US Dollar Index

The US Dollar Index held around 97.50 on Monday as investors awaited two key inflation reports this week that could shape the near-term interest rate outlook following last week’s weaker jobs data. The Producer Price Index is due Wednesday, followed by the Consumer Price Index on Thursday. On Friday, the index fell about 0.5% after data showed US nonfarm payrolls rose by only 22K in August, well below the revised 79K in July and market expectations of 75K, signaling further labor market weakness. The disappointing numbers reinforced dovish comments from Federal Reserve officials, who have recently stressed the need to adjust policy in line with cooling economic and labor market conditions. Markets have almost fully priced in a 25-basis-point rate cut by the Fed later this month, with some betting on a larger 50-point cut depending on this week’s inflation results.

The Dollar Index remains under downward pressure, with bearish momentum continuing to build from a technical perspective. It has clearly broken below the 100-day moving average at 98.68, which now stands as a new key resistance level. The dollar also lacks catalysts for a rebound in the near term. Moreover, the index slipped under the psychological 98.00 level, further strengthening bearish sentiment. Yesterday’s drop to a low of 97.41 opened the door to testing the July 24 low of 97.11 and the 97.00 round number, while the July 1 low of 96.38 has also re-emerged as a focus. Should this week’s CPI report or revised employment data surprise to the upside, the index could rebound toward 98.31 (last Friday’s high) and the 100-day moving average at 98.68. However, both resistance levels have been significantly reinforced by the recent technical breakdown.

WTI Spot Crude Oil

WTI crude oil rose to around $62.90 per barrel on Monday, ending a three-day losing streak after OPEC+ agreed to further increase output, though at a modest pace given the weak demand outlook. The group announced on Sunday that production will rise by 137,000 barrels per day starting in October, well below the hikes of about 555,000 bpd in August and September and 411,000 bpd in June and July. The move reflects Saudi Arabia’s attempt to regain market share but also signals caution, as global economic risks are expected to weigh on consumption. The October increase also marks the start of unwinding the second batch of production cuts totaling 1.65 million bpd—more than a year ahead of schedule. Since April, OPEC+ has already fully rolled back the first batch of cuts amounting to 2.5 million bpd, roughly 2.4% of global demand.

Last week, weaker-than-expected US nonfarm payrolls data raised concerns about slowing energy demand growth. As a result, both Brent and WTI fell more than 3% over the week, with Friday alone seeing losses of over 2%. On the daily chart, WTI has stabilized around $62 after last week’s sharp drop. Short-term moving averages remain downward-sloping, showing bearish momentum has not fully dissipated, though the 14-day RSI is nearing oversold territory, suggesting selling pressure may be easing. If prices can hold above the May low of $61.20, WTI may rebound to test the 20-day SMA at $63.25 and the $63.20 area (last Friday’s low). A break higher could target the 100-day SMA at $64.12. Conversely, if prices fall below $61.00, downside risks reopen toward $60.78 (the June 2 low) and the key $60.00 psychological level. In the short term, crude prices are likely to consolidate within the $60–66 range.

Spot Gold

Gold surged past $3,600 per ounce on Monday, reaching a new all-time high of $3,646, after US August job growth came in below expectations and the unemployment rate rose to its highest level since 2021, signaling labor market weakness. Traders now see a 90% chance of a 25-basis-point rate cut at the upcoming Federal Reserve meeting. Attention has shifted to this week’s US Producer Price Index and Consumer Price Index releases, which may provide further clues on the Fed’s policy path. Meanwhile, the People’s Bank of China increased its gold reserves for the 10th straight month in August, continuing its diversification away from the US dollar. Gold is up 37% so far this year, supported by dollar weakness, looser monetary policy, ongoing central bank buying, and heightened geopolitical and economic uncertainty.

