This Week's Market Strategy - January 7, 2025 (Tuesday)

Last week, the Japanese market was closed for year-end and New Year holidays, making it a week without clear direction for USD/JPY. The pair was stuck at higher levels within a 2-yen range. However, this morning it has started to show movement, breaking above last week's highs. US long-term interest rates supporting USD/JPY continue to rise, but the dollar index, which had been trading near 2-year highs, has been declining since the week's opening.

USD/JPY is updating recent highs, but we believe it will be difficult to rapidly break above 160 yen. From here, we recommend a selling strategy waiting for upside attempts. Stop loss above 160 yen, take profit in the mid-155 yen range.

WTI crude oil futures reversed course at the week's opening from last week's five consecutive days of gains, falling below 74 dollars per barrel. The strength of the dollar put pressure on dollar-denominated commodities. Supported by cold waves in Europe and the US and declining US inventories, crude oil prices rose nearly 5%. On the supply side, due to policy changes under the Trump administration and strengthened sanctions, Iranian oil production and exports are expected to decline through the second quarter.

The fundamentals for WTI crude are weak, so the upside is limited. So should we wait for a pullback and buy on weakness? Near this year's lowest point around 9/10, the 65 dollar range is long. Take profit at 75 dollars, stop loss below 60 dollars.

Gold has been consolidating around the 2,600 dollar level through the year-end and New Year period. The incoming Trump administration is expected to push inflation higher, which could limit the Federal Reserve's ability to cut rates. This could reduce the attractiveness of low-yielding gold.

Gold on a long-term basis, buy below 2,600 dollars. Short-term, short at 2,725 dollars, stop loss at 2,800 dollars, take profit at 2,510 dollars.