US Dollar Index
The dollar retreated at the close of European trading. US GDP was confirmed while weekly jobless claims remained stable. The dollar index rebounded from a 15-month low. After hovering at a 14-month low, the dollar rebounded slightly, sparking a sharp rebound in risk markets ahead of key data releases and Chairman Powell's speech. The dollar index rose significantly after hitting a new 2024 low near 100.20. The US August personal consumption expenditure (PCE) price index, which will be released on Friday, will be in focus. Dovish words from Fed officials and signs of falling inflation could weigh on the dollar. In addition, Fed officials Kugler, Barr, Kashkari, Collins, Williams and Chairman Powell will all speak. Rising market expectations that the Fed will launch a deeper interest rate cut in November put pressure on the dollar. Meanwhile, the dollar index, which tracks the value of the dollar against six major currencies, fluctuated lower to 100.85. Fed Governor Adrienne Kugler said midweek that she would support further rate cuts from the Fed in the future, adding that the Fed should continue to focus on reducing inflation while shifting its focus to maximum employment.
The US dollar index is basically bearish on technical charts. In the short term, the US dollar is expected to have some correction pressure. The 14-day relative strength index (RSI) and moving average convergence divergence (MACD) of technical indicators have gained some momentum, but the RSI is still below the negative zone (latest at 43.12), and the MACD continues to show flat green bars. These technical indicators show that the bears are in control and the buying pressure is weak. Therefore, the key resistance level above is 101.16 of the 20-day moving average; and 101.29 (23.6% Fibonacci rebound level from 104.80 to 100.20). If the closing price is above the above area for three consecutive days, it will confirm that the price will test 101.65 (40-day moving average) in the short term. If it breaks, it will directly point to 101.96 (38.2% Fibonacci rebound level), and 102.00 (market psychological level). The support level is at the 200-week moving average of 100.52. If it breaks, it will see the double bottom of 100.20 - 100.22, and 100.00 (market key psychological level).
Consider shorting the US Dollar Index around 100.68 today, stop loss: 100.80, target: 100.30, 100.20
WTI Crude Oil
Crude oil prices have plunged, having fallen more than 3.00% on Thursday. Rumors of Saudi Arabia and ceasefire proposals in Lebanon outweighed additional stimulus from China. The US Dollar Index remained stable ahead of a very volatile data calendar, with the Fed's Powell speech in the spotlight. Crude oil prices remain subdued this week, with WTI crude oil prices trading close to below $68.00 per barrel during Asian trading hours on Thursday. However, crude oil prices could rise due to increased fuel demand and reduced inventories in the United States, the world's largest oil consumer. The key inflation US PCE price index is due to be released on Friday, and the market is inclined to believe that the data will be weaker and below trend. Meanwhile, oil prices are falling as traders question demand from China. The debate between OPEC+ and the International Energy Agency is heating up, with OPEC+ believing that China's demand for oil will far exceed the IEA's forecasts. But the market doubts whether the magic wand of the Chinese central bank can cure the downturn in China's real estate market. Don't forget that the problems of OPEC+ may also be structural.
From the technical trend of the daily chart, the 14-day relative strength index (RSI) of the technical indicator turned downward, suggesting that the momentum is in favor of sellers {currently at 40.45}, indicating that oil prices are brewing a new round of decline, but they must first effectively break through the support level of $67.97 (the low point on December 8 last year) before they have the opportunity to continue to challenge the $64.75 (the low point on September 10) area. If oil prices rise above $70.00 (market psychological barrier) in the future, the technical weakness of the past two months may be reversed, and the extended target is the key level of $71.46 (the low point on February 5). In addition, the resistance of $72.50 has been repeatedly restricted in recent days, and the nearby $72.20 is the downward trend line. If oil prices can break through this area in the future, the latest target is the 50-day simple moving average of $73.13.
