The 20-year US bond auction "exploded"! US Treasury fell sharply, US dollar index continued to decline

On May 22, early trading in the Asian market on Thursday, Beijing time, the US dollar index hovered around 99.56. On Wednesday, the dollar index continued to decline and fell below the 100 mark, which ended up closing down 0.42% at 99.60 due to concerns about the Trump administration's tax cuts and spending bills and weak demand for 20-year U.S. Treasury bid. The benchmark 10-year U.S. Treasury yield closed at 4.605%; the two-year U.S. Treasury yield closed at 4.030%. Spot gold started to rise during the European session and accelerated its upward trend in the US session. It once rose by more than 1% during the day and finally closed up 0.78% to $3,315.64 per ounce, hitting a new high in the past week. Spot silver finally closed up 0.94% at $33.38 per ounce. Affected by the situation in the Middle East and the prospects of the Iran nuclear agreement, the two oils rose first and then fell. After US media reported that Israel was preparing to crack down on Iran's nuclear facilities, WTI crude oil opened sharply higher and rose nearly 2%, but then continued to decline, erasing all the gains in the day and turning to a decline, and finally closed down 1.49% at $61.20/barrel; Brent crude oil closed down 1.31% at $64.16/barrel.

Analysis of major currencies

Dollar Index: As of press time, the US dollar index hovers around 99.56. Since the beginning of this week, the dollar has paid the price for the volatility of Trump's administration's policies, which is currently facing difficulties in many aspects. Hawkish rhetoric by Fed officials has significantly lowered market expectations for a recent rate cut, which provides support from the dollar to some extent. However, the ongoing political uncertainty and geopolitical risks put pressure on the US dollar, forming aA delicate balance. Technically, the US dollar weakened among major currency pairs, with the euro, pound, yen and Canadian dollars all recording gains driven by domestic positive factors and widespread US dollar selling.

Euro: As of press time, the euro/dollar hovers around 1.1330. On Wednesday, the euro/dollar was driven by buying, breaking through the 1.1300 technical resistance level and gained for the third consecutive trading day after market sentiment turned to the dollar due to the heavy blow to the U.S. Treasury market. Treasury yields rose and demand for 20-year Treasury bonds fell in a mid-term bond auction, prompting investors to pull out broadly from U.S. assets, including the dollar, which is often considered safe-haven assets. Technically, from a technical perspective, the euro decisively broke through the previous resistance level near 1.1260, and the 50-cycle SMA is at 1.1210, which is now far below the price. This obvious breakthrough confirmed a reversal from the mid-May low, while the rise in euro zone bond yields increased support.

GBP: As of press time, GBP/USD is hovering around 1.3426. Although the rise in the UK's April inflation data exceeded expectations triggered concerns about the Bank of England's policy turn, the US dollar continued to be under pressure due to a downgrade of the sovereign rating, providing support for the pound. The market is currently reevaluating the differentiation of policy paths between Britain and the United States. With the interweaving of long and short factors, the pound may maintain a high fluctuation in the short term. Technically, the GBP/USD firmly breaks through the 1.3420 area and is now easily above its 50-cycle SMA1.3309.

Analysis of gold and crude oil market trends

1) Analysis of gold market trends

On Thursday, gold trading around 3324.88. International gold prices have recently experienced a strong rise, rising for the third consecutive trading day on Wednesday, setting a new weekly high of $3324.76/ounce, and finally closed at $3315.14/ounce, a single-day increase of about 0.78%. This wave of upward trend is mainly driven by the weakening of the US dollar index and the intensified global geopolitical uncertainty, showing the unique charm of gold as a traditional safe-haven asset. This trading day will be released on PMI data in European and American countries in May, changes in the number of initial unemployment claims in the United States, and the total annualized number of existing home sales in April. Investors need to pay attention to it. In addition, we will continue to pay attention to the international trade situation, geopolitical situation and news related to the G7 meeting, and pay attention to the speeches of Federal Reserve officials.

Technical: From the daily chart, gold prices broke through on Tuesday, which was recently restricted on the 21st.The consolidation range between the 50-day simple moving average (SMA). At the same time, the 14th-day relative strength indicator (RSI) returned to the upper part of the midline, indicating that buying was enhanced. Gold also successfully held the key retracement support - $3,165, the 61.8% Fibonacci correction level in April, which provided the basis for the rebound of gold prices. If gold prices successfully close above the 21-day moving average (about $3289) on the daily chart, it will pave the way for further uptrends. The next target is the downtrend line resistance level of $3387. If it breaks through, gold is expected to challenge the $3400 mark. On the contrary, if the bears dominate the market again, the first support level is at the 50-day moving average (about $3185). If it falls below, the above $3165 retracement support will be tested again. Once lost, it may trigger a new round of selling, gold prices may fall back to around $3,100.

2) Analysis of crude oil market trends

On Thursday, crude oil trading around 61.07. Oil prices have been under constant pressure since U.S. President Donald Trump took office in January, affected by recession concerns, rising global supply and weaker dollar. Together, these factors have led to weakness in liquid commodities, suppressing the bullish momentum that previously supported high energy prices.

Technical: From a technical perspective, WTI crude oil has recently tried to break through the 38.2% Fibonacci retracement level ($64.179), which corresponds to the year-to-date decline from January to April. However, the rebound is limited by strong selling pressure, forming a long upper shadow on the daily candlestick chart, a classic signal of bullish weakness and potential reversal points. This further consolidates the $64.00 region as a key resistance, and short-term price movements may tend to further consolidate or downside unless the buyer can re-control the level. The 10-day simple moving average (SMA) close to $61.68 is used as dynamic support, and once a clean breakout is clear, the next support range may be exposed at $60.58 (23.6%Fib).

Forex market trading reminder on May 22, 2025

15:00 State Information Office held a press conference on the relevant situation of science and technology financial policies

15:15 Initial value of French manufacturing PMI in May

15:30 Initial value of German manufacturing PMI in May

16:00 Germany's May IFO Business Increasing Index

16:00 Eurozone's May manufacturing PMI in May

16:30 Initial value of UK manufacturing PMI in May

16:30 Initial value of UK service industry PMI in May

16:30 Initial value of UK service industry PMI in May

16:30>

18:00 UK CBI industrial order difference in May

19:30 European Central Bank released minutes of April monetary policy meeting

20:30 US initial request for unemployment benefits in the week from the United States to May 17

21:45 US initial value of S&P Global Manufacturing PMI in May

21:45 US initial value of S&P Global Services PMI in May

22:00 US April The total number of existing home sales is annualized

22:30 EIA natural gas inventory in the week from the United States to May 16

The next day, the Federal Reserve Williams delivered a keynote speech

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