US Dollar Index

The dollar recovered slightly on Wednesday. The market saw the Federal Reserve rate hike bets, while Trump's tariffs will take effect in early March. The dollar index is close to the yearly low and is expected to rebound. The dollar index, which measures the performance of the US dollar against a basket of six major currencies, fell slightly, falling to near the year's low of 106.16 in Asian trading on Wednesday. The dollar fell due to escalating geopolitical tensions and potential new tariffs on China. Traders remained cautious as the US President Donald Trump's administration signaled possible semiconductor restrictions, and the US dollar index hovered above key support levels, suggesting potential downside risks. The dollar strengthened at the beginning of the week, and President Trump claimed that the tariff measures on Canada and Mexico were moving forward, which provided some support to the US dollar. The 25% tariff was postponed for a month in early February, and March 3 (next Monday) is the new deadline to avoid trade frictions caused by the United States-Mexico-Canada Agreement (USMCA). The market also only priced in the risk of this happening as a moderate level. The foreign exchange market may take this threat more seriously during this week.

From the daily chart, the US dollar index is still anchored above 106.00 (round mark), trying to climb the index to the 100-day simple moving average to recover to around 106.71, and hope to rise further to 107.10 (89-day moving average), and 107.00 (round mark) area. On the other hand, despite the slight recovery of the US dollar, technical indicators are still weak. Both the relative strength index (RSI) and the moving average convergence divergence (MACD) indicate continued bearish momentum. Coupled with the 9-day and 100-day construction of a bearish "death cross" pattern. Therefore, the support level is 106.00 (round mark, and a break below 106.00 may confirm a deeper bearish outlook in the short term to 105.90 (lower limit of the falling wedge), and 105.89 (resistance level in June 2024) area, ultimately pointing to the 105 psychological mark.

Today, consider shorting the US dollar index around 106.60, stop loss: 106.72, target: 106.25, 106.10

WTI spot crude oil

Oil prices are set to fall further as investors remain hopeful of peace between Russia and Ukraine. Trump's tariffs are causing a global economic slowdown amid a negative outlook for oil prices. WTI crude oil was trading around $69.00 in early Asian trading on Wednesday. WTI prices faced some selling pressure and fell to a two-month low amid concerns about slowing energy demand and concerns about U.S. President Donald Trump's tariff policy. Trump's proposed plan to raise tariffs has sparked concerns about inflation at the Federal Reserve. This could convince the U.S. Federal Reserve to maintain higher interest rates, which could slow economic growth and energy demand. The American Petroleum Institute (API) weekly report showed that as of February In the week ended 21, US crude oil inventories fell by 640,000 barrels, compared with an increase of 3.34 million barrels in the previous week. In addition, another factor weighing on oil prices is the possible peace agreement between Russia and Ukraine, which indicates the lifting of Russian sanctions and may bring Russian supply back to the market.

Ongoing demand concerns and potential geopolitical developments, especially Iran, pose downside risks. Traders should pay close attention to geopolitical headlines and technical signals. Oil prices have spent more than a month consolidating above $70.00 after falling back below the 200-day simple moving average. Finally breaking below the psychological $70.00 mark midweek, oil prices are below the 50, 100 and 200-day moving averages. The relative strength index is below 40 to support further declines. Bears are already exploring a breakout above $70.00 to confirm the decline continues towards $68.50 {low on December 23 last year). Below this is the support level of $67.51 {low on December 10, 2024). On the upside, buyers need to re-break the $70.00 mark to confirm further upward challenges to the 65-day moving average of $71.72 and $71.47 (Friday's high) and the horizontal resistance of $73.00 to continue to rise and point to the 200-day moving average at $73.38.

