USD

delivered cautious remarks, the U.S. Dollar Index plummeted to 105.43 on Wednesday. According to Powell's observations, the U.S. economy, despite facing inflationary pressures and a tight labor market, continues to exhibit strong domestic demand. After a challenging start to the week, the dollar managed to regain momentum, briefly pushing the Dollar Index above the 106.00 mark, thanks to data and cautious trading ahead of Wednesday's Fed rate decision. The U.S. Bureau of Labor Statistics (BLS) reported that the U.S. Employment Cost Index rose by 1.2% in the first quarter. This figure follows a 0.9% increase in the fourth quarter of 2023 and was higher than the market expectation of 1%. Over the 12 months up to March 2024, compensation costs for civilian workers increased by 4.2%, down from 4.8% in March 2023.

From a technical perspective, the short-term outlook for the Dollar Index shows a predominantly bullish momentum. The 14-day Relative Strength Index (RSI) displays a positive slope in the bullish zone, indicating potential dominance by buyers. The flat green bars seen in the Moving Average Convergence Divergence (MACD) align closely with this bullish sentiment, but signal a potential flattening of momentum. That said, once the index climbs back above the 106.00 psychological level, it may further challenge the April 16 high of 106.51 and 106.52. Key supports to watch are at 105.58 and 105.41. The next level to watch is 105.00.

Today, consider shorting the Dollar Index near 105.80, with a stop loss at 106.00 and targets at 105.30 and 105.25.

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WTI Spot Crude Oil

On Wednesday, U.S. WTI crude oil fell below $80.00 per barrel, as continued oversupply of U.S. crude outstripped demand, and the Federal Reserve remained tentative on the path to interest rate cuts. As global markets focused on the latest Federal Reserve rate decision, the U.S. Energy Information Administration (EIA) released the latest weekly barrel count of U.S. crude supply. According to EIA data, for the week ending April 26, U.S. oil production increased by 7.265 million barrels, far exceeding the forecasted reduction of 2.3 million barrels and completely offsetting the prior week’s reported decrease of 6.368 million barrels. This upward trend in EIA data was consistent with figures reported earlier this week by the American Petroleum Institute (API), marking the highest weekly crude production since the week of February 9. In April, EIA-tracked U.S. crude inventories rose by 9.473 million barrels, with U.S. oil supply running a surplus of nearly 30 million barrels since 2018.

Wednesday's decline dragged WTI back below $80.00 per barrel, falling out of the stable demand zone between $82.00 and $80.00. Yesterday, WTI touched a near one-and-a-half-month low of $78.50, marking the first time since mid-March that it has dipped below the 200-day moving average of $79.82. U.S. crude is now down nearly 10% from its early April peak of $81.25, as a shift toward safe-haven assets like the dollar suggests that inflation may continue to worsen, dampening the Federal Reserve’s opportunity for rate cuts in the near term. With bullish momentum for U.S. crude still limited, WTI has retreated to a familiar supply region below $80.00. If it fails to reclaim the 50-day moving average of $81.33 and the central line of the daily descending channel at $81.10, support levels to watch include $78.20. On the upside, initial targets include the psychological level of $80.00 and the 200-day moving average at $79.82, which will serve as key resistance levels. A break above could lead to the 45-day moving average at $81.80 and $82.98.

Today, consider going long on crude oil near $78.50, with a stop loss at $78.20 and targets at $79.60 and $79.75.

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XAUUSD

On Wednesday, gold prices surged above the milestone range of $2,300 to $2,329 following the Federal Reserve's decision to keep interest rates unchanged while announcing a slowdown in the pace of balance sheet reduction. Additionally, Federal Reserve Chairman Jerome Powell did not provide forward guidance on rate cuts for the remainder of the year. As Powell made his remarks, gold rose to $2,319, with him stating that rate cuts are inappropriate until they are confident that inflation is moving towards the 2% target, adding that this year's inflation data "has not given us greater confidence." On another note, China, the world's largest gold consumer, has been steadily purchasing gold since October 2022, which in turn helps further drive up the price of the precious metal. Gold traders will keep an eye on the developing tensions in Taiwan and the geopolitical unrest in the Middle East. Any escalation in these tensions could increase the influx of safe-haven capital, thus benefiting gold prices.

