On Monday (December 2), the US dollar index rose to 106.16, with a bullish outlook remaining. US President-elect Donald Trump maintains a 'strong dollar' policy and warns BRICS nations that if they create a currency to replace the dollar, they will face 100% tariffs. Gold started off deeply down at $2629, while Bitcoin's upward momentum faced resistance at $97500 million levels. The ongoing tension between Russia and Ukraine continues to disrupt, with Russian President Putin increasing military spending to a record level by 2025.
Trump threatens BRICS nations as the dollar maintains a bullish outlook.
On Saturday local time, Trump stated on his social media platform Truth Social that he would demand that the so-called BRICS nations commit to not creating a new currency that would replace the dollar and reiterated his threat to impose 100% tariffs on these countries.
We need these countries to commit to not creating a new BRICS currency nor supporting any other currency to replace the strong dollar; otherwise, they will face a 100% tariff and should be prepared to say goodbye to our wonderful US economy, Trump wrote in a post.
He added, 'They can go find other 'suckers.' The plans of BRICS nations to replace the dollar in international trade have no possibility; any country attempting to do so should say goodbye to the US.'
The rise of the euro puts pressure on the dollar, but the current momentum has weakened, impacting the performance of the dollar index. The Fed's hawkish stance may continue to push the index higher. The minutes from last week's FOMC meeting indicated that the Fed is not in a hurry to cut rates.
Some participants warned that deflation may take longer than expected. Officials discussed 'technical adjustments' in monetary market operations.
According to the CME's Fed Watch tool, the likelihood of a rate cut in December has risen to about 66%.
Putin approves record military spending for 2025 as EU officials visit Ukraine.
AP News reported that Putin approved a budget plan to raise military spending to a record level by 2025 as Russia seeks victory in the Ukraine war. Approximately 32.5% of the budget, totaling 13.5 trillion rubles, over $145 billion, is allocated for defense, up from 28.3% this year.
Members of the two houses of the Russian parliament, the State Duma and the Federation Council, have approved the plan in the past 10 days.
Since February 2022, Russia has launched a full-scale invasion of Ukraine, marking the largest conflict in Europe since World War II, depleting resources on both sides. Kyiv has received billions of dollars in aid from its Western allies, but Russia's military is larger and better equipped, gradually pushing Ukrainian forces back into the eastern regions in recent months.
Newly appointed European Council President Antonio Costa and the EU's foreign policy chief, Kaja Kallas, arrived in Kyiv on Sunday, sending a strong message of support for Ukraine on their first day in office. Their visit comes amid growing concerns about Kyiv's expectations of Trump's leadership of the new US government.
From the first day of the war, the EU has stood by Ukraine, Costa tweeted, accompanied by a photo of himself, Kallas, and EU enlargement chief Marta Kos. 'From our first day in office, we have reaffirmed our firm support for the Ukrainian people.'
Costa reiterated the EU's recent commitment to help Ukraine through the war during a joint press conference with Ukrainian President Zelensky, including providing €4.2 billion, approximately $4.4 billion, to support Ukraine's budget, and €1.5 billion, about $1.6 billion, in aid from the proceeds of frozen Russian assets each month.
When asked if the EU would increase funding if Trump withdrew support, Costa stated that the EU would 'provide support to Ukraine when necessary.'
Dollar Technical Analysis
FXStreet analyst Patricio Martín indicated that the technical indicators for the dollar index suggest the market will enter a consolidation phase, with the relative strength index (RSI) and the moving average convergence divergence (MACD) indicators hovering around neutral levels.
Although the index recently fell below the 20-day simple moving average (SMA), it quickly recovered, indicating that the upward trend remains intact.
Key support levels are at 106.00-106.50, with resistance at 108.00. The overall bullish momentum suggests that, due to the strong US economy, the Federal Reserve is expected to bet on rate cuts, and the upward trend may continue in the medium term.
Traders should closely monitor the 106.00 level, as a fall below this level may trigger further declines.
Gold Technical Analysis
FXEmpire analyst James Hyerczyk stated that in the short term, gold prices may maintain range fluctuations, with support depending on weak US economic data or escalating geopolitical risks. A weak non-farm payroll report may push gold prices up, as traders believe the Fed's stance is dovish. However, strong employment data may depress gold prices.
The weekly chart shows that if it continues to rise above $2663.51, a bullish tendency may emerge; if it continues to fall below $2631.04, a bearish tendency may occur.
FXStreet analyst Christian Borjon Valencia stated that gold prices remain on an upward trend, but are still within the 50-day and 100-day simple moving averages (SMA) at $2668 and $2572, respectively.
Buyers need to clear the 50-day SMA to test $2700. If it strengthens further, the next resistance level for gold will be the psychological price of $2750 and the historical high of $2790.
On the other hand, if sellers drag gold prices below $2600, they may target the 100-day SMA, ahead of the November 14 low of $2536.
Bitcoin Technical Analysis
CoinTelegraph noted that Bitcoin is consolidating below $100000, indicating that bulls are not in a hurry to exit as they expect the upward trend to continue. Raoul Pal, founder and CEO of Global Macro Investor, posted a chart indicating that Bitcoin may form a local top above $110000 in January.
Some analysts remain optimistic about next year. Tom Lee, co-founder and research head of Fundstrat Global Advisors, stated that Bitcoin could soar to $250000 by 2025.
It's not just Bitcoin stealing the spotlight. Traders seem to be gradually shifting their focus to altcoins. Noted analyst Mikybull Crypto indicated that Bitcoin's dominance has fallen below its two-year support line, signaling that the cryptocurrency market has officially entered 'Altcoin Season.'
Bitcoin faces resistance near the psychologically significant level of $100000, but a positive sign is that the price remains above the upward trend line.
The 20-day exponential moving average shows an upward trend at $92114, and the relative strength index (RSI) is in positive territory, indicating bullish dominance. This increases the possibility of breaking through $100000. If this occurs, Bitcoin could rise to $113331, followed by $125000.
Sellers must pull the price below the 20-day moving average to weaken the bullish momentum. The currency pair could then drop to $85000, which may attract buyers.
The moving averages on the 4-hour chart have flattened, with the RSI slightly above the midpoint, indicating a balance between supply and demand. The currency pair may consolidate between $100000 and $90000 for some time.
A breakout and closure above $100000 indicates that buyers have absorbed the selling pressure. This could start a move towards $113331. On the other hand, a drop below $90000 may entice short-term buyers to take profits, pulling the price down to $85000.
