Market Summary

The US dollar index experienced notable fluctuations on Monday, falling below 98 points before partially recovering to close 0.13% lower at 98.28. Treasury yields remained steady, with the 10-year yield at 4.181% and the 2-year yield at 3.516%, reflecting sensitivity to Federal Reserve policies. Spot gold approached the $4350 psychological resistance level but retraced to close marginally higher at $4304.91 per ounce, showing investor caution. Oil prices fell further amid growing concerns about global oversupply and subdued demand outlooks.

Major Market Movements

US Dollar:
The dollar's intraday swing reflects uncertainty over the Fed’s policy path. Key technical resistance around 98.55 and support near 98.25 continue to define the index’s short-term range. Market participants await this week's US economic data for clearer direction.

Gold:
Gold prices flirted with the $4350 mark, fueled by expectations of future Fed interest rate cuts and a softer dollar. However, profit-taking and diminished risk aversion limited further gains, resulting in a modest 0.1% increase to $4304.91 per ounce.

Oil:
Crude oil prices declined amid fears of sustained oversupply into 2026, despite geopolitical factors like US-Venezuela tensions and Russia-Ukraine developments. WTI crude closed down 1.61% at $56.47 per barrel, while Brent crude slipped 1.31% to $60.63 per barrel.

Technical Analysis

USD/JPY:
USD/JPY maintains a broader bullish trend above major moving averages, though momentum has softened near the 155.05 support zone. Indicators point to consolidation, with a potential pullback if support fails, or a bullish rebound if price clears resistance at 156.80.

EUR/USD:
The euro remains bullish, trading above key moving averages with strong momentum indicators. While overbought conditions suggest a short-term pullback risk, a sustained close above 1.1740 could extend gains toward 1.1870.

USOIL:
Oil prices face heavy selling pressure, trading below key averages and showing oversold signals that may prompt corrective bounces. However, unless prices reclaim resistance near 60.10, the bearish trend is likely to continue.

Economic Highlights

Gold (XAU/USD):
Safe-haven demand supports gold near record highs as markets brace for critical US labor and inflation data. The metal’s next move hinges on whether upcoming data confirms economic cooling or reignites inflation concerns.

Oil (USOIL):
Oil markets balance oversupply fears against geopolitical risks and China’s weak demand signals. Any meaningful price recovery will require clear supply tightening or demand improvement.

Japanese Yen (JPY):
The yen strengthened ahead of an anticipated Bank of Japan rate hike, supported by strong domestic business sentiment and reduced carry trade activity. Focus now shifts to BoJ guidance for future monetary policy.

Euro (EUR):
The euro held firm near multi-week highs, buoyed by robust industrial production and speculation that the ECB may hold rates steady before a possible hike in 2026.

Canadian Dollar (CAD):
The Canadian dollar strengthened on stable inflation data and the Bank of Canada's decision to maintain interest rates, benefiting from a narrowing yield spread with the US.

US Dollar (USD):
The dollar remains subdued amid weak regional data and persistent speculation of further Fed easing in 2026. Upcoming US jobs and inflation reports are key to near-term sentiment.

Outlook and Trading Strategy

• USD: Short positions recommended near resistance at 98.55, targeting support near 98.15 with tight risk management.

• EUR/USD: Buy on dips around 1.1720, aiming for gains near 1.1770.

• Gold: Look to buy near 4252 support, with a target near 4348 resistance.

• Oil: Sell on rallies below 58.00, targeting lower support levels.

Investors should adjust strategies dynamically in response to market developments and upcoming economic data.