Dollar Index

The U.S. dollar index continued to rise repeatedly last week to a nearly two-month high of 103.18, but encountered resistance at the 103.00-103.20 mark. More Federal Reserve officials support cutting interest rates at a more moderate pace. At the same time, the minutes of the September monetary policy meeting also showed that there are differences within the Federal Reserve on whether to cut interest rates by 50 basis points. Market expectations for an interest rate cut within the year have further cooled. The market is currently placing less than 50 basis points of bets on an interest rate cut before the end of the year, and some market participants estimate that the Fed may suspend interest rate cuts if inflation data is hotter than expected. If inflation is hotter than expected, it may reignite the market's discussion of American exceptionalism and continue the dollar's rising momentum. The latest batch of U.S. data sends a very different signal to the Fed and markets. In other cases, the dollar would have risen, but at least two sets of factors dampened the FX market reaction. An unexpected rise in jobless claims could be due to extreme weather events, while monthly core consumer prices rose 0.3% in September. The US dollar failed to benefit from these data, but had a significant negative impact on the greenback. Second, heading into the US election, the link between interest rates/data and the dollar will weaken. Last week's market seems to recognize this dynamic, and in the short term, the U.S. dollar index is still likely to strengthen to 103.50.

The U.S. dollar index rose rapidly last week and reached its highest level in nearly two months near 103.18 before entering a consolidation stage below 103.00. But the current trend in U.S. Treasury bond rates is inconsistent with this message from the Fed. Either the market completely rules out any rate cuts in 2024, which would mean a breakout of 103.00 on the US Dollar Index, or it fades away as US rates fall. Psychological 103.00 is the first level to resolve upwards. Further up, the daily chart shows the U.S. Dollar Index rebounded in early October, partially recouping some of its Q3 losses of around 5%. At some point, the USD may have entered this temporary equilibrium, where 103.00 – 103.18 is identified as the final resistance level for the week. Once above the above levels, a very volatile area emerges, with the 120-day simple moving average at 103.57, and the 200-day 103.77 level coming into play. On the downside, 102.62 (38.2% Fibonacci bounce from 106.61 to 100.16) is the first line of defense, with the area formed by the 102.32 level (9-day EMA) and the key 102.00 (psychological level) sufficient to halt any bearish pressure and trigger a backlash. If this level does not work, it is believed that a drop to 101.68 (23.6% Fibonacci bounce from 106.61 to 100.16) level could also serve as support.

Today you can consider shorting the US dollar index near 103.05, stop loss: 103.15, target: 102.65 102.60

WTI crude oil

Crude oil prices recovered last week and stabilized around Monday's opening price, near $75.00. Earlier this week, Israel signaled its readiness to retaliate against Iran before recovering from lower levels. U.S. President Joe Biden spoke by phone with Israeli Prime Minister Benjamin Netanyahu in mid-week, with the president urging against attacks on Iranian oil facilities. Meanwhile, Florida is measuring the extent of Hurricane Milton's damage and oil platforms in the U.S. Gulf of Mexico are preparing to reopen again. Crude oil prices have been swinging wildly as markets await Israel's next move against Iran, which could severely disrupt oil supplies. The market remains concerned that Israel may launch an attack on Iran's oil infrastructure, which keeps geopolitical risk appetite alive and boosts WTI oil prices. Separately, China's massive stimulus measures will ignite a lasting recovery in the world's second-largest economy and boost fuel demand in the world's largest oil importer. In addition, the market seems confident that further interest rate cuts by the Federal Reserve will boost economic activity and oil demand. In other words, stronger U.S. inflation data has caused some doubts in the market about the extent of interest rate declines in the coming months, thereby preventing the upside of crude oil prices.

