US Dollar Index
The US dollar resumed its bullish trend, testing a three-month high of 104.63. US JOLTS job openings and consumer confidence data will be the main attraction. The dollar remains supported by rising US yields and market expectations of gradual easing by the Federal Reserve. The US dollar index, which measures the value of the US dollar against a basket of six currencies, fell on Monday. This reversed earlier gains as investors took profits ahead of key economic data for October to be released later this week. Despite the strong economy, the US dollar faces headwinds. Although US Treasury yields extended their rebound to hit multi-week highs, the US dollar remained range-bound ahead of key US data releases and growing speculation ahead of the US election on November 5. The US dollar index fluctuated in a fairly narrow range around 104.30, accompanied by rising US Treasury yields and a slight rise in risk assets. The goods trade account results will be released today, followed by monthly wholesale inventories, FHFA house price index, Conference Board consumer confidence index, JOLTS job openings and API weekly US crude oil inventory report.
Last week, the US dollar index surpassed the 200-day simple moving average of 103.82 and reached a 3-month high of 103.63, but due to excessive gains, buyers temporarily lost momentum, but at the round-number mark of 104 high. The index is now expected to consolidate sideways between 103.82 (200-day SMA) - 104.85 (78.6% Fibonacci rebound from 106.13 to 100.16) to correct the overbought condition. Despite the rise this weekend, the 14-day relative strength index (RSI) of the technical indicator is about to break into the overbought area (latest at 70), and bulls should act with caution. Therefore, once the US dollar index makes a short-term technical adjustment, the targets will be 103.82 (200-day moving average), and 103.53 (23.6% Fibonacci retracement level from 100.16 to 104.57). The resistance level can first focus on 104.56 - 104.57 (double top), and the break will point to 104.85 (78.6% Fibonacci rebound level from 106.13 to 100.16), and 105.00 (market psychological level).
Today, consider shorting the US dollar index around 104.35, stop loss: 104.50, target: 104.00 104.05
WTI crude oil
As the United States plans to buy oil for its strategic oil reserves, WTI prices have recovered some of their daily losses. The United States announced that it would take up to 3 million barrels of crude oil for delivery by May next year. Oil prices fell as limited military action reduced concerns about a potential full-scale conflict in the Middle East. On Tuesday, U.S. WTI crude oil traded around $67.30. WTI oil prices plummeted as limited military action eased investors' concerns about the possibility of a full-scale war in the Middle East. Last Saturday, Israel launched an attack on Iranian military facilities in three provinces, and Iranian state media claimed that oil output was normal. This in turn weighed on WTI oil prices as concerns about a major disruption in crude oil supply faded. In addition, weak demand prospects and China's economic slowdown also contributed to the downward trend in WTI oil prices. A report released by the International Energy Agency pointed out that oil demand growth in 2024 and 2025 is estimated to be only half of that in 2022 and 2023, mainly due to lower demand in China. Put pressure on WTI oil prices denominated in US dollars.
The daily chart shows that WTI crude oil prices have fallen below the key support levels of $70.00 (market psychological barrier) and $69.78 (61.8% Fibonacci retracement level of $64.75 to $77.93) from a technical perspective, and then continued to challenge $68.18 (January 1 low) and $67.03, a near one-month low. The 14-day relative strength index (RSI) of the technical indicator is about to enter the oversold area (latest report 39), so it is particularly important for bears to act cautiously. If the EIA inventory data continues to increase this week, it will form a double kill of supply and demand for oil prices. If it falls below the low of $66.81 at the beginning of the week, the bears will accelerate downward to challenge around $66.00. After the decline at the beginning of the week, the current $70.00, and $69.78 (61.8% Fibonacci retracement of $64.75 to $77.93) levels are particularly important. If oil prices re-reach this level in the next few trading sessions, it may be possible for oil prices to test $71.34-71 42. Next, the important technical level of $72.89 (38.2% Fibonacci retracement)) and the 100-day moving average (75.02) may be the next big obstacle in the future.
Today, consider going long on crude oil around 67.15, stop loss: 67.00; target: 68.30; 68.50
Spot gold
On Tuesday, gold continued its daily upward trend and hit a new high above $2,774.80 during the US trading session. The dollar remains under moderate bearish pressure after dismal employment-related data, driving the rebound in gold prices. In Asian trading on Tuesday, gold prices fluctuated higher to around $2,757 and approached the upper limit of the short-term trading range in the past week. The sluggish dollar price trend is seen as a key factor supporting commodities amidst the risk-averse demand caused by tensions in the Middle East and the US election. However, bets on the Fed's easing policy continue to boost the dollar, preventing bulls from establishing new positions in zero-yielding asset gold prices. In addition, the potential contribution of bulls in global stock markets also prevents gold prices from rising. This week, the United States will release important macro data - the preliminary value of third-quarter GDP, the personal consumption expenditure (PCE) price index and the non-farm payrolls (NFP) report. These key data will play a key role in influencing the market's expectations of the Fed's rate cut path, thereby driving the demand for the US dollar and providing new directional momentum for gold/dollar.
