US Dollar Index
The US dollar, as measured by the US dollar index, fell on Tuesday, dropping below 103.00. This came after disappointing Producer Price Index (PPI) data that was below analysts' expectations. Looking at the overall economic data, the US economy continues to achieve above-trend growth. This suggests that market participants may have overestimated the need for aggressive monetary easing as the Fed may ask for more data before cutting interest rates. The market sentiment was relatively calm earlier, with US stock index futures unchanged and the 10-year US Treasury yield remaining close to 4% earlier in the day. Although market expectations for the upcoming monetary policy decision remain unchanged, the US economic outlook continues to indicate above-trend growth, suggesting that there may be an overestimation in the market for future aggressive easing. Last week's market trend smoothly transitioned to this week. The Japanese Yen and Swiss Franc underperformed on Monday, despite slight gains in global bond yields and equities. Due to the lack of important data releases at the beginning of the week, the market is maintaining last week's trend while focusing on important US data released this week, including CPI and retail sales data.
The technical outlook for the US dollar index remains bearish, and it is difficult for buyers to make major moves. The index remains below the 20 (103.80); 100-day (104.84); and 200 (104.17) simple moving averages, consistent with a major bearish bias. The 14-day relative strength index (RSI) based on technical indicators continues to remain below 50 (38.90), indicating continued selling pressure. In addition, the moving average convergence divergence (MACD) remains in negative territory, showing lower red bars. Despite the gains this week, the overall technical outlook has not improved significantly, suggesting the possibility of continued correction in the market. Therefore, the support below can be considered at 102.40 {lower line of the descending channel}, and the market psychological level of 102.00. While the resistance above is concerned about 103.56 {50.0% Fibonacci retracement}, and 103.00 (market psychological level).
Today, you can consider shorting the US dollar index around 102.75, stop loss: 102.90 target: 102.40, 102.30
WTI Spot Crude Oil
WTI crude oil prices fell during the Asian session on Tuesday and now appear to have ended a four-day winning streak to reach a three-week high around $78.75-78.80 hit the previous day. At the beginning of the week, oil prices rose for the fourth consecutive day. And once broke through the psychological level of $80.00. Oil traders pushed crude oil prices higher after the Organization of the Petroleum Exporting Countries (OPEC) lowered its demand outlook and may limit production at the upcoming meeting. Of course, seeing the recent price increases from Saudi Arabia to Asia and Russia, they will commit to their production quotas by firmly reducing production in August and September. The International Energy Agency (IEA) report on Wednesday is bound to increase volatility, which tends to be more dovish than OPEC reports. Although the headlines in the Middle East have moved to the background, tensions remain, and this factor still needs to be considered as a tail risk for more upside.
On the upside, the key level around $78.17 (200-day moving average) has now been recaptured by bulls, which will act as a support level. The other two major moving averages are very close, the 55-day moving average is $79.35 and the 89-day moving average is $79.46. The 14-day relative strength index (RSI) of the technical indicator rebounded on the daily chart, which means there is room for another decline. Looking down, the first level to watch out for is 78.41 {50.0% Fibonacci rebound from 84.73 to 72.10}, and $78.17 (200-day moving average). Once the decline continues, the possibility of seeing $77.87 (20-day moving average) or even $76.92 (38.2% Fibonacci rebound level) cannot be ruled out. On the upside, pay attention to $80.00 (market psychological level) and $81.74 (76.4% Fibonacci rebound level).
Today, you can consider going long on crude oil around 78.20, stop loss: 78.00; target: 79.50; 79.80
Spot gold
At the beginning of the week, it rebounded by more than 1% as the market worried about the expansion of the conflict in the Middle East and Ukraine's sudden attack on Russia, leading to safe-haven inflows. In addition, the Fed's dovish expectations put dollar bulls on the defensive and pushed interest-free gold back to near the monthly top in the Asian session on Tuesday. Nevertheless, optimistic market sentiment prompted some selling near gold prices in the Asian session on Tuesday. Bulls seem to prefer to wait and see, waiting for the release of US inflation data before betting on further gains. Despite this, gold prices are still close to 7. The all-time peak reached in February appears poised to break out of the short-term range seen over the past month or so. Going forward, geopolitical developments between Israel and Iran-backed militant groups - Hamas and Hezbollah - will continue to dominate market sentiment and influence gold prices. US inflation data and speeches by Fed policymakers will also be closely watched.
