The strong AI-driven rally paused on Thursday, while the US dollar maintained its strength, and crude oil and gold continued their downward trend.

On geopolitical news, former President Trump on Wednesday dismissed a report from Iranian television about "Iran and Oman jointly managing the Strait of Hormuz." Subsequently, the US launched a new round of strikes on Iranian military facilities. For now, it appears there is still some distance before the US and Iran sign a memorandum of understanding.

Influenced by conflicting reports, international oil prices plunged over 5% on Wednesday but rebounded by 2% in early Thursday trading. Despite the short-term deadlock, the geopolitical situation, with multiple forces involved, is expected to gradually cool down, potentially leading oil prices to continue fluctuating in a downward trend.

Despite weaker oil prices, the US dollar index remained strong, with the two assets diverging in their performance this week. Beyond safe-haven demand and expectations for Federal Reserve rate hikes, the current state of the US economy is significantly better than that of Europe and other regions, providing a foundation for the strong dollar.

The sustained high level of the dollar has put pressure on non-US currencies. USD/JPY continued its ascent, challenging the 160 level.

The most notable decline overnight was in the Australian dollar (-0.35%), as Australia's April CPI fell short of expectations, sharply reducing expectations for a rate hike this year. In stark contrast, the New Zealand dollar (+1.1%) rose, with markets anticipating up to four rate hikes this year following the Reserve Bank of New Zealand's hawkish pause. AUD/NZD fell 1.5% overnight, threatening a reversal of its long-term upward trend.

As shown in the chart, gold fell to a two-month low of $4,456 on Thursday, with the 200-day moving average being the next critical area.

The three major US stock indices reached record closing highs overnight, but the rally in popular AI stocks paused. Despite nearing month-end, which brings potential for technical corrections and profit-taking, Wall Street remains optimistic about the US stock market outlook. Goldman Sachs raised its year-end target for the S&P 500 from 7,600 to 8,000, citing sustained growth in corporate profits. A retreat in US Treasury yields from their highs could bolster investor confidence.

Among US-listed Chinese stocks, Pinduoduo (PDD) saw its shares plunge 10% after its earnings report fell short of expectations.

Numerous US economic data releases are scheduled for Thursday evening, including the Fed's preferred inflation gauge—the April PCE price index—durable goods orders, the revised Q1 GDP figure, and initial jobless claims. Better-than-expected economic data could continue to support the US dollar index. Additionally, Costco (COST) is set to report earnings after the market close.

Gold has refreshed its two-month low, with both price action and technical indicators suggesting a continuation of the bearish trend.

As indicated in the chart, the gold price is currently testing the crucial area around the 200-day moving average near $4,390-$4,400. This moving average previously helped halt gold's decline on March 23. However, if the US dollar index maintains its strength (potentially challenging the 100 level), gold could face further downward pressure, testing the $4,250-$4,300 zone, which would represent the bulls' last line of defense.

If tonight's US economic data generally exceeds expectations, it could further boost the dollar (stimulating rate hike expectations) and pressure gold. A complete reversal of gold's weakness would likely require a phased pullback in the dollar, potentially triggered by a formal US-Iran peace agreement.