US Dollar Index
The US dollar, as measured by the US dollar index, showed above the 101.00 level during Thursday's trading session. This occurred in a market environment that closely watched Chairman Jerome Powell's speech on Friday, while the market was assessing the recent unemployment claims and the release of the S&P PMI. The US dollar fluctuated higher in Asian trading on Thursday, currently interrupting a four-day losing streak. A slight rebound in US Treasury yields was seen as a key factor in providing some support to the US dollar, even though it seemed difficult for the US dollar to achieve further gains amid dovish expectations from the Federal Reserve. In addition, the minutes of the July Federal Open Market Committee meeting showed that most participants were open to a rate cut in September. The US dollar, as measured by the US dollar index, hit a seven-month low, which is consistent with the trend of falling Treasury yields and strongly dovish bets on the Federal Reserve. Federal Reserve Governor Michelle Bowman expressed caution about any policy adjustments as she believes that there are still upside risks to inflation. She warned that taking excessive measures on any one economic data could jeopardize the progress that has been made.
The technical outlook for the US dollar index remains mainly bearish as shown by the daily chart. The index broke through the 101.87 {87.6% Fibonacci retracement level of 100.61 to 106.51} -101.61 {low on December 28 last year} range and fell to the annual low of 100.90, which provided sellers with sufficient downward momentum. The oversold state of the 14-day relative strength index (RSI) and the rising red bar of the moving average convergence divergence (MACD) of the technical indicators indicate that the US dollar index is still in a clear bearish dominant position. Therefore, the downward support can focus on 100.90 {low on Wednesday}, and 100.61 {low on December 28 last year}. As for the upward resistance, consider 101.87 {78.6% Fibonacci retracement of 100.61 to 106.51}, and if it breaks, it will test the resistance level of 102.00 {market psychological barrier} upward.
Today, consider shorting the US dollar index around 101.65, stop loss: 101.75, target: 101.30, 101.25
WTI spot crude oil
Oil prices are floating around $74.00 after Saudi Arabia's oil sales data made headlines. Oil exports fell to a three-year low in June with sales of $17.7 billion. Bloomberg reported that the government has postponed several projects due to the decline in exports and may regard Saudi Arabia as an effort by all participants in the upcoming OPEC meeting in September to increase oil prices. On Thursday, US WTI crude oil was trading around $74.00. Following the release of the Fed minutes, market expectations for a September rate cut by the Federal Reserve have firmed up, which could limit the downside for WTI oil prices. The reason for the lower WTI prices is that Iran has so far refrained from launching attacks on Israel in response to the killing of a senior Hamas leader in Tehran in late July. The decline in oil prices extended last week's losses due to continued concerns about Chinese demand and progress in ceasefire talks in the Middle East. Oil traders will be watching Fed Chairman Jerome Powell's speech at Jackson Hole on Friday, which may provide some hints on the future outlook for interest rate policy.
In terms of technical trends, WTI crude oil fell more than 5% from a high of $77.20 to a low of $72.77 this week. Although the 14-day relative strength index (RSI) of technical indicators is continuing to fall back to a recent low of 36, the MACD indicator has just broken below the signal line, indicating that oil prices continue to face adjustment pressure. But in the short term it will still look for a bottom, with targets at $72.62 {June 4 low}, and $72.77 {Wednesday low}. Below this, support is at the August lowest price of $71.70 and $70.00 {market psychological level}. On the other hand, bulls are looking to break the first resistance at $74.62 (5-day moving average), once it breaks, the next level will be $75.50 (Wednesday high), and $76.92 (38.2% Fibonacci rebound from 84.73 to 72.10)
Consider going long on crude oil around 74.00 today, stop loss: 73.80; target: 75.20; 75.30
Spot gold
Gold extended its correction during the U.S. trading session on Thursday, trading well below $2,500. The benchmark 10-year U.S. Treasury yield maintained its daily gains after the release of the U.S. August PMI data, forcing gold prices to remain low. Gold prices held steady above the psychological $2,500 mark during the Asian session on Thursday, still close to the all-time highs reached earlier this week. In addition, the minutes of the July Fed meeting showed that several officials were inclined to cut interest rates immediately. This reaffirmed the market's bets that the Fed is about to start an easing policy cycle in September, and the US dollar fell to a new low for the year on Wednesday, and continued to boost the price of zero-yielding assets such as gold. However, if the US labor market is not strong enough to justify a larger rate cut next month, investors will seek more clear signals. This makes the speech of Fed Chairman Jerome Powell at the Jackson Hole Symposium more important and provide new directional momentum for gold prices.