Crude oil clearly reflects when you are leaving the market without clues or comments. The fact that markets are still left to guess what Prime Minister Netanyahu will do next has allowed markets to quickly price in the rise in risk premiums. Over time, we may see more headwinds. And last Monday's false breakout to just below $78 should be ignored, as this move was perfectly matched last Tuesday. This means that the key levels currently on the upside are still in effect: currently, WTI oil prices are hovering above $73.53 (9-day EMA), and $73.97 (last Friday's low), making this support area a stronger support level. Once above holds, the $76.60 (61.8% Fibonacci bounce from 83.93 to 64.75); $77.17 (200-day EMA); $77.93 (last week’s high) areas should prevent any further gains as they did on Tuesday . On the downside, without a daily close below the $73.51 – $73.97 level, it could still act as support. First up is $72.07 (38.2% Fibonacci bounce level), which is a potential first line of defense. A little further down, $71.46 (February 5 low) would serve as secondary support before a return to the psychological level of $70.00, and final support at $66.18 (October 1 low).

Today you can consider going long crude oil near 74.70, stop loss: 74.50; target: 76.00; 76.20

Spot Gold

Gold extended its gains, trading above $2,650 on Friday, after a preliminary Michigan consumer confidence index showed a decline in sentiment in October. Gold recovered to around $2,650 before the end of last week as poor U.S. employment data solidified expectations that the Federal Reserve would cut interest rates at its November policy meeting. Expectations of falling interest rates are bullish for gold because their occurrence would lower the opportunity cost of holding non-interest-bearing assets, making them more attractive to investors. Gold rebounded from the key psychological level of just above $2,600 on Thursday after official U.S. jobless claims data showed an unexpected spike in claims. Gold gets a boost. Gold has recently received a further boost from comments from Federal Reserve policymakers. In the middle of last week, a string of officials made neutral or dovish comments on the outlook for monetary policy, which supported gold prices above $2,600. On the other hand, gold may also rise by attracting safe-haven funds amid heightened geopolitical tensions. Israel has stepped up its bombing of Hezbollah targets in Lebanon, causing massive collateral damage, and investors remain jittery about the scale of Israel's almost certain retaliation against Iran.

The daily chart shows that after bottoming at the psychological level of $2,600 last week, gold reversed short-term losses and recovered to the familiar range above $2,625-$2,630. The short-term trend is likely to have switched back to a sideways trend. Considering the technical analysis principle of "the trend is your friend", the probability of continuing to rise in the short term is relatively high. This will likely see gold continue its upward move towards old territory

Heading towards the top of the cap between $2,625 - $2,685. Technical indicators such as the 14-day Relative Strength Index (RSI) are above the 50 to 62.50 level, suggesting there is more upside. Gold prices' next bullish price objective is $2,659.60 (last week's high). Meanwhile, the $2,672 – $2,673 area could form immediate resistance ahead of the $2,685 – $2,686 area or the all-time high hit last week. Following closely behind is the $2,700 mark which, if conquered by the bulls, would set the stage for a continuation of the established multi-month uptrend. After this, gold may start a period of decline back to the bottom of the range in the process of continued fluctuations. Near-term support is seen at the bottom of the old range of $2,625 - $2,685 at $2,625. If it continues to fall below the latter, the decline may extend towards the psychological level of $2,600. If it continues to fall below the latter, the decline may extend towards the low of $2,583.80 on September 20 (34-day moving average) . Further losses could challenge the 40-day EMA demand area at $2,572.

Today you can consider going long gold before 2,654.00, stop loss: 2,650.00; target: 2,675.00; 2,680.00

AUD/USD

The Australian dollar had recovered against the U.S. dollar ahead of the weekend after days of losses after a gauge of prices paid by producers reiterated that inflation was falling, warranting further easing from the Federal Reserve. AUD/USD is currently trading around 0.6750. AUD/USD climbed as US PPI data reinforced expectations of a 25 basis point interest rate cut by the Federal Reserve in November. The producer price index (PPI) remained unchanged at 0% in September, down from August's 0.2% month-on-month increase. The PPI data and CPI report hinted that the Fed may cut interest rates at its November meeting. In other data, the University of Michigan showed consumer sentiment worsened slightly to 68.9 from 70.1, missing consensus. Americans have become pessimistic as the cost of living rises, while they have raised their inflation forecasts from 2.7% to 2.9% over the course of a year. Australia's economic to-do list will be light this week. Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunt will release data on October 15, followed by employment data on October 16. On the U.S. side, the calendar will include Fed speakers, trade balance, retail sales, initial jobless claims, industrial production and housing data.

