Dollar Gain as Trump Warns BRICS

• The dollar gained sharply on Trump’s statement that threatened the BRICS.
• The euro weighs on political instability in France as the opposition is said to overthrow the ruling party.
• Gold was hammered by the strengthening dollar while the appetite for safe-have eased in the market. 

Market Summary

The dollar rallied sharply following the Thanksgiving holiday, with the Dollar Index climbing nearly 0.5% in early Asian trading, holding firmly above the 106 mark. The surge was fueled by comments from U.S. President-elect Donald Trump, who urged BRICS nations to uphold the greenback's dominance while threatening 100% tariffs should they pursue alternative currencies.

In Europe, the euro faced pressure amid mounting political risks in France. The opposition leader threatened to overthrow the government this week, while contentious parliamentary debates over the national budget have eroded investor confidence in both the French economy and the euro. In contrast, the Japanese yen strengthened after a hawkish BoJ statement indicated inflation and growth were in line with forecasts, suggesting another interest rate hike may be on the horizon.

In the commodities market, gold prices tumbled, pressured by a stronger dollar and diminished safe-haven demand, kicking off the week on a weak note. Oil prices remained subdued as traders awaited the OPEC meeting on December 5, with expectations of a potential delay in the full resumption of oil supplies.

Current rate hike bets on 18th December Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (40.4%) VS -25 bps (59.6%) 

Market Movements

DOLLAR_INDX, H4

The Dollar Index remained flat but hovered near its lowest level since November 12. Friday's disappointing US Chicago PMI data, which fell from 41.6 to 40.2, below the market expectation of 44.9, tempered optimism about the US economic outlook. With limited market catalysts at present, investors continue to adopt a cautious wait-and-see approach, focusing on potential shifts in monetary policy and President-elect Trump’s proposed policy measures. Key highlights for this week include the US Nonfarm Payrolls and Unemployment Rate reports, which will be pivotal for global market sentiment.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 56, suggesting the index might extend its losses after it successfully breakout since the RSI stays below the midline. 

Resistance level: 107.60, 108.60

Support level: 106.10, 105.15

XAU/USD, H4

Gold prices remained flat, supported by heightened trade war fears as President-elect Trump reiterated threats to impose tariffs on products from Canada, Mexico, and China. This raised concerns about a potential trade war, particularly affecting the auto sector, which relies heavily on cross-border supply chains. Additionally, Fed Chair Jerome Powell is expected to discuss monetary policy later this week, with markets awaiting insights into the labor market's strength. Declining US Treasury yields, and a weaker US dollar further boosted gold's safe-haven appeal amidst broader economic uncertainties.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 44, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level: 2655.00, 2710.00

Support level: 2615.00, 2555.00

GBP/USD，H4

The GBP/USD pair maintains a higher-high price pattern, signaling a bullish bias. However, the pair encountered selling pressure at its recent peak amid dollar strength following Donald Trump’s remarks. Pound traders now focus on today’s PMI readings, which could influence Sterling’s direction.

The GBP/USD has broken above its resistance level at the 1.2700 mark, suggesting a bullish bias for the pair. The RSI has been hovering above the 50 level while the MACD remains above the zero line, suggesting that the pair remain trading with bullish momentum. 

Resistance level:1.2790, 1.2850

Support level: 1.2620, 1.2505

EUR/USD，H4

The EUR/USD pair remains below the 1.0565 resistance, hinting at a potential trend reversal. Political turmoil in France, with the opposition vowing to oust the ruling party amid heated budget debates, has dented confidence in the French economy, weighing on the euro.

EUR/USD has fallen below from the uptrend support level, suggesting a potential trend reversal for the pair. The RSI has eased while the MACD is about to cross on the above, suggesting that the bullish momentum is easing. 

Resistance level: 1.0610, 1.0680

Support level: 1.0440, 1.0325

USD/JPY, H4

The Japanese yen extended its upward momentum, driven by hawkish remarks from Bank of Japan (BoJ) Governor Kazuo Ueda over the weekend. Ueda hinted that a rate hike is imminent as Japan's economic performance continues to improve, supported by stronger-than-expected Tokyo inflation data for October. Investors are advised to closely monitor upcoming BoJ policy developments for further trading cues.

USD/JPY is trading lower following the prior breakout below the previous support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 39, suggesting the pair might experience technical correction since the RSI rebounded sharply from oversold territory. 

Resistance level: 151.15, 153.65

Support level: 148.60, 145.50 

Dow Jones, H4:

The Dow advanced during Friday's shortened session amid Thanksgiving celebrations and extended gains in Monday's Asian session. Futures climbed as investors reacted to President-elect Trump's bold remarks on BRICS, perceived as a threat to U.S. economic dominance. Optimism grows around potential economic improvements under Trump's administration, driving positive sentiment in U.S. equities.

The Dow is now hovering at its all-time peak and is set to break another high with sufficient bullish momentum. The RSI has gotten into the overbought zone while the MACD continues to edge higher, which is in line with the view of excessive bullish momentum with the index. 

Resistance level:  45350.00, 47150.00 

Support level:  43870.00, 42800.00 

CL OIL, H4

Oil prices closed last week approximately 3% lower as fears of supply disruptions from the Israel-Hezbollah conflict subsided, coupled with expectations of increased oil supply in 2025. The OPEC+ coalition postponed its policy meeting to December 5, where it is anticipated to extend production cuts. However, OPEC has revised its global oil demand growth forecasts downward for 2024 and 2025, citing economic challenges in key markets like China and India. The International Energy Agency also forecasts that global oil supply will exceed demand in 2025, even if OPEC+ maintains its output cuts.

Oil prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 42, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level: 69.95, 72.65

Support level: 66.90, 65.60