Today, you can consider going long on crude oil around 67.10, stop loss: 66.85; target: 68.50; 68.70
Spot gold
On Thursday, gold prices broke through a new high of $2,685. The main factors are the decline in global interest rates, intensified geopolitical conflicts and the Federal Reserve's increased easing bets. Spot gold continued to rise on Thursday, reaching a high of $2,685.50 per ounce. Gold prices retreated slightly to around $2,670 as the dollar gained momentum against major currency pairs. However, gold remained firm due to its safe-haven conditions as Wall Street turned red. Market sentiment quickly deteriorated at the end of the European session, fueled by escalating geopolitical concerns. On one hand, US President Joe Biden said that a full-scale war in the Middle East was possible, but a settlement was also possible. Meanwhile, Russian President Vladimir Putin once again threatened to use nuclear weapons. Finally, higher US Treasury yields helped the dollar's upward momentum. On the data front, economic events remain light. Speculators are still waiting to see the US PCE price index to be released on Friday. The Fed's most valued inflation indicator is expected to show that price pressures continued to weaken in August.
The daily chart shows that gold prices broke through a new high of $2,685 and remained near the high level of $2,670, but a correction decline is not impossible. The 14-day relative strength index (RSI) of the technical indicator fell slightly, but still remained in the overbought range {77.20}, and the downward momentum is relatively weak for the time being. In terms of technical trends, although the gold price is still in the high range, the gold price has risen by more than $160 since the beginning of this month, so that the RSI and stochastic index are already in the severely overbought area, so in the short term, we must be careful that the upward momentum of the gold price will begin to weaken. The nearest support is $2,645 (5-day moving average) and $2,622.00 (Tuesday's low). If it breaks, it will look at the psychological market level of $2,600.00. The current resistance will point to the $2,680 and $2,700 levels, and the next level will be $2,750; most of the mid-line target markets have already pointed directly to the $3,000 level.
Consider going long on gold today before 2,668.00, stop loss: 2,665.00; target: 2,685.00; 2,690.00
AUD/USD
AUD/USD quickly shook off Wednesday's strong pullback and again breached the 0.6900 mark on Thursday, helped by news of new stimulus measures from China and renewed weakness in the U.S. dollar. The Australian dollar retraced its recent losses against the U.S. dollar on Thursday. The AUD/USD pair was supported by the divergence in the monetary policy outlooks of the two major central banks. In addition, the commodity-linked Australian dollar was supported as its largest trading partner, China, announced a new round of stimulus measures to boost its economy. The Reserve Bank of Australia on Tuesday held the official cash rate steady at 4.35%, providing support to the Australian dollar and supporting the AUD/USD pair. In addition, Reserve Bank of Australia Governor Michelle Bullock confirmed that interest rates will remain unchanged for now. The Federal Open Market Committee made a sharp 50 basis point cut to the federal funds rate to 4.75% to 5.0%, marking the first rate cut by the Fed in more than four years. Traders are now focusing on the US August Personal Consumption Expenditures (PCE) price index, which will be released on Friday.
On Thursday, AUD/USD was trading just below 0.6900. Technical analysis on the daily chart shows that the pair has broken out of the ascending channel pattern, which suggests that the bullish bias is likely to weaken. However, the 14-day relative strength index (RSI) remains above the 60 level, suggesting that bullish sentiment remains intact. In terms of resistance, AUD/USD could test the 0.6900 USD (round number) level. A move back above 0.6900 would strengthen the bullish bias and lead the pair towards the upper line of the ascending channel, which is around 0.6960. On the downside, AUD/USD could find key support at the 9-day moving average of 0.6812, and the 0.6800 (market psychological level) level. The next important support is the psychological level of 0.6756 (20-day moving average). A break below this level could see the pair fall further towards the psychological market barrier of 0.6700.
Consider going long AUD today before 0.6880, Stop Loss: 0.6865; Target: 0.6930; 0.6940.
GBP/USD
GBP/USD broke the 1.3400 barrier and revisited the last trading level seen in March 2022 at 1.3434 in response to a firm risk appetite trend and a slight decline in the US dollar. On Thursday, GBP/USD regained some positive traction during the Asian session and reversed some of the losses from the sharp overnight retracement from the 1.3430 area, which was the highest level since March 2022. Spot prices are currently trading around the 1.3400 area and seem ready to resume the upward trend of the past two weeks or so. Despite attempts by several Fed officials this week to overturn market expectations of more aggressive policy easing in the future, investors still see a bigger chance of a sharp rate cut in November. This, coupled with the underlying bullish sentiment surrounding global financial markets, failed to help the safe-haven dollar capitalize on Wednesday’s strong rebound from near year-to-date lows. This, in turn, was seen as a key factor that provided some support to the GBP/USD pair. Apart from this, expectations that the Bank of England’s rate-cutting cycle may be slower than that of the United States continued to support the British pound and led to intraday gains in the GBP/USD pair.
