US Dollar Index
The US dollar was repeatedly weak last week, and the US Dollar Index, which tracks the US dollar against six major currencies, fell through the 103.00 to 102.40 low again before the close of last weekend. It is difficult to maintain the recovery in the middle of the week. The US Dollar Index is under selling pressure as investors still believe that the Federal Reserve will cut interest rates from the September meeting. However, market expectations that the Federal Reserve will start the policy easing cycle in an aggressive manner have weakened significantly. Previously, due to concerns that the United States may fall into a recession, market participants began to expect the Federal Reserve to cut interest rates by 50 basis points in September. 30-day federal funds futures pricing data showed that the probability of a 50 basis point rate cut has dropped to 29.5% from 51% a week ago. The firm speculation of the Federal Reserve's September rate cut also suppressed bond yields. The 10-year US Treasury yield plunged to around 3.91%. At the same time, Federal Reserve policymakers also admitted that it has become appropriate to cut interest rates as risks have now also expanded to the labor market.
From the daily chart, the US dollar index fell to 102.40 before the lower line of the "upward channel" of 102.10 last week. At this stage, the US dollar index continues to form lower highs and lower lows. The decline of the 9-day moving average of 102.91 indicates a bearish trend in the near term. The 14-day relative strength index (RSI) of the technical indicator oscillates in the range of 30.00-40.00, indicating that the momentum is strongly inclined to the downside. Looking down, 102.16 {August 5 low}; 102.10 {lower line of the downward channel); and 102.00 {76.4% Fibonacci retracement level of 100.61 to 106.51, and market psychological level} are direct support levels. Once the above areas are broken, it will point directly to the 101.34 {low point of January 2 this year} level. On the upside, 102.85 {upward channel axis}, and 103.00 {market psychological barrier} will act as major resistance for USD bulls. The next level will be towards 103.57 {50.0% Fibonacci retracement}.
Consider shorting USD Index around 102.55 today, stop loss: 102.70, target: 102.20, 102.10
WTI spot crude oil
Geopolitical tensions surrounding Iran’s possible response to the killing of Hamas leader last month further supported WTI oil prices to rebound to a near one-month high of $80.40 early last week. This uncertainty led to increased options trading activity as market participants sought protection against a sharp rise in prices. However, concerns about slowing global demand, especially from China, curbed the gains in oil prices. It had retreated to $76.00 late last week. In July, China's factory output growth slowed and refinery output fell for the fourth consecutive month, highlighting the uneven recovery of the country's economy. Earlier this week, the International Energy Agency lowered its oil demand growth forecast for 2025, citing the impact of China's weak economy on consumption. OPEC also lowered its demand forecast for 2024 due to similar concerns. The oil market remains in flux, with a variety of factors affecting prices. While optimism about possible US interest rate cuts and geopolitical risks have provided some support, concerns about slowing global demand, especially from China, continue to weigh on the market.
From a technical perspective, WTI crude oil prices struggled to capitalize on a break above the very important 200-day simple moving average {78.12} early last week. Oil prices subsequently retreated from the monthly peak of $80.40 to around $76.00, indicating that the correction since the $71.20-71.15 area (the lowest level since January 17, reached last week) has lost momentum. However, the mixed oscillators on the daily chart still warrant caution for bearish traders. At that time, crude oil prices may accelerate their decline towards the psychological level of $75.00 and 75.08 {23.6% Fibonacci rebound from 84.73 to 72.10}, dragging crude oil prices below the $74.00 level, while $73.45 is the next relevant support level. On the other hand, short-term resistance is located at $78.12 {200-day simple moving average}. Meanwhile, any subsequent gains may retake last week's high of $80.40. And pave the way for further gains to the $81.75 {76.4% Fibonacci rebound from 84.73 to 72.10} level.
Consider going long on crude oil near 76.80 today, stop loss: 76.55; target: 78.20; 78.50
Spot gold
Gold hit a new all-time high of $2,510.00 despite struggling to gather bullish momentum in the first half of last week. Macroeconomic data released by the U.S. and Fed Chairman Jerome Powell's speech at the Jackson Hole Symposium this week could spark gold's next big move. Following a rebound in the second half of last week, gold maintained its bullish momentum on Monday, closing above $2,470. A pullback in U.S. Treasury yields in the absence of major macroeconomic data helped gold move higher at the start of last week. Meanwhile, gold benefited from high geopolitical tensions after Israel's defense minister said that despite Western calls for Iran not to retaliate, they still expected an Iranian attack. Midweek, gold erased some of its weekly gains as bets on a big rate cut faded. Meanwhile, gold struggled to gather bullish momentum as more optimistic U.S. macroeconomic data released further favored the Fed's 25 basis point rate cut in September. As risk money began to dominate the financial markets over the weekend, the dollar struggled to find demand, allowing gold prices to regain traction and hit a record high of $2,510.
