Federal Reserve interest rate cut expectations support risk assets; year-end technical analysis of four major trading instruments

Macroeconomic Background: Federal Reserve Policy Shift May Boost Risk Sentiment

As the year-end approaches, the Christmas holiday has led major markets to close, but focus remains on the Federal Reserve’s policy trajectory. After three rate cuts this year, the Fed is awaiting new guidance from labor market and inflation data. Notably, there are concerns about rising unemployment rates, and the possibility that non-farm payrolls data may be overestimated, with actual employment growth potentially turning negative. Bank of America forecasts that the Fed will implement two rate cuts in the first half of the year, and expects the 10-year U.S. Treasury yield to fall back to the 4% to 4.25% range by year-end. This dovish outlook could provide potential support for risk assets such as U.S. stocks.

EUR/USD: 1.1700 Becomes a Key Pivot

During weekend trading, EUR/USD rose modestly, reaching a high of 1.1793, but remains constrained by the 1.1800 level. From a technical perspective, the short-term support/resistance boundary is at 1.1700, with the overall upward trend still solid.

The next move depends on the performance of the 1.1700 support level. If the currency pair can hold above this level, a rebound toward 1.1900 and even the 1.2000 psychological level is possible. Conversely, if it breaks below 1.1700, there is a risk of falling back to 1.1630.

Support levels: 1.1700, 1.1630, 1.1500 | Resistance levels: 1.1800, 1.1900, 1.2000

AUD/USD: Medium-term Uptrend Intact, Short-term Correction Possible

AUD/USD edged higher over the weekend, reaching a high of 0.6718, and is currently hovering around 0.6700. While the medium-term uptrend shows no signs of reversal, short-term consolidation risks should be monitored. From the perspective of AUD against RMB, the RMB trend closely correlates with AUD performance, which in turn influences AUD/USD strength.

If AUD/USD falls below 0.6700, the downside could test 0.6620. If this level holds, the medium-term uptrend may continue. The upside target is set at 0.6800.

Support levels: 0.6700, 0.6620, 0.6520 | Resistance levels: 0.6750, 0.6800, 0.6900

NZD/USD: Range-bound Battle Near Gann Line

NZD/USD gained slightly over the weekend, reaching a high of 0.5841. The pair has broken above the Gann 2/1 line at 0.5770, but recent upward momentum has weakened, with technical signals indicating fatigue, and the pair may face a test of the Gann line.

If a rebound encounters resistance at 0.5850, it will test the 0.5770 support. If this level stabilizes, the medium-term uptrend could continue. The key resistance above is at 0.5900.

Support levels: 0.5800, 0.5770, 0.5730 | Resistance levels: 0.5850, 0.5900, 0.6000

WTI Crude Oil: AO Indicator Suggests Rebound Correction Initiation

WTI crude oil rose slightly over the weekend, reaching a high of $58.6. Notably, the AO indicator shows increasing bullish momentum, which may signal a potential rebound correction after the decline since June.

Breaking and stabilizing above $59.0 could allow oil prices to further rebound toward $61.5 and even $64.5. However, a drop below $57.0 warrants caution for further downside risk.

Support levels: 57.0, 55.0, 52.0 | Resistance levels: 59.0, 61.5, 64.5