From a technical perspective, AUD/USD is temporarily consolidating on the daily chart, although technical indicators such as the 14-day Relative Strength Index (RSI) are now around 46 and have fallen into bearish territory. But hinting at a slight upward trend. If the currency pair wants to resume its upward trend, buyers first need to break above the October 8 high of 0.6770 and the 9-day simple moving average of 0.6790, thereby challenging the market psychological barrier from 0.6800; 0.6802 {0.6348 to 0.6942 The 23.6% Fibonacci retracement level}; and 0.6810 {last week’s peak} form the key resistance area. The breakout is towards 0.6850 (an upward trend line from the August low of 0.6348), and 0.6852 (this month’s 4th). On the other hand, if the bears step in and push the pair down to 0.6715 (38.2% Fibonacci retracement level), and 0.6716 (the second upward trend line from the August low of 0.6348). Below, AUD/USD is likely to continue falling to 0.6645 (50.0% Fibonacci retracement level), and the 200-day simple moving average area of ​​0.6627 opens the door.

Today you can consider going long Australian dollar before 0.6735, stop loss: 0.6720; target: 0.6790; 0.6795.

GBP/USD

Last week, GBP/USD recorded its second consecutive weekly loss, with the GBP/USD pair falling to its lowest level in a month near 1.3020. After the release of the U.S. employment report, the market expects a 94% chance of the Federal Reserve cutting interest rates by 25 basis points at its next meeting. Although the U.S. consumer price index data for September was released on Thursday, there were no major changes. Dismal U.S. jobless claims overshadowed consumer inflation data, keeping hopes of a rate cut in November alive. Expectations of a smaller rate cut by the Federal Reserve at its upcoming meeting remained a key driver last week, which continued the dollar's climb back to two-month highs against its major rivals. As a result, the GBP/USD pair continued its decline, hitting its lowest level in a month at 1.3020. Sterling traders continue to assess the chances of the Bank of England cutting interest rates next month, following conflicting messages from Bank of England policymakers last week. The European Central Bank will announce its policy decision on Thursday, which could have a EUR/GBP crossing-driven "friction" effect on GBP/USD. In addition, speeches by officials from the Federal Reserve and Bank of England will also attract attention, while geopolitical developments in the Middle East will also be closely watched.

The daily chart shows that GBP/USD finally fell below the key 50-day moving average at 1.3101 in the middle of last week, after successfully holding on to this support level the previous week. With the 14-day Relative Strength Index (RSI), a technical indicator, still well below the 50 level, currently around 41.20, acceptance below that level would help sellers unleash their strength and there could be more room to the downside. If GBP selling intensifies, 1.3000 (psychological threshold), and 1.3002 (September 11 low) will serve as the next rescue levels for buyers. Further down, the 100-day EMA at $1.2944, and the 1.2958 (61.8% Fibonacci retracement of 1.2665 to 1.3434) area will be tested. Additionally, retaking the 50-day EMA at 1.3101 based on last weekend's previous daily chart close will also be crucial to launch a meaningful rally towards 1.3140 (38.2% Fibonacci retracement level). If the upward momentum continues, GBP will target the market psychological level of 1.3200, and the 1.3202 area of ​​the 25-day EMA.

