US Dollar Index

The U.S. dollar was flat on Wednesday after two days of declines. The market is measuring the impact of the 10% tariffs on Chinese goods announced by President Trump on Tuesday. The U.S. dollar index tested the 108.00 mark and will fall to the lower end of 107.00. At this stage, the U.S. dollar index is still consolidating around 108.00 and will fall into losses if more selling pressure emerges. Trading was quiet in the early part of the week as the market was responding to U.S. President Donald Trump's comments late Monday on tariffs on its North American neighbors. U.S. Treasury yields were close to 4.60%, far lower than last week's levels; however, President Trump's sudden trade policy announcement triggered a reversal in currency pairs and risk assets. Tariff negotiations indicated that by early February, a 25% tariff would be imposed on imports from Canada and Mexico, which immediately put pressure on the Canadian dollar and the Mexican peso. The narrative of a strong dollar persists, and the market believes that the core drivers of the continued rise, including the dominant U.S. economy and the stable policies of the Federal Reserve, are the main factors driving the dollar's gains.

From the daily chart, the dollar index fell below the 20-day simple moving average near 108.72 this week to 107.75, a near three-week low, and the bulls' efforts to retake this threshold proved unsuccessful. As the dollar index still hovers around 108.00, the resistance position of the 20-day moving average indicates downside risks. The 14-day relative strength index (RSI) of the technical indicator is at 47.80, a near three-and-a-half-month low, which limits the dollar's rebound. If sellers remain in control, the dollar may face a larger correction despite the broader fundamentals that suggest the US economy is resilient. Targets are 107.40 (55-day moving average), and 107.75 (Wednesday's low). However, any signs of supportive trade or a shift in Fed expectations could quickly trigger new demand for the dollar. Therefore, the upside can focus on 108.57 (23.6% Fibonacci retracement of 103.84 to 110.18), and 108.91 (10-day moving average) area levels.

Today, consider shorting the US dollar index around 108.40, stop loss: 108.50, target: 107.95, 107.85

WTI spot crude oil

WTI prices fell as US President Donald Trump reiterated his proposal to impose a 10% tariff on imports from China. US sanctions on Russia have disrupted the physical oil and tanker markets, providing support for oil prices. On Wednesday, US WTI crude oil prices traded around $75.50. WTI prices fell as US President Trump considered imposing tariffs on major trading partners and promised to increase US oil and gas production. In addition, Trump said he was considering imposing a 25% tariff on Canada and Mexico, while discussing a 10% tariff on goods imported from China, which will take effect on February 1. Tariffs could slow economic growth and put some selling pressure on black gold prices. The U.S. Energy Information Administration (EIA) said on Tuesday that oil prices are expected to fall this year and next year as weak economic activity and energy transition efforts have hit the United States and China hard. Strong growth in global production of petroleum and other liquids, while slowing demand growth, has put downward pressure on prices.

WTI crude oil prices resumed their downward trend after hitting a high of $79.37 since July last year in the middle of last week, falling below $76.87 (9-day moving average) and consolidating around $75.50 again. In addition, the 14-day relative strength index (RSI), a technical indicator on the daily chart, also fell sharply from the overbought area of ​​77 last week to a nearly two-week low of 54.50, which limited the rise in oil prices and led to a five-day decline. This reinforces the expectation that the corrective downtrend will continue for the rest of the week, paving the way for oil prices to move further towards the next downside target of $74.25 (20-day moving average). It should be reminded that if the $76.87 and $77.00 round-number mark area is broken, the downtrend will stop and push oil prices to try to resume the main uptrend. The targets are $78.57 (61.8% Fibonacci rebound from 87.12 to 64.75) and $79.37 (last Friday's high).