From a technical point of view, gold prices have been range-bound since the beginning of this week, which is seen as a bullish consolidation phase before the next leg up. In addition, the daily chart oscillator remains in the positive zone and has not yet entered the overbought zone, validating the recent bullish outlook. Therefore, it seems very likely that gold prices will test the all-time highs around $2,531-2,532 hit on Tuesday. Some follow-up buying will once again serve as a new trigger for bulls to the $2,548.90 (150.0% Fibonacci rebound) level. And pave the way for the continuation of the recently established upward trend. On the other hand, any significant correction in gold prices may continue to attract some buyers around the $2,500 round number. When gold prices are around the $2,485.70 {Monday low} USD resistance breakout point, it will help the downside. If it falls below the resistance point, it may trigger some technical selling to $2,468.80 {12-day moving average} and push gold prices down to the $2455-2453 horizontal support level.
Today, you can consider going long on gold before 2,480.00, stop loss: 2,476.00; target: 2,500.00; 2,505.00
AUD/USD
The significant rebound in the US dollar has put the risk complex under downward pressure again, and AUD/USD fell to a three-day low near 0.6700 on Thursday. It successfully re-entered the 0.6760 area on Wednesday and hit a five-week high. Meanwhile, the recent break above the key 200-day moving average of 0.6605 supports the continued rise of AUD/USD, which turns the outlook bullish and supports the continuation of the upward momentum of AUD/USD in the short term. Despite some consolidation in commodity prices, such as a small rebound in copper prices and a small pullback in iron ore, the further decline of the US dollar and the overall recovery of risk assets have largely driven the continued multi-day rebound of AUD/USD. On the monetary policy front, the Reserve Bank of Australia decided to keep the official cash rate stable at 4.35%, which has supported the Australian dollar in the near term. In a subsequent speech, RBA Governor Bullock reiterated that given the high overall inflation, the RBA is ready to raise interest rates if necessary to control inflation and maintain a hawkish stance.
The daily chart shows that the 14-day relative strength index, a technical indicator, has risen to around 60. Supporting the continued bullish momentum. A further move higher in AUD/USD could see Wednesday's high of 0.6761, followed by the July high of 0.6798 (July 8), before testing the 0.6840 {highest price this year} level. On the other hand, a fall in AUD/USD could result in an initial drop to the important 50-day moving average of 0.6645 key support level. Then to the 200-day moving average of 0.6605.
Consider going long on AUD today before 0.6690, stop loss: 0.6675; target: 0.6730; 0.6740.
GBP/USD
On Thursday, GBP/USD struggled to maintain a positive stance as a decent rebound in the US dollar prompted the British pound to abandon the recent 13-month high around 1.3130 and return to the area around 1.3100. GBP/USD briefly tested above 1.3100 on Wednesday as the pair continues to move deeper into bullish territory. GBP/USD is heading for a fresh 13-month high, hitting an intraday high of 1.3120, with the pair potentially able to break through its highest price since April 2022. Bets on a rate cut rose further on Wednesday after the latest Federal Reserve meeting minutes showed that Fed policymakers had begun discussing the timing of rate cuts as early as July. The opening of the Jackson Hole Symposium is expected to attract a lot of investor attention on Thursday, but a speech by Fed Chairman Jerome Powell on Friday is expected to set the overall tone for market sentiment next week.