Today it is recommended to go long GBP before 1.3050, stop loss: 1.3035, target: 1.3095, 1.3110

USD/JPY

The yen weakened slightly against the dollar last week, hampering a midweek recovery from its lowest level since early August. Prime Minister Shigeru Ishiba's blunt comments on monetary policy, as well as signs that Japan's real wages fell for the first time in three months, household spending fell and price pressures on raw material costs are fading, have raised doubts among investors about the Bank of Japan's plans to raise interest rates. This in turn undermined the yen and helped the USD/JPY pair attract some buyers on the dip amid a modest gain in the dollar. While the market believes the Fed will continue to cut rates amid signs of labor market weakness, traders have completely ruled out more aggressive policy easing. This helped limit the dollar's pullback from the near two-month high hit on Thursday and provided some support for the USD/JPY pair. That said, the softer risk tone limited losses for the safe-haven yen. However, the fundamental backdrop suggests that the path of least resistance for spot prices is to the upside. Monetary policy dynamics should favor a stronger dollar early next year, and weak growth prospects will drive safe-haven flows to the dollar

From a technical perspective, last week's breakout of the 50-day simple moving average (145.10) for the first time since mid-July and acceptance above 148.13 (38.2% Fibonacci rebound from 161.95 to 139.58) favors bullish long investors. In addition, the 14-day relative strength index (RSI) on the daily chart is now around 63.50, far from being in overbought territory, suggesting that the path of least resistance for the USD/JPY pair is to the upside. Therefore, the upside resistance can focus on 149.80 (the August to October highs), and 150.00 (market psychological highs), which can sustain a rebound to 150.60 (the central axis of the upward channel) after a break. And further climb to 151.20, the 200-day simple moving average. Therefore, any subsequent decline is more likely to attract new buyers and should remain around 148.00 (round mark). The latter should be a key turning point, and if broken, it may trigger some technical selling and drag the USD/JPY pair into the support level of 147.67 (9-day moving average), and then reach the 147.00 (round mark) mark, and open the door to the 147.35 (last week's low) area.

Today, it is recommended to short the US dollar before 149.35, stop loss: 149.60; target: 148.30, 143.20

EUR/USD

Last week, EUR/USD fell to a two-month low of 1.0900, and will close negative for the second consecutive week, but overall this week there is little change around 1.0940. The dollar retreated at the beginning of the week but resumed its gains following US headlines. The minutes of the September meeting of the Federal Open Market Committee released last week showed that risks to employment and inflation targets are now seen as "roughly balanced". The dollar fluctuated between gains and losses after the news was released, and investors finally decided to give the dollar a vote of confidence. Later, the US released the Consumer Price Index (CPI) data for September, which was slightly higher than market expectations. The core data was also higher than expected, and on Friday, the Producer Price Index (PPI) for September was released, which was higher than expected by 1.6%. But it was not enough to reverse the Fed's attitude. Market participants are still betting that the central bank will achieve a 25 basis point rate cut in November. In addition, the minutes of the September meeting of the European Central Bank were released. The document showed that policymakers expect inflation to move higher and then fall to the target value in the second half of 2025. Meanwhile, Wall Street still held up well, with the S&P 500 index hitting another record high. The momentum of US stocks reflects optimism about the US economy, which has limited the bearishness of the US dollar despite the Fed's dovish attitude.

From a technical perspective, the EUR/USD pair is biased lower. The downward break below the psychological 1.1000 level at the beginning of this month has a clear psychological impact on the bulls. The technical readings on the weekly chart support the bearishness as the pair plunged to 1.09 before temporarily easing below the bearish 200-week MA at 1.1035. Meanwhile, EUR/USD is struggling with the flat 20-week MA at 1.0937, while the 100-week MA is also losing directional strength around 1.0820. A final drop to 1.0777 {August 1 low} is possible. Finally, the technical indicator's 14-week chart maintains a firm downward slope and is about to cross the midline into negative territory, which is necessary to confirm a sustained medium-term decline. On the other hand, the first resistance is at 1.1000 {market psychological barrier}, after breaking through this level, it will face 1.1046 (38.2% Fibonacci retracement level from 1.0777 to 1.1213), and 1.1069 (23.6% Fibonacci retracement level from 1.0601 to 1.1214), until 1.1140 (last December high).

Today, it is recommended to go long on the euro before 1.0922, stop loss: 1.0910, target: 1.0980, 1.0990.

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