Today, consider going long on crude oil around 68.50, stop loss: 68.30; target: 69.60; 69.80

Spot gold

As the dollar continues to lose momentum, gold prices reversed their initial decline and reclaimed the key $2,900 per ounce level and even higher, while investors are preparing for President Trump's upcoming speech. Spot gold was trading around 2,915 on Wednesday. Gold prices fell to their lowest in more than a week on Tuesday as investors booked profits after hitting a record high in the previous session. The market continued to worry about the instability brought by US President Trump's tariff plan. Gold prices recovered some lost ground after hitting a one-week low in the previous session. Uncertainty about US President Donald Trump's tariff plan and continued fear of turmoil provided some support for this traditional safe-haven asset. Nevertheless, Trump's plan to increase tariffs has triggered inflation concerns from the Federal Reserve, which may convince the US central bank to maintain higher interest rates for longer. This in turn may limit the upside of precious metals as higher interest rates weaken the appeal of non-yielding gold.

From the recent technical trend, gold prices may still be confined to a narrow trading range in the short term. However, the bullish outlook for gold prices remains intact on the daily chart, with prices remaining above the key 20-day moving average (2,889). In addition, the 14-day relative strength index (RSI) is above the midline, close to 64.0, indicating that the path of least resistance is upward. The first upside resistance at the 5-day moving average near $2,931.50, followed by the all-time high of $2,956.30, appears to be a key breakthrough barrier for gold bulls. A break above the above level could trigger a move to the next bullish level of $2,980, which is the upper line of the Bollinger Band and in turn points to the psychological level of $3,000. In the bearish case, $2.900 is the first target, followed by the low of $2,888 on February 25. Further declines could pave the way to $2,862.50, which is where the 25-day moving average is located.

Consider going long on gold today before 2,913.00, stop loss: 2,910.00; target: 2,932.00; 2.935.00

AUD/USD

The selling bias in AUD/USD remained unabated for the fourth day on Wednesday, with the currency testing the key 0.6300 contest zone amid a recovering US dollar and tariff concerns. AUD/USD remained subdued for the fourth day on Wednesday. Pressure continued after Australia's consumer price index for January showed a 2.5% year-on-year increase, matching the increase in December. AUD/USD struggled with growing risk sentiment after US President Trump said late Monday that broad US tariffs on goods from Canada and Mexico "will continue" once a one-month implementation delay ends next week. A report from Bloomberg revealed that the Trump administration plans to tighten chip export controls on China, Australia's main trading partner. Given the close trade relationship between China and Australia, any changes in the Chinese economy could affect the Australian dollar.

As shown in the daily chart, AUD/USD traded close to 0.6300 in the second half of Wednesday, breaking below the ascending channel that reflects a weakening bullish market bias. However, the 14-day relative strength index (RSI) is below 50 (last reported at 48.80), but still supports the continued positive outlook. On the upside, AUD/USD tested the immediate resistance of 0.6397 of the 100-day moving average. A successful breakthrough of this level may improve short-term price momentum and support the pair to test the key psychological resistance level of 0.6400, with the next obstacle near the upper line of the ascending channel at 0.6450. On the downside, the pair tested the immediate psychological support level of 0.6300. A decisive break below this level may lead to the emergence of a bearish bias and allow the pair to test the 34-day moving average of 0.6277 and the 0.6235 (February 12 low) level.

Consider going long on AUD today before 0.6285, Stop Loss: 0.6275; Target: 0.6340; 0.6350.

GBP/USD

GBP/USD is now regaining upside momentum, shaking off initial losses and turning its attention to the upper range bound near two-month highs, trading closer to the key 1.2700 mark. GBP/USD gave up some of the previous session's gains during Wednesday's Asian session, hovering around 1.2650. Despite the pullback, GBP/USD has seen a modest rise at the start of the week, bringing the pound back to the upper end of short-term consolidation and placing bids close to the 200-day moving average. US consumer confidence fell in February, further adding to concerns of an economic slowdown, while US President Trump reiterated his intention to impose high import taxes on his closest trading partners as a threat of a trade war. GBP/USD remained positive on Tuesday despite a sharp weakening of consumer confidence due to President Trump's tariff policy. Despite the resurgence of President Trump’s trade war attempts, the market still believes that he will find a last-minute reason to postpone his tariff threats.