From a technical perspective, although the upward trend in gold prices remains intact, Tuesday's dip below the $2,300 mark might have opened the door for further corrections. If sellers keep gold prices below the psychological level of $2,300 and the April 23 low of $2,291, this could challenge the next cycle high at $2,255.10 (the 61.8% Fibonacci retracement from $2,146.10 to $2,431.50) and potentially clear the path to the support at $2,223. Once these levels are cleared, the next step could be $2,200. On the upside, if gold prices return to $2,300, this could open the door to challenge the April 26 high of $2,352, and therefore, they still have the potential to challenge higher prices. The next resistance level is at $2,364.10.

Today, consider going long on gold just before $2,315.00, with a stop loss at $2,310.00, and targets at $2,330.00 and $2,335.00.

AUDUSD

The AUD/USD pair partially reversed Tuesday’s strong pullback, reclaiming the 0.6500 level and above, in response to a significant retracement in the dollar following the FOMC announcement on Wednesday. Since the start of the week, renewed buying pressure on the dollar put the AUD/USD in a downtrend, causing it to retreat from a six-day rally that included a three-week high near 0.6586 on April 29, to a weekly low of 0.6465. In terms of monetary policy, investors anticipate that the Reserve Bank of Australia might cut rates later this year, especially after last week's inflation data exceeded expectations. Currently, market sentiment suggests a 90% probability of a 25 basis-point rate cut in 2024, with earlier this month anticipating about 50 basis points of easing. Additionally, considering the Fed's commitment to tightening monetary policy and the potential onset of an easing cycle by the RBA later this year, the ongoing rise of the AUD/USD is deemed limited.

From a technical standpoint, although there was a breakout last week, there is still insufficient evidence to suggest that the bullish short-term trend has reversed. The AUD/USD could now fall to 0.6442. Further bearish movement could drive the price down to the next breakout target of 0.6400. Despite the breakout, the pair might still recover, and the current weakness may just be a pullback within the dominant uptrend. A re-break above the 0.6500 high could boost confidence and suggest that prices will continue to rise toward the 200-day moving average around 0.6521. Breaking above this level would confirm that the upward trend remains intact, producing a higher high at 0.6586, which in turn could lead the pair to continue its upward trend and set new highs.

Today, consider going long on the Australian Dollar just before 0.6505, with a stop loss at 0.6490 and targets at 0.6550 and 0.6565.

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GBPUSD

After the Federal Reserve decided to keep interest rates unchanged but announced a slowdown in the reduction of its balance sheet starting in June, the GBP/USD experienced fluctuations. The pair mainly oscillated within the 1.2500/1.2550 range, and during Wednesday's early Asian session, it held around 1.2480. The market sentiment remained cautious, with a strengthening dollar providing support for the GBP/USD decline. The U.S. Conference Board reported that the Consumer Confidence Index for April dropped from the previous value of 103.1 to 97.0, marking the lowest level since July 2022. Meanwhile, the Chicago Purchasing Managers' Index for April fell from 41.4 in March to 37.9, below the expected 44.9, recording the lowest level since November 2022. On the other hand, a dovish stance maintained by the Bank of England exerted some selling pressure on the pound. Bank of England Governor Andrew Bailey expressed confidence in cooling UK inflation and anticipated that the market expects the BoE to cut rates two to three times this year. Financial markets are pricing in a 50 basis points rate cut by the BoE in August.

