMA (108.74), and above 109.00 (round number) to reverse the recent weakness. On the other hand, failure to hold the recent support around 107.63 (50-day SMA) to 108.00 could trigger additional downside.

Consider shorting the US dollar index around 108.28 today, stop loss: 108.40, target: 107.85, 107.80

WTI spot crude oil

WTI prices fell due to uncertainty about the impact of tariffs and energy policies proposed by President Trump. API weekly crude oil inventories increased by 1 million barrels in the previous week. Trump threatened to impose "high levels" of sanctions and tariffs on Russian imports. U.S. WTI crude oil prices traded near $75.00 on Thursday. WTI prices extended their decline to a one-week low as traders assess how U.S. President Donald Trump's proposed tariffs could affect global energy demand and the economy. Tariffs could slow economic growth and drag black gold prices lower. . On Tuesday, the U.S. Energy Information Administration (EIA) said it expects oil prices to fall this year and next as weak economic activity and energy transition efforts hit the United States and China hard. "Robust growth in global production of petroleum and other liquids, while slowing demand growth, exerted downward pressure on prices," EIA economists said.

A weaker U.S. dollar provided key support for oil prices, with the dollar trading near a two-week low. A weaker dollar makes crude oil more affordable for international buyers, boosting demand. Positive risk sentiment in financial markets, which further pushed up crude oil prices. On the 4-hour chart, crude oil prices showed a steady downward trend, breaking through the neckline of the head and shoulders pattern that has been broken. It should be reminded that the target price starts from $75.53, and after breaking this level, it will extend to $73.90. If it breaks, it will test the round mark of $73.00). As for the upward target, the price needs to be maintained above $75.00 and $76.56 (10-day moving average).

Today, you can consider going long on crude oil around 74.00, stop loss: 73.80; target: 75.30; 75.50

Spot gold

Gold continued to pull back from the multi-month high of more than $2,763 set on Wednesday, falling below $2,736 on Thursday. After the release of US data, the 10-year US Treasury yield remained in the positive range above 4.6%, not allowing gold prices to regain traction. Re-up above $2,750 before the close. Gold prices moved lower during Thursday's Asian session, moving away from the highest level since early November hit the previous day at $2,763-2,764 area. The dollar rebounded from its monthly low overnight as US Treasury yields rose, which in turn exerted some downward pressure on the commodity. Apart from this, the underlying bullish sentiment in the stock market weakened the demand for the safe-haven precious metal. Moreover, the uncertainty surrounding US President Donald Trump's tariff plan could trigger a trade war and increase market volatility, which should help limit the downside for gold prices.

From a technical perspective, any subsequent decline is more likely to find decent support around the strong horizontal resistance breakout point (now turned support) of $2,730-2,732 (5-day moving average). Some follow-up selling may drag gold prices to the $2,700 mark, which if decisively broken should pave the way for deeper losses. Gold prices may fall to $2,694.50, the latter being the 14-day moving average. On the other hand, the overnight swing high, around the $2763-2764 area, now seems to provide some resistance, and gold prices may challenge the historical peak reached in October, around the $2790 area. The $2800 mark is closely followed.

Consider going long gold before 2,750.00 today, stop loss: 2,745.00; target: 2,766.00; 2,770.00

AUD/USD

AUD/USD rose yesterday, building on Wednesday's small gains, and approached the key resistance level of 0.6300, thanks to the continued offer bias of the US dollar and the broad recovery in risk-related areas. On Thursday, the Australian dollar remained stable against the US dollar as market concerns eased after US President Trump revised the planned tariffs on China to be much smaller than initially expected. This development helped calm investor nerves, especially considering the strong trade relationship between China and Australia, making the Australian market very sensitive to changes in the Chinese economic situation. The dollar was boosted by President Trump's memorandum directing federal agencies to investigate and address the ongoing trade deficit. Traders are increasingly expecting the Reserve Bank of Australia to start cutting interest rates as early as next month. All eyes are now on Australia's quarterly inflation report, which will be released next week, as it may provide more clues about the future direction of interest rates.

Daily chart analysis shows that AUD/USD is trading around 0.6270, suggesting a potential bullish bias. In addition, the 14-day relative strength index (RSI) of the technical indicator is slightly above 50, reinforcing the positive market sentiment. On the upside, AUD/USD may test the psychological resistance level of 0.6300, with the next target being the 50-day simple moving average near 0.6345. On the other hand, the US dollar may appreciate as traders expect the US Federal Reserve to keep the benchmark overnight rate in the range of 4.25%-4.50% at its January meeting. This could see the pair resume its downward path, with initial support around the 20-day moving average at 0.6217 and secondary support at the psychological level of 0.6200.

Today, consider going long on AUD before 0.6270, Stop Loss: 0.6255; Target: 0.6310; 0.6320.