From a technical perspective, the overnight breakout of the $2,448-2,450 horizontal resistance level is seen as a new trigger for bullish traders. Moreover, oscillators on the daily chart have also gained positive traction, further suggesting that there is least resistance to the upside for gold prices. Therefore, there is a high probability that gold prices will subsequently return to challenging the all-time highs around $2,483-2,484. This is followed by the psychological $2,500 mark, which, if decisively broken, will create conditions for the continuation of the upward trajectory. On the other hand, the $2,450-2,448 resistance breakout point now appears to be protecting the recent downtrend, and a break below this resistance point could see gold prices fall back to the overnight swing lows around $2,424-2,423. The next relevant support level is at $2,400. Around 2,412-2,410 USD before the round mark of the US dollar.
Today, consider going long on gold before 2,460.00, stop loss: 2,457.00; target: 2,480.00; 2,485.00
AUD/USD
AUD/USD finally broke through the 0.6600 mark in a fairly strong rebound, which has always been supported by the renewed upward impulse of the risk-related complex and the weakness of the US dollar. AUD/USD remained around 0.6600 in Asian trading on Tuesday despite the Australian wage price index data that was lower than expected. Despite the pause in the decline of the US dollar and the mixed market sentiment, the currency pair continued to be supported by the hawkish inclination of the Reserve Bank of Australia. Waiting for US data. AUD/USD extended its gains after the release of key Australian economic data on Tuesday. The exchange rate may rise due to the hawkish sentiment of the Reserve Bank of Australia. Australia's Westpac Consumer Confidence Index in August turned to an increase of 2.8% from a decrease of 1.1% in July. Meanwhile, the wage price index remained stable in the second quarter. AUD/USD found support as the US dollar faces challenges from the Federal Reserve's possible rate cut in September.
The daily chart shows that the Australian dollar traded above 0.6600 on Tuesday. AUD/USD is stable within the upward channel, suggesting a bullish bias. However, the 14-day relative strength index (RSI) of the technical indicator is consolidating at the 50 mark. If it rises above this critical value, it will indicate a strengthening of bullish momentum. On the upside, AUD/USD has tested the upper line of the upward channel at 0.6660. If it holds above this level, AUD/USD will approach 0.6650 and the six-month high of 0.6798 reached on July 11. In terms of support, the AUD/USD pair is testing the retracement level of 0.6577 (20-day moving average), and the immediate support of 0.6572 {50.0% Fibonacci retracement level of 0.6798 to 0.6347}. A break below this level could strengthen the bearish bias, potentially pushing the pair towards 0.6500 {market psychological level}, and 0.6453 {23.6% Fibonacci retracement level of 0.6798 to 0.6347}.
Consider going long on AUD today before 0.6616, Stop Loss: 0.6600; Target: 0.6660; 0.6670.
GBP/USD
GBP/USD continues to recover, trading at a new weekly high above 1.2800 on Tuesday. Upbeat UK employment data supported the pound, while soft US producer inflation in July further boosted the currency. GBP/USD attracted some bargain hunting and climbed to a new intraday high near the upper 1.2800 level during the Asian session on Tuesday. However, spot prices remained confined to the previous day's wide trading range as traders eagerly awaited key UK and US macro data before making new directional bets. The latest consumer inflation data from the UK and the US are released on Wednesday. This data, along with the first UK second quarter gross domestic product (GDP) figures released on Thursday, will have a key impact on the direction of the pound and provide new directional momentum for GBP/USD. Meanwhile, expectations that the Bank of England will cut borrowing costs two more times this year after its first rate cut since 2020 on August 1 are likely to continue to weaken the pound. On the other hand, the US dollar has struggled to attract meaningful buyers as bets on the Federal Reserve to increase rate cuts continue to heat up. Therefore, caution should be exercised before going long on GBP/USD.