From a technical perspective, a breakthrough of the $2,750 resistance zone can be seen as a new trigger point by bulls. The subsequent rise and breakout of the historical peak, the area around $2,758.50, thus testing the resistance of the rising trend line that has been maintained for nearly four months, around $2,774.80. At this stage, it may continue to strengthen to the round mark of $2,800. Nevertheless, the 14-day relative strength index (RSI) of the technical indicator of the daily chart has entered the overbought area (the latest report is 71.80), and bulls should act with caution. At the same time, if the price of gold starts to consolidate and pull back, it seems that it will be around the overnight swing low of $2,724.70, and $2,721.90 (23.6% Fibonacci retracement level of 2603.50 to 2758.50), then the next target will be $2,700 (market average psychological level) and $2,681 (50.0% Fibonacci retracement level).
Consider going long on gold today before 2,772.00, stop loss: 2,770.00; target: 2,795.00; 2,800.00
AUD/USD
AUD/USD extended its recent break below the 0.6600 support level and fell to a two-month low in the mid-0.6500s as concerns over the Chinese economy and stimulus implementation continued unabated. AUD/USD remained under pressure at the start of the week, exacerbating last Friday's correction to print a new low around 0.6545 and extending its recent break below the key 200-day moving average, which is currently at 0.6629. While the US dollar was underperforming, posting a modest decline amid an equally tepid recovery in risk assets, the Australian dollar was struggling amid market concerns about the effectiveness of China's recently announced stimulus measures. Further gains in copper prices and another small rise in iron ore prices further highlighted the mixed sentiment on China's economic outlook, but this did nothing to curb the selling sentiment of the Australian dollar. Although the potential rate cut by the Federal Reserve later this year may provide some support for AUD/USD, the uncertain outlook for China's economy is expected to put heavy pressure on AUD/USD.
From the daily chart, AUD/USD continued to fall to the October low of around 0.6545. The 14-day relative strength index (RSI), a technical indicator of the daily chart, fell to around 30, reinforcing the bearish sentiment. Indicates that a bearish outlook may emerge in the short term. Initial targets consider 0.6507 (August 8 low), and 0.6500 (market psychological level), the next level will be towards 0.6475 (78.6% Fibonacci retracement of 0.6348 to 0.6942). On the upside, the intermediate resistance lies at the 200-day moving average of 0.6629 and 0.6645 (50.0% Fibonacci retracement) levels before reaching the 0.6710 (65-day moving average), and 0.6715 (38.2% Fibonacci retracement) levels.
Today, consider going long on AUD before 0.6550, stop loss: 0.6535; target: 0.6590; 0.6605.
GBP/USD
GBP/USD rose slightly and re-crossed above 1.3000. Weaker-than-expected JOLTS employment data from the US limited the dollar's strength, but the cautious market stance did not allow the pair to gain bullish momentum. GBP/USD fell modestly to around 1.2970 in early Asian trading on Tuesday. Traders may prefer to wait and see ahead of the release of key US economic data this week. Last week's US economic data showed that the US economy remains resilient, boosting the US dollar. This week's US third quarter GDP and October non-farm payrolls reports will be closely watched as they may provide some hints on the size and speed of the Fed's interest rate cuts. Meanwhile, the uncertain outlook for the US presidential election and continued geopolitical tensions in the Middle East may boost the safe-haven dollar. Growing bets that the Bank of England will cut interest rates at all of its two remaining meetings this year may weigh on the British pound in a volatile lower.
The GBP/USD pair has seen little change in its trend at the beginning of the week as local markets are stuck in a holding mode ahead of Wednesday's budget. Fiscal policy is expected to be eased to some extent, and if she can do this and maintain investor credibility, the pound may benefit. The pair is trading in a range around 1.3000. Short-term trading patterns help to make a potential bullish direction to the recent trading range. Above 1.3000 (market psychological level), and 1.3006 (14-day moving average) key resistance areas, add momentum to the positive short-term tone on the daily chart formed after the reversal. The next target is the support of 1.3049 (50.0% Fibonacci retracement of 1.2665 to 1.3434). Above, it will point to the 25-day moving average level of 1.3105. The technical indicator 14-day relative strength index (RSI) is at a low of 44.50 levels, supporting the downside bias. If it falls below 1.2907 (last week's near 2-month low); 1.2903 (130-day moving average); and 1.2900 (round number), the next bearish target is the June 12 high of 1.2861.