GBP/USD

On Thursday, GBP/USD re-entered the 1.2300 range. Although the cautious market stance did not allow the pair to accumulate bullish momentum, the lack of demand for the US dollar after the weak unemployment claims data helped it gain a foothold. It traded around 1.2300 during the Asian session on Thursday. The pair faced challenges as the US dollar gained support as President Donald Trump issued a memorandum directing federal agencies to investigate and address the ongoing trade deficit. The US dollar could appreciate further as the Federal Reserve is expected to keep the benchmark overnight rate steady in the 4.25%-4.50% range at its January meeting. In addition, Trump's policies are likely to drive inflationary pressures, which may limit the Fed from cutting interest rates once more. The pound continues to be under pressure after the UK December inflation and retail sales data came in below expectations, weak labor demand in the three months to November, and moderate GDP growth.

From the daily chart, GBP/USD has been recovering slowly and steadily to Wednesday's high of 1.2376 after the recent fall to a 15-month low near 1.2099, but bulls are struggling to push bids to around 1.2400. At this stage, the price action is a solid technical support level near 1.2252 (10-day moving average), and the next level will look to the 1.2200 (round mark) level. The upward momentum will challenge 1.2376 (Wednesday's high) again, and a break will face a solid technical barrier level of 1.2400 (round mark).

Today, we recommend going long on GBP before 1.2338, stop loss: 1.2325, target: 1.2380, 1.2390

USD/JPY

USD/JPY retreated from a six-day high as initial jobless claims in the U.S. indicated a cooling labor market. The Bank of Japan meeting is likely to raise interest rates by 25 basis points, in stark contrast to the Fed's steady stance. Global markets await Trump's comments in Davos, where trade policy comments will affect currencies. The Japanese yen rose slightly in the Asian session on Thursday after better-than-expected Japanese trade balance data, but remained close to the one-week low hit the previous day. Expectations of an imminent rate hike by the Bank of Japan on Friday continued to support the yen. In addition, the rebound in USD/JPY from the more than one-month low hit on Tuesday was limited as the market bet that the Federal Reserve will cut interest rates twice this year. However, yen bulls seemed hesitant and chose to wait and see ahead of the Bank of Japan's two-day policy meeting that begins this Thursday. In addition, concerns about U.S. President Donald Trump's tariff plan and risk sentiment may limit further appreciation of the yen. Nonetheless, the divergence in BoJ and Fed policy expectations warrants caution before confirming that USD/JPY has formed a short-term bottom.

From a technical perspective, the spot price found decent support at the lower line of the multi-month ascending channel earlier this week and bounced. The subsequent strong break above the 156.00 mark favors bullish traders. Moreover, oscillators on the daily chart have started to gain positive traction again, supporting the prospect of further gains. Therefore, a move towards the 156.75-156.80 area and, in turn, the 157.00 round number looks like a distinct possibility. The latter should act as a key pivot point and, if decisively breached, should pave the way for further gains towards the 157.55 area, 158.00 mark. On the other hand, downside now seems to be contained ahead of the 156.00 mark. The next relevant support is found in the 155.55-155.50 area, below which the USD/JPY pair could accelerate its decline towards the 155.00 psychological mark.

Today, we recommend shorting the US dollar before 156.25, stop loss: 156.45; target: 155.20, 155.00

EUR/USD

EUR/USD quickly shook off Wednesday's small decline and resumed its upward trend above 1.0400 to counter the dollar's renewed decline ahead of the release of key PMI data on Friday. In the latter part of the week, EUR/USD retreated somewhat, falling to around 1.0400 as the initial climb to a six-week high around 1.0455 failed to hold. The momentum of the US dollar has increased, with the US dollar index hovering around the psychological level of 108.00 amid a mild rise in US yields. Meanwhile, the volatile performance of the US dollar so far this week continues to be driven by headlines related to former President Trump, especially news about potential trade tariffs and their impact. This week, the focus will be on the Purchasing Managers' Index (PMI) data released by the European Union and the United States on Friday. The results of the EU and US PMI business activity surveys for January are expected to be mixed this week. PMI data usually has limited impact unless the data is seriously out of sync with forecasts, but the ratio of survey respondents is often low, so the overall data should be viewed with reservations.

From the technical trend, after rising to a near one-month high of 1.0455 in the middle of the week, EUR/USD was constrained by the 55-day moving average (latest at 1.0448) and fell back to the level before 104 (round mark). Although the price has shown a wave of technical rebound since it fell to a two-year low of 1.0177 last week, the overall upward momentum has steadily weakened in the near term. Once the currency pair returns below 1.04, it is not ruled out that it will continue to test the 1.0341 (low on Tuesday) and 1.0337 (20-day moving average) area levels, breaking through and looking at 1.0300 (psychological mark). On the other hand, the 14-day relative strength index RSI of the technical indicator rebounded above 52, indicating that momentum has picked up. As long as the currency pair remains above 1.04, the overall bullish trend remains intact. The resistance level is at 1.0447 (55-day moving average), and 1.0500 (round number).

Today, it is recommended to go long on the euro before 1.0405, stop loss: 1.0385, target: 1.0455, 1.0465.

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