Today, consider going long on crude oil around 75.00, stop loss: 74.80; target: 76.30; 76.50

Spot gold

On Wednesday, gold prices remained positive for the third consecutive day, approaching the highest point since November 1 at $2,763. The uncertainty of US President Donald's trade policy is the key factor that continues to drive safe-haven funds to precious metals. Gold prices extended three days of bullish momentum into Wednesday, reaching a two-month high of $2,763. A fresh wave of risk aversion appears to have provided fresh support to gold prices as the market digests the latest tariff threats from US President Trump. Risk sentiment deteriorated as trade war concerns intensified, reigniting the risk-off theme and boosting the safe-haven asset - gold. However, it remains to be seen whether gold prices can maintain the three-day winning streak as most of the tariffs announced by Trump have been priced in by the market. In addition, a mild rebound in US Treasury yields may offset the dovish impact of the Federal Reserve's rate cut expectations, limiting the rise of non-yielding gold prices. That said, Trump's new tariff negotiations and policies may play a key role in affecting the overall market sentiment, ultimately affecting the US dollar and gold prices.

The daily chart shows that gold prices are still expected to test the record high of $2,790 or the symmetrical triangle target of $2,785. Earlier this month, gold prices broke out of the symmetrical triangle while standing firmly above all major daily simple moving averages, supporting the bullish scenario. The 14-day relative strength index (RSI) of the technical indicator continues to climb above the mid-line and is currently close to 68, keeping buyers hopeful. Gold prices must break and hold above the psychological barrier of $2,750 on a daily close to challenge the November 2024 high of $2,762. The next target is the resistance level near the historical high of $2,790. As for the downside, consider the $2,742 (Wednesday's low), and $2,725 (5-day moving average) levels.

Today, consider going long on gold before 2,752.00, stop loss: 2,748.00; target: 2,768.00; 2,772.00

AUD/USD

AUD/USD trades in a narrow range and falls again before the key 0.6300 mark, thanks to renewed buying interest in the US dollar and a general knee-jerk in the risk complex. On Wednesday, the Australian dollar against the US dollar showed a pattern of first weakness and then stabilization. The AUD/USD pair faced challenges as US President Donald Trump announced that his administration is considering imposing a 10% tariff on Chinese imports from February 1. Trump mentioned earlier that given the close trade relationship between China and Australia, any development that affects the Chinese economy could have a significant impact on the Australian market. The S&P/ASX 200 index climbed to around 8,450 points on Wednesday, hitting its highest level in nearly seven weeks. The rise was driven by positive momentum on Wall Street, mainly due to US President Donald Trump's decision to postpone the implementation of tariff threats, which brought relief to global markets.

On Wednesday, the AUD/USD pair was trading around 0.6270. The daily chart shows that the pair is moving within an ascending channel, indicating a possible bullish bias. In addition, the 14-day relative strength index (RSI) of the technical indicator is slightly above 50, reinforcing the bullish sentiment in the market. On the upside, the AUD/USD pair may test the psychological resistance of 0.6300, with the next target being the upper line of the ascending channel near 0.6320. Initial support is near the 20-day moving average at 0.6220, followed by the psychological level of 0.6200.

Consider going long AUD today before 0.6260, Stop Loss: 0.6245; Target: 0.6305; 0.6310.

GBP/USD

On Wednesday, GBP/USD briefly traded in a tight range around 1.2350 as the US dollar remained weak amid a positive shift in risk sentiment. Investors closely watched comments from US President Donald Trump on trade policy. This week, GBP/USD consolidated, falling and then climbing as global funds flowed in and out of the dollar. The pound saw mixed results from UK labor data. On the US front, US President Trump downplayed his campaign promise to impose comprehensive first-day tariffs on all US trading partners, instead focusing new and more refined tariff threats on the US's North American trading partners Canada and Mexico. Markets were volatile as investors raced to catch up with the latest headline maker - President Trump. A new round of trade rhetoric updates has left sentiment stuck in a mid-range. GBP traders will focus on the S&P Global Purchasing Managers Index (PMI) data, which may be focused on both sides of the Atlantic on Friday.