The 14-day relative strength index (RSI) indicator, a technical indicator on the daily chart, remained above 65, indicating that the bullish bias remained intact. On the upside, $2,514.50 (123.6% Fibonacci rebound from 2483.70 to 2353.20) could become the next resistance. If gold successfully converts this level into support, then $2,548.90 (150.0% Fibonacci rebound) will be the next bullish target. A breakout points to the $2,600.00 {upper rail of the ascending channel} level. If gold makes a technical correction first, the first target is below $2,489.00 {upper line of the daily horizontal channel}, and with this as resistance, technical sellers will show interest. In this case, $2,450.80 (Friday's low), and 2,442.30 (9-day moving average) can be seen as the next support level, followed by $2,400 (psychological price).
Today, you can consider going long on gold before 2,505.00, stop loss: 2,500.00; target: 2,530.00; 2,535.00
AUD/USD
AUD/USD rebounded last week, rising 1.49% for the week and closing around 0.6667. Mixed sentiment data from the United States and comments from Reserve Bank of Australia Governor Michelle Bullock affected the Australian dollar. Despite mixed economic forecasts and rising inflation, the RBA has maintained a hawkish stance, leading the market to predict only 25 basis points of easing in 2024, which seems to have gained interest in the Australian dollar. Australia's monthly employment report showed that Australia added 58,200 jobs in July, much better than the expected value of 20,000. The unemployment rate rose to 4.2%, while the expectation was 4.1%. In addition, consumer inflation expectations rose to 4.5% in August from 4.3% in the previous month. The RBA is in no hurry to cut interest rates and is likely to be one of the last banks to abandon tight monetary policy. Market participants know this and ignore this negative news. Stronger global stock markets have strengthened the AUD/USD throughout the day, even with a surge in demand for the US dollar after the release of optimistic US data.
From the daily chart, the AUD/USD exchange rate has shown large fluctuations, which favor a slightly bullish momentum. The technical indicator Moving Average Convergence Divergence (MACD) confirms this deviation, showing rising green bars. The 14-day relative strength index (RSI), an oscillator that shows market momentum, has been holding around 59.50, pointing upward and sending a bullish signal. At this stage, the currency pair is now in a bullish "golden cross" formation between the 9-day and 150-day. The key resistance areas this week will be 0.6700 (market psychological level), and 0.6701 (78.6% Fibonacci retracement level from 0.6798 to 0.6347), a break of which will point to 0.6755 (July 17 high), and towards the 0.6800 market psychological level. Support is located at 0.6625 (61.8% Fibonacci retracement level), and the next level appears near the 0.6600 (market psychological barrier) area. A break will point to 0.6572 (50.0% Fibonacci retracement level). A breakout in either direction could suggest further directional intent.
Consider going long AUD today before 0.6650, stop loss: 0.6635; target: 0.6700; 0.6710.
GBP/USD
GBP/USD has regained traction, rising slightly on the day to around 1.2850. Although the pair faced bearish pressure following the release of strong US data, it managed to reverse direction as risk flows began to dominate financial market movements. Midweek, GBP/USD pulled back and fell below 1.2850, with investors expecting a further decline in inflation after the release of US PPI and CPI inflation rates this week showed a more pronounced decline in price pressures at the producer level. However, the decline in price pressures does not seem to be directly transmitted to consumers. The interest rate market currently only has a 40% probability of a 50 basis point rate cut by the Federal Reserve on September 18, down from 50% earlier this week and 70% the week before. UK inflation rose in July, but missed market expectations, coming in at 2.2% year-on-year, below the expected 2.3%. The figure was still higher than the previous reading of 2.0%, while core inflation fell to 3.3% from 3.5% previously.
GBP/USD broke a four-day rally to a near 3-week high of 1.2872 midweek after a technical rebound from the 200-day exponential moving flat near 1.2675 last week. Bulls remain in the driver's seat, but GBP/USD failed to break out and reclaim 1.2899 (61.8% Fibonacci rebound from 1.3045 to 1.2664), and the 1.2900 mark lost in mid-July. The long-term trend favors bulls, as dollar weakness pushes GBP higher, while the long-term technical pattern's higher lows keep bullish momentum in the driver's seat. If GBP/USD breaks above 1.2900 (market psychological level), 1.2955 (76.4% Fibonacci rebound from 1.3045 to 1.2664) may be seen as the next resistance area. On the downside, the first support is at 1.2800 (market psychological level), and 1.2809 (38.2% Fibonacci rebound), and a break below points to 1.2753 (23.6% Fibonacci rebound) level.