Today, we recommend going long on GBP before 1.2995, stop loss: 1.2985, target: 1.3040, 1.3050
USD/JPY
The dollar has resumed its upward trend and is testing the medium-term high of 153.88. The uncertain political and monetary situation in Japan is hitting the yen. The broader bias is positive, but the bearish divergence warns that a pullback may be coming. In early Asian trading on Tuesday, USD/JPY fell to around 153.00. The dollar retreated from the nearly three-month high of 153.88 in the previous trading day, and USD/JPY fluctuated lower. However, the downside of USD/JPY may be limited amid the uncertainty about the composition of the next government and the Bank of Japan's rate hike plan. The defeat of the ruling coalition in Japan in the election has triggered political and monetary policy uncertainty, which may put some selling pressure on the yen. The Bank of Japan's interest rate decision will be in focus on Thursday. Nearly 86% of economists expect the Bank of Japan to keep interest rates unchanged at its October meeting on Thursday. Elsewhere, data released by the Statistics Bureau on Tuesday showed that Japan's unemployment rate fell to 2.4% in September, lower than the previous reading and the forecast of 2.5%. Bets on Fed easing may provide some support to the dollar in the short term.
From a technical perspective, last week's breakout above the 150.65 confluence level, including the 100-day moving average (150.55) and 150.75 (50% Fibonacci rebound from 161.95 to 139.58) is seen by bulls as a new trigger. That said, the failure to find support or increase momentum above 153.40 (61.8% Fibonacci rebound) at the beginning of the week warrants caution. Moreover, the 14-day RSI, one of the technical indicators on the daily chart, is in the overbought zone (latest at 70.20), however, any subsequent decline may attract some bargain-hunting buying and continue to maintain above 152.00 (round number); 152.20 (lower line of the daily rising channel); and 152.22 (last weekend's closing price). However, if there is some follow-up selling, it may fall to 151.44 (200-day moving average). This point should now become a key pivot level and strong support. On the other hand, 153.88 (early week high), and 154.00 (round number) levels may provide some resistance before 154.50 (midline of the daily rising channel) resistance area. Some follow-through buying should pave the way for the recapture of the psychological 155.00 level, and if this level is broken, USD/JPY looks set to test the 156.67 (76.4% Fibonacci rebound) level.
Today's recommendation is to short before 153.50, stop loss: 153.70; target: 152.50, 152.30
EUR/USD
EUR/USD rebounded from earlier lows near 1.0770 to regain the handle just above 1.0800. Germany's preliminary inflation rate is in focus along with EMU's third-quarter GDP growth, final consumer confidence index, economic and industrial sentiment and the European Central Bank's consumer inflation expectations. In addition, the European Central Bank's Schnabel will also speak. In early Asian trading on Tuesday, EUR/USD held steady near 1.0810 as the US dollar consolidated. Rising expectations that the Fed will cut interest rates at a slower pace could boost the dollar in the short term. Nonetheless, market participants will get more clues from key U.S. economic data this week, while traders will keep a close eye on the U.S. presidential election on November 5. Uncertainty surrounding this key event could lift safe-haven currencies such as the US dollar against the euro. European Central Bank President Onsch's dovish speech helped limit the euro's losses. This, combined with a series of recent objections to accelerating the pace of interest rate cuts, has helped the euro rise.
EUR/USD is consolidating in a developing range around 1.08, essentially orbiting the 1.0760 – 1.0850 range. The trading pattern so far suggests a slight pause in the euro's decline before resuming the downward trend (potential bear market pattern). However, within the intraday and daily swings, the euro remains oversold, which does increase the risk of a short squeeze at some point. Therefore, if there is a technical rebound, the first targets are 1.0871 (last week's high), and 1.0878 (50-week moving average). Followed by 1.0900 (round number mark), and 1.0943 (20-day moving average). As for the downside, we can first focus on 1.0760 (last week's low), and a breakout will point to the 1.0740 (61.8% Fibonacci retracement level from 1.0448 to 1.1214) area level.
Today it is recommended to be long the euro before 1.0800, stop loss: 1.0790, target: 1.0850, 1.0860.
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