The GBP/USD pair built on recent gains in the past two weeks and rose to its highest level since March 2022, around 1.3430, during Wednesday’s Asian session. But it re-traced above 1.3400 yesterday. The 14-day relative strength index (RSI) of the technical indicator rebounded again, with a chance to make a push towards future highs such as 1.3500 {market psychological level}, and 1.3638 {February 18, 2022 high}. As for support levels, first look back to the 1.3300 {round number}, and 1.3250 area levels. The larger support is expected to be the 25-day moving average of 1.3197 to 1.3153 (low on September 19).
Today, it is recommended to go long on GBP before 1.3400, stop loss: 1.3385, target: 1.3450, 1.3460
USD/JPY
On Thursday, the Bank of Japan released the minutes of its July policy meeting, and the yen remained sluggish against the US dollar. The yen faces challenges as traders expect the Bank of Japan to think carefully before further rate hikes. The minutes of the Bank of Japan's monetary policy meeting expressed the consensus of members on the need to remain vigilant to the risk of inflation exceeding the target. Several members said that raising the interest rate to 0.25% is an appropriate way to adjust the level of monetary support. Several other members suggested that a moderate adjustment of monetary support is also appropriate. The US dollar is under downward pressure as the probability of further rate cuts by the Federal Reserve at its upcoming policy meeting increases. The market expects the probability of the Federal Reserve cutting interest rates by 75 basis points to a range of 4.0-4.25% by the end of this year to be about 50%. Tokyo's inflation data, and the US August PCE price index, will be released on Friday, which may provide further guidance on the economic outlook and possible monetary policy moves by the Bank of Japan.
Daily chart analysis shows that USD/JPY is trading slightly below 145.00. It has broken out of the descending channel, suggesting that the bearish bias may weaken. In addition, the 14-day relative strength index (RSI) of the technical indicator has risen above the 52 level, indicating a shift in momentum from bearish sentiment to bullish. On the upside, USD/JPY may explore the 50-day moving average area around 146.50. A breakout will rise to 147.21 (September 3 high). In terms of support, USD/JPY may test the immediate upper line of the descending channel around 144.00, followed by the 9-day moving average at 143.15. A return to the descending channel will strengthen the bearish bias and lead the pair to target 142.00 {round mark}.
Today, it is recommended to short before 145.00, stop loss: 145.20; target: 144.00, 143.80
EUR/USD
Rising interest in risk-related assets, stance on the dollar and China's stimulus measures have all contributed to the revival of the euro/dollar's upward momentum, and the euro/dollar successfully retested the 1.1190 range on Thursday. EUR/USD rose to a new 2024 high near 1.1215 on Wednesday, but then retreated to around 1.1100-1.1110. 1.1150 was first seen in European trading on Thursday. EUR/USD largely lost Tuesday's strong gains, which were driven by a general rebound on news that the People's Bank of China launched additional stimulus policies. On the US dollar side, the US dollar index approached a 14-month low near 100.20 and rebounded from this area due to a big change in investor mentality and a considerable rebound in US Treasury yields of various maturities. If the Federal Reserve continues to cut interest rates further, the policy gap between the Federal Reserve and the European Central Bank may narrow, providing potential support for EUR/USD.
Despite hitting a 14-month high of 1.1214 on Wednesday, EUR/USD has reentered short-term consolidation after the market turned back to push the dollar higher. EUR/USD remains in the depths of a bull market, trading above the 20-day moving average near 1.1097. The first resistance for further gains in EUR/USD is the 2024 high of 1.1214 (September 25), followed by the 2023 high of 1.1275 (July 18). The next downside targets for EUR/USD are 1.1097 (20-day moving average), followed by 1.0968 (September 19 low). The 4-hour chart shows a re-emergence of the bearish trend. Initial resistance is 1.1214, followed by 1.1275. On the other hand, initial key levels are at 1.1100, followed by 1.1083 and 1.1068.
Today it is recommended to go long before 1.1160, stop loss: 1.1150, target: 1.1195, 1.1205.
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