The daily chart shows a continued bullish outlook for GBP/USD as the pair remains in an ascending channel pattern. The 14-day relative strength index (RSI) remains above 60, reflecting the strengthening of bullish momentum. Moreover, the pair continues to trade above the 9-day and 14-day exponential moving averages, highlighting strong short-term price dynamics and confirming the current uptrend. GBP/USD faces immediate resistance at 1.2690, and the two-month high of 1.2715, which was reached on February 26, followed by the upper line of the ascending channel, around 1.2750. A break above this level could strengthen the bullish outlook and pave the way for a test of the three-month high of 1.2811, which was last seen on December 6. On the downside, GBP/USD may find immediate support at the 9-day MA of 1.2626, and 1.2600 (market psychological level), followed by the 14-day MA level of 1.2562.

Today's recommendation is to go long GBP before 1.2658, stop loss: 1.2645, target: 1.2710, 1.2720

USD/JPY

USD/JPY may face resistance as the possibility of further rate hikes by the Bank of Japan increases. Traders await a series of key Japanese economic reports on Friday, including industrial production, retail sales and Tokyo inflation data. USD/JPY rebounded to around 149.30 during the Asian trading session on Wednesday. However, global risk aversion and rising expectations of a rate hike by the Bank of Japan may boost the yen and limit the upside for the currency pair. The Bank of Japan is expected to raise interest rates from 0.50% to 0.75% this year, which may affect investor sentiment and support the yen. Japan's service producer price index (PPI) released on Tuesday supports the case for a rate hike by the Bank of Japan. This, coupled with strong consumer inflation data from Japan, further confirms the prospect of further rate hikes from the Bank of Japan, which continues to support the yen. The US Conference Board's consumer confidence index fell sharply for the first time since August 2021, which in turn may put pressure on the dollar against the yen. Traders will take more clues from the Fed's speech later this week. Any hawkish comments from Fed officials may boost the dollar in the short term.

The daily chart shows that USD/JPY is currently trending down, and sellers currently seem to be targeting below Tuesday's low of 148.57. Considering that the 14-day relative strength index (RSI) on the technical indicator is deeply trapped in negative territory, in this case, the next support level will be the daily low of 147.35 on October 8 last year, and finally the 147.00 round mark. On the contrary, if USD/JPY climbs above 150.00 (market psychological mark), further gains are expected as buyers may be ready to challenge 150.68 (10-day moving average). And then approach the round mark level of 152.00.

Today, we recommend shorting the US dollar before 149.38, stop loss: 149.50; target: 148.40, 148.20

EUR/USD

The EUR/USD reversed its two-day upward trend and tried again to challenge the year-to-date peak of around 1.0530 amid the rebound of the US dollar, but failed and finally closed below 1.0500. The euro's rally after the German election did not last long, as the market did not factor in the political risk premium before the election, and the key downside risks facing the euro still exist. It is reported that Chancellor-designate Friedrich Merz is discussing a quick agreement on 200 billion euros in defense spending with his possible coalition partner, the Social Democratic Party, after making remarks that Europe needs to get rid of its dependence on the United States. The market will not see defense spending as a way to revitalize the stagnant growth of the eurozone, so the positive impact on the euro is limited. On the other hand, facing the new round of weakness in the US dollar, market participants re-evaluated the health of the US economy, especially against the backdrop of the recent loss of momentum in some key fundamentals. Secondly, any positive reaction from the euro may fade once the ECB reiterates its dovish stance.

From the daily chart, the EUR/USD high has been above 1.0500 in the past three trading days, and the 14-day relative strength index (RSI) of the technical indicator is above 50 (the latest is 55.40), indicating that the EUR/USD still has the momentum to rise further in the future. Therefore, once the currency pair continues to rebound, it may first test 1.0574 (110-day moving average), then 1.0600 (market psychological level), and finally the high of 1.0630 in December last year. On the downside, the first support level is 1.0477 (9-day moving average), and then 1.0400 (round number level).

Today, it is recommended to go long on the euro before 1.0468, stop loss: 1.0455, target: 1.0520, 1.0530.

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