GBP/USD continues to slowly enter a technical recovery in the range, with buyers finally firmly locking in above 1.2300 as the dollar lost upward momentum this week. The exchange rate trend tends to be bullish, with the 14-day relative strength index RSI, a technical indicator on the daily chart, rebounding from near 30.00 last week's low to around 45 and turning to a buy signal, but the currency pair is still significantly below its recent high after hitting a 15-month low of 1.2099 last week. The upward momentum will face solid technical barriers at the 25-day exponential moving average of 1.2404, and 1.2400 (round mark), with a break of 1.2494 (January 8 high) level. On the downside, 1.2254 (10-day moving average) and 1.2200 (round mark) can be watched respectively.

Today's recommendation is to go long GBP before 1.2300, stop loss: 1.2290, target: 1.2350, 1.2360

USD/JPY

The yen retreated from a one-month high hit on Tuesday against the dollar. The divergence in policy expectations between the Bank of Japan and the Federal Reserve should help limit any meaningful decline in the yen. Traders may also choose to wait and see ahead of the Bank of Japan meeting that begins on Thursday. The yen fell against the dollar during the Asian session on Wednesday, but the yen continued to be supported by expectations of a rate hike by the Bank of Japan on Friday. This was a sharp contrast to market bets that the Federal Reserve will cut interest rates twice this year, causing the dollar to approach a two-week low and limiting gains in USD/JPY. In addition, uncertainty about possible tariffs imposed by US President Trump may benefit the safe-haven yen. However, traders seem hesitant and may choose to wait and see ahead of the start of the much-anticipated two-day monetary policy meeting of the Bank of Japan. The outcome of the meeting will play a key role in influencing the short-term price dynamics of the yen and provide some meaningful impetus for USD/JPY. However, the fundamental backdrop mentioned above seems to firmly favor yen bulls.

From a technical perspective, USD/JPY has shown resilience below the 155.00 psychological mark and the lower line of the multi-month ascending channel. The subsequent rise, coupled with the fact that the oscillators on the daily chart have yet to gain any meaningful negative traction, calls for caution for bearish traders. Therefore, it would be wise to wait for a sustained breakout and acceptance of the trend channel support before positioning for any further depreciation. The spot price may accelerate its decline towards the 154.50-154.45 intermediate support and then the 154.00 round number mark. On the other hand, the 157.00 round number mark, followed by the January 15 swing high, around the 158.08 area. Further buying may push USD/JPY to the 158.88 (January 10 high) mark.

Today's recommendation is to short the US dollar before 156.75, stop loss: 156.95; target: 155.80, 155.70

EUR/USD

The weekly recovery in EUR/USD shows some signs of losing momentum, even though the pair hit a three-week high around 1.0460, mainly against the backdrop of a resurgent bid bias around the US dollar. In a mid-week reversal trade, EUR/USD found additional support this week, breaking through the 1.0400 mark again as the US dollar lost upward momentum in the late trading. Meanwhile, the US dollar's price action has been almost entirely dependent on Trump-related headlines, especially news about the possibility of trade tariffs. Last week, the US dollar's weakness was also exacerbated by disappointing US economic data and dovish comments from FOMC Governor Christopher Waller, who hinted last week that more rate cuts could be in the works if economic conditions require it. This uncertainty about the Fed's next move has investors reassessing the central bank's stance ahead of its January 28-29 meeting.

From the daily chart, EUR/USD once faced the key support level of 1.0176, which was the low of the year on January 13, and the psychologically important 1.0 parity level, and then rebounded sharply to 1.04 and fluctuated above. The 14-day relative strength index RSI rebounded above 53, indicating that the momentum has picked up. As long as the currency pair remains above the 34-day moving average of 1.0388 and 1.0400 (round mark), the overall bullish trend remains intact. Resistance is in the 1.0488 (60-day moving average) and 1.0500 (round mark) areas, breaking through the level directly points to the 1.0560 (75-day moving average) level. On the downside, 1.0350 (25-day moving average) and 1.0300 (market psychological mark) should be considered respectively.

Today it is recommended to go long on Euro before 1.0400, stop loss: 1.0385, target: 1.0450, 1.0460.

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