From a technical perspective, GBP/USD prices have shown some resilience below 1.2868 (23.6% Fibonacci retracement of 1.2299 to 1.3045) and have made a good recovery from the $1.2665 area or lows of more than a month. Together with the oscillators on the daily chart have turned neutral, supporting the prospect of further appreciation of the pair. Nevertheless, to confirm the positive outlook, sustained strength after stabilizing above the 1.2800 mark is needed. The 1.2868 level can be tested upwards, and the next level will be 1.2900 (round mark). As for the support below, the 100-day and 200-day moving average confluence area between 1.2687 and 1.2661 should be paid attention to in order to open the door to further downside.
Today, we recommend going long on GBP before 1.2840, stop loss: 1.2825, target: 1.2890, 1.2900
USD/JPY
Amid tensions in the Middle East, the yen's decline may be suppressed by safe-haven flows. USD/JPY weakened to around 147.20 in early Asian trading on Tuesday. The slight decline in the US dollar dragged the pair lower on the day. Expectations that the Federal Reserve will cut interest rates in September continue to weigh on the dollar in the short term. The interest rate market still sees a 100% chance of a 25-basis point rate cut by the Federal Reserve at its September meeting. The market is awaiting key US Consumer Price Index (CPI) inflation data on Wednesday. The US core CPI annual rate for July, released on Wednesday, is expected to fall to 3.2% from the previous value of 3.3%. On the other hand, ongoing geopolitical risks in the Middle East may drive safe-haven flows, benefiting the yen. Israeli intelligence believes that Iran has decided to attack Israel directly and may act within days. Elsewhere, Japan’s PPI rose 3.0% YoY in July, compared to 2.9% in the previous month, in line with the consensus. On a monthly basis, PPI rose 0.3% MoM in July, compared to 0.2% in the previous month.
USD/JPY is trending down, despite the pair’s gains, breaking above 148.00 and hitting a six-day high of 148.22 before reversing course and falling below 147.90 (last week’s high). The technical 14-day RSI remains bearish, suggesting momentum favors sellers. USD/JPY could continue to fall if the pair breaks below 146.90 (10-day moving average) and the August 9 low of 146.27. Once cleared, the next demand zone will be the August 8 low of 145.44, followed by the August 7 low of 144.28. On the contrary, if USD/JPY re-crosses 147.90-148.00 and strengthens further, the next resistance for the pair will be in the 148.90 area {a support trend line extending upward from the low of 127.46 in January 2023}. The second is 150.00 {market psychological barrier}.
Today, it is recommended to short the US dollar before 147.00, stop loss: 147.30; target: 146.20, 146.00
EUR/USD
The EUR/USD added to the optimism on Monday and climbed to a multi-day high of 1.1000 on the support of investor optimism. The US dollar retreated significantly before the US CPI on Wednesday. EUR/USD continues to fluctuate around 1.0950 below, and the market is waiting for the key US Consumer Price Index (CPI) inflation data on Wednesday. The US core CPI annual rate in July, released on Wednesday, is expected to fall to 3.2% from the previous value of 3.3%. The market is stuck in a Goldilocks forecast scenario; if the CPI is too high, sentiment will be hit. On the other hand, if the CPI is too low, it could trigger another fear-driven correction, with interest rate markets pulling back on bets for a 50bps rate cut in September. Despite this, interest rate markets are still pricing in a 100% probability of at least a 25bps rate cut from the Fed in September. Eurozone GDP data will be released early Wednesday, with overall growth figures expected to remain at previous levels, which will cap off the euro's economic performance this week.
On the daily chart, EUR/USD continues to trade around the top of the descending channel at 1.0996, which has been suppressing the pair through 2024. The pair remains outside the recent technical upper barrier, but bullish momentum remains suppressed below 1.1000. Once the key resistance area of 1.0996 - 1.1000 is broken upward, it will test 1.1023 (78.6% Fibonacci rebound level from 1.1139 to 1.0601), and 1.1085 (high of December 29 last year). But if the bulls do not return and support EUR/USD to create a recent high, EUR/USD may still fall back to the 200-day moving average near 1.0835. On the other hand, once it falls below 1.0880, it will look to the 1.0835 level of the 200-day moving average. The next level points to around 1.0800 {market psychological level}.
Today, it is recommended to go long on the US dollar before 1.0980, stop loss: 1.0970 target: 1.1040, 1.1050
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