As GBP/USD rises for the fifth consecutive time, the pair is expected to break through multi-year highs, provided buyers can maintain pressure long enough to climb above the July 2023 high of 1.3142. Since GBP/USD has closed higher except for one of the past ten consecutive trading days and has broken through the "double top" formed on the daily chart {1.3045 on July 17; and 1.3050 on Tuesday}, the bulls have a better chance of winning. The next level will point to 1.3214 {March 2022 high}. On the downside, 1.3000 {market psychological barrier} and 1.2974 {Tuesday low} can be considered. A break will point to the 9-day moving average of 1.2934 and 1.2900 {market psychological barrier} nearby.
Today, we recommend going long GBP before 1.3095, stop loss: 1.3080, target: 1.3140, 1.3150
USD/JPY
USD/JPY strengthened in late North American trading on Thursday after a volatile session on Wednesday that saw the pair hover around 145.20. Rising US Treasury yields pushed the pair higher, with the pair up 0.66% or 95 pips to close around 146.25. USD/JPY strengthened to around 145.50 in early Asian trading on Thursday. Data on Japan's record trade deficit dragged the yen lower, supporting USD/JPY. On Friday, traders will be watching closely for a speech by Bank of Japan Governor Kazuo Ueda and a speech by Fed Chairman Powell at the Jackson Hole conference. These events are likely to trigger market volatility. The market is fully pricing in a rate cut by the Federal Reserve in September, with a full percentage point cut expected by the end of the year. Rising expectations of a rate cut by the Federal Reserve could weigh on USD/JPY in the near term and limit upside for USD/JPY. On the other hand, traders will get more clues from the speech of Bank of Japan Governor Kazuo Ueda in the Diet on Friday. If Ueda makes hawkish comments, it could boost the yen against the dollar.
From the recent trend, USD/JPY has pared some of its earlier gains. After falling to a seven-month low of 141.68 in early August, USD/JPY recovered some losses by the end of last week, hitting a two-week high of 149.39, and then resumed the ongoing downtrend to a near three-week low of 144.45 yesterday. Momentum supports sellers, as shown by the 14-day relative strength index (RSI) among technical indicators. If USD/JPY falls below 145.00 again, and 144.45 {Wednesday's low}, the August 6 low of 143.61 will be exposed. Once cleared, the next support will be near the seven-month low of 141.69, followed by the December 28 low of 140.25. On the other hand, if the price climbs above 146.00, this could pave the way for further gains. The next resistance will be 146.76 {9-day moving average}, followed by the 20-day moving average of 147.80.
Today's recommendation is to short the US dollar before 146.50, stop loss: 146.70; target: 145.50, 145.30
EUR/USD
On Thursday, the strong multi-day trend of EUR/USD was reversed due to some renewed buying interest around the US dollar ahead of CEO Powell's speech at the Jackson Hole Symposium on Friday. EUR/USD broke through a 13-month high on Wednesday, testing above 1.1175 and continuing to approach 1.1200. The market is selling the dollar across the board as investor confidence in a September rate cut quickly reaches a high. The market generally expects the Federal Reserve to cut interest rates by at least 25 basis points on September 18 and hopes for two rate cuts. According to the latest Fed meeting minutes, policymakers noted that discussions on when to provide the prospect of a rate cut to market participants who remain on the sidelines began in July, further consolidating the possibility of at least a 25-basis point cut on September 18. Fed Chairman Jerome Powell's speech on Friday is expected to set the overall tone for market sentiment next week.
From the daily chart, EUR/USD closed higher for the fourth consecutive day, breaking through 1.1175 for the first time in more than a year. Since the EUR/USD's previous low fell to the 1.0800 mark, the EUR/USD has accumulated a total increase of more than 3.5%, and then rebounded from the 200-day moving average to rise to around 1.1110. As EUR/USD continues to break away from the bearish trend, the path to the 1.1200 level is clear, and a breakout will see it rise to 1.1275 {last July 18 high}. On the downside, the 1.1000 {round mark} support is supporting buying pressure. The next level will point to the 1.1070 {Tuesday low} level.
Today, it is recommended to go long on the dollar before 1.1090, stop loss: 1.1080, target: 1.1140, 1.1150.
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