Today, it is recommended to go long on GBP before 1.2930, stop loss: 1.2915, target: 1.3020, 1.3030
USD/JPY
USD/JPY fell 0.64% to 147.50 last week. As the US consumer confidence data improved and the market sentiment recovered, the US dollar was sold off across the board. The yen recovered a lot of its earlier losses against the US dollar. The rise came as Japan's second quarter gross domestic product (GDP) grew more than expected, supporting the argument that the Bank of Japan could raise interest rates in the near term. Japan's Minister of Economic Revitalization Yoshitaka Shindo said the economy is expected to recover gradually as wages and incomes improve. He also added that the government will work closely with the Bank of Japan to implement flexible macroeconomic policies. The University of Michigan Consumer Sentiment Index showed a stronger-than-expected recovery in the outlook of consumers surveyed in August, rising to 67.8 from 66.4 previously, easily beating the forecast of 66.9. Investors seized on the headlines and bought riskier assets while selling the dollar, despite the UoM 5-year consumer inflation expectations remaining stable at 3% in August and a slight decline in the UoM consumer current situation outlook (to 60.9), which started at 62.7, the exact opposite of the forecast of 63.1. The week will start with a quiet economic calendar, with the key data for the yen to be the Japanese national consumer price index (CPI) inflation data, while US traders will turn their attention to the opening of the Jackson Hole Economic Symposium some time later.
Daily chart analysis shows that USD/JPY fell 0.64% to around 147.50 last Thursday. The Japanese yen was the worst performing non-US currency last week. Currently, the pair is located slightly below the upper resistance line of the "ascending triangle" at 148.05, and 148.25 (a downward resistance trend line from the July high of 161.80), indicating a short-term bearish trend. In addition, the 14-day relative strength index (RSI) of the technical indicator is slightly above the 35 level, indicating the possibility of a correction. In terms of support, the USD/JPY pair may hover around 146.42 (23.6% Fibonacci rebound level from 161.80 to 141.68). Further downside could lead the pair towards the second support level of 144.27 (August 7 low). On the upside, USD/JPY may encounter immediate resistance at the upper line of the ascending triangle near the 148.05 level, followed by the 149.36 (38.2% Fibonacci rebound level) level, and may test the 150.00 (market psychological barrier) resistance level, the previous support level has now turned into resistance.
Today, it is recommended to short the US dollar before 147.80, stop loss: 148.05; target: 146.80, 146.50
EUR/USD
EUR/USD edged higher to trade near 1.1000 before the weekend close. The pair is still on track to post its highest weekly close in 2024, despite cautious market stance limiting upside. The EUR/USD pair surged to 1.1048 this week, a new high for the year. The pair was trading solidly around the 1.1000 mark before the weekend close. Optimism gripped financial markets as US inflation-related data came in below expectations, weakening demand for the dollar. The dollar fell sharply as bets rose that easing inflationary pressures would allow the Federal Reserve to kick off an easing monetary policy cycle at its September meeting. However, enthusiasm for an impending rate cut was short-lived, with the dollar paring most of its intraday losses despite strong momentum in global equities, reflecting a general risk appetite. The dollar's gains were capped as equities continued to rebound. In addition, EU data released last week failed to impress. The EU's economic sentiment index fell sharply. The EU reported second-quarter gross domestic product (GDP) that converged with preliminary estimates.
From a technical perspective, EUR/USD is poised to extend its gains. On the weekly chart, technical indicators are at positive levels, although the momentum is uneven. Meanwhile, the pair has extended gains further above the 20-week (1.0808), and 100-week (1.0724) SMAs and is approaching the mildly bearish 200-week SMA, which provides dynamic resistance at 1.1068. Once above this level, bulls may feel more comfortable adding to long positions. Technical indicators corrected overbought conditions before resuming the up move, supporting continued gains. Once above the 200-week SMA (1.1066), bulls will look to test the strong static resistance zone around 1.1100, and 1.1140. Above this resistance zone, the next level is towards 1.1275 (last July 17 high). If a pullback occurs, 1.0950 is the immediate support level before 1.0920 {upper resistance line of the weekly triangle}, and 1.0910 {last week's low} area. A break below the 1.0890 price area will see the pair move lower to the 1.0800 {market psychological level} area。
Today it is recommended to go long on USD before 1.1005, stop loss: 1.0995, target: 1.1055, 1.1060.
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