From the daily chart, the GBP/USD exchange rate showed a reversal after initially breaking above the 200-day moving average (1.2552) earlier in the week. U.S. Employment Cost Index data suggesting potentially rising inflation bolstered the dollar. Consequently, after reaching a daily high of 1.2563, GBP/USD turned around and fell back to around 1.2470. The GBP/USD appears neutral but failing to hold above the 200-day moving average at 1.2555 could open the door for a retracement, with traders eyeing to test the mid-April support level at 1.2448, and 1.2439. A break below could target the psychological level of 1.2400. On the upside, breaking above 1.2500 could see 1.2525, with the next level retesting the 200-day moving average at 1.2552, and potentially the psychological market level of 1.2600.

Today, consider going long on the British Pound just before 1.2505, with a stop loss at 1.2490, and targets at 1.2560 and 1.2570.

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USDJPY

After the Federal Reserve decided to maintain interest rates at 5.25%-5.5%, the USD/JPY fell to a near two-week low of 153.00 on Wednesday. In its statement, the Fed acknowledged that there has been no significant progress in combating inflation recently, noting a "lack of further progress towards achieving the 2% inflation target in recent months." This observation forms the core of their hawkish stance, as anticipated by the market. Despite this, the Fed chose to slow the pace of quantitative tightening, a move that was also expected. They now view inflation risks as more balanced, achieving a consensus vote among members. For now, the likelihood of rate cuts in June and July remains low, and these probabilities are not yet reflected in the pricing for the September meeting. The market is starting to bet on only one rate cut in 2024, by the end of the year. Powell's pressuring will be key for the market to gain additional guidance.

Technically, after a significant drop on Monday, suspected to be triggered by intervention, USD/JPY maintained some resistance below the 14-day moving average at 155.48, and 155.39. However, bulls might prefer to wait for a breakthrough above the 158.00 level before re-entering to absorb dollars. At that point, USD/JPY could breach the midline resistance near 158.43, targeting a reclaim of the prior high at 160.00. Conversely, if USD/JPY decisively breaks below the 14-day moving average at 155.38, and 155.39, it could then fall to the psychological level of 155.00, and 153.00.

Today, consider going short on the dollar just before 154.55, with a stop loss at 154.80, and targets at 153.50 and 153.00.

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EURUSD

After the Federal Reserve's decision to maintain interest rates at 5.25%-5.5% and Chairman Powell's subsequent remarks, the USD experienced a notable retreat, allowing the EUR/USD to breach the crucial 1.0700 threshold. Despite this, the pair continued its downward trend for a second consecutive day, stabilizing around 1.0650 during Wednesday's Asian trading session amid closed European markets for Labor Day. Hawkish statements from Federal Reserve officials suggested no immediate necessity for rate cuts, further dampening EUR/USD strength. In the Eurozone, robust data released on Tuesday did not suffice to sustain the euro's earlier gains. The GDP of the Eurozone increased by 0.3% in the first quarter, surpassing expectations. Additionally, the Harmonized Index of Consumer Prices (HICP) recorded a consistent year-on-year rise, aligning with forecasts and bolstering investor confidence that the European Central Bank (ECB) may implement rate cuts in June.

From the technical perspective, EUR/USD was seen lingering near the 1.0650 low at one point. With the European markets closed for Labor Day, the pair showed limited movement within this lower range. Looking upwards, EUR/USD is anticipated to encounter resistance at the psychological barrier of 1.0700, followed by further resistance at the significant 200-day moving average situated at 1.0799 and 1.0785, which represents the midline of the daily descending channel. Conversely, if EUR/USD continues to decline, it might retest the recent low of 1.0650 and possibly reach the 2024 low of 1.0601 set on April 16. This could indicate a potential further decline towards the November 2023 low of 1.0516 and the October 13, 2023, weekly low of 1.0495.

For trading today, consider entering a long position on the euro just below 1.0700, setting a stop loss at 1.0685, and aiming for targets at 1.0760 and 1.0775.

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