Starting from $3,437 per ounce early last week, spot gold rallied through a series of swings to challenge the $3,600 mark, logging a third consecutive weekly gain. This not only fueled bullish enthusiasm on Wall Street but also reinforced broader investor conviction as inflation returns to the market spotlight. Prices are again approaching the $3,646 level, seen not as an endpoint but the beginning of a new chapter. On the daily chart, the 14-day RSI remains above 70, signaling overbought conditions and suggesting the possibility of a technical pullback before the uptrend continues. Defining gold’s next upside target is challenging given its proximity to record highs, but once $3,600 is confirmed as support, the $3,650 and $3,700 levels are likely the next psychological barriers. On the downside, $3,563 is the first support, followed by the $3,500 round number.

AUD/USD

The Australian dollar climbed toward 0.6600 against the US dollar on Monday, supported by expectations that the Federal Reserve may deliver an outsized 50-basis-point rate cut at next month’s policy meeting, as the greenback underperformed against major peers. Recent data showed weaker-than-expected US job growth in August, reinforcing signs of a cooling labor market and strengthening bets that the Fed could begin cutting rates later this month. In Australia, the economic calendar remains relatively light, with investors awaiting key releases including building permits, housing approvals, consumer confidence, inflation expectations, and speeches from Reserve Bank of Australia officials. Last week’s strong domestic data led markets to scale back expectations of further RBA easing. Current market pricing reflects about an 80% probability of a 25-basis-point cut in November, down from a near-100% chance earlier.

AUD/USD traded near 0.6590 on Monday. From a technical perspective, daily chart analysis suggests market sentiment remains bullish. The pair is holding above the 14-day simple moving average at 0.6510, indicating strengthening short-term momentum. On the upside, the pair is eyeing the 0.6600 psychological level, followed by the upper boundary of the rising channel around 0.6610, and the 10-month high of 0.6625 set on July 24. A breakout would reinforce the bullish bias and support a test of 0.6681 (the November high). Immediate support is seen at 0.6510 (the 14-day SMA), aligned with the 0.6500 psychological level. A break below this key support zone would weaken the bullish outlook and open the door toward 0.6450, near the 120-day SMA.

GBP/USD

The British pound started the new week on a steady note, hovering just above the 1.3500 psychological level in early trading. However, the recent pullback lacks strong bearish conviction, keeping sellers cautious about extending Friday’s retreat from the 1.3555 area, which marked a three-week high. The US dollar has regained some positive traction, rebounding from its lowest level since July 28—hit on Friday following disappointing US employment data—and this has weighed somewhat on GBP/USD. The dollar’s rebound has been partly attributed to yen weakness, driven by domestic political turmoil in Japan and fading demand amid rising Fed rate cut expectations. Still, the pound remains vulnerable to downside risks, as UK fiscal uncertainty and concerns ahead of the November Autumn Budget continue to drag on British assets.

In the short term, GBP/USD is showing a sideways trend, with prices closely tracking the 20-day simple moving average near 1.3490. On the daily chart, the 14-day RSI oscillates between 50 and 55, also pointing to range-bound conditions. A decisive break below the 100-day SMA at 1.3460 could trigger a deeper correction toward the 1.3400 round number and the 1.3367 region, which corresponds to the 50% Fibonacci retracement of the 1.3141–1.3594 rally. On the upside, a rebound above the resistance zone at 1.3555 (last week’s high) and 1.3550 (September 1 high) could open the way for a move toward 1.3594 (August 14 high) and the 1.3600 psychological barrier.

USD/JPY

On Monday, the yen briefly fell below 148 against the US dollar, reversing gains from the previous session after Prime Minister Shigeru Ishiba announced over the weekend that he would resign. His departure followed weeks of pressure from domestic election setbacks and growing divisions within the ruling party. The resignation also comes as Japan faces setbacks in reaching a trade deal with the US while trying to shield its vital auto industry from steep tariffs. Meanwhile, second-quarter GDP growth was revised higher on both annual and quarterly terms, driven by robust exports and steady private consumption. The stronger data underpinned the Bank of Japan’s hawkish stance, with Governor Kazuo Ueda reiterating last week that rate hikes remain an option if the economic outlook holds.

From a technical perspective, the pair’s early-week rally stalled near the critical 200-day simple moving average resistance at 148.82, with spot currently trading around the 148.00 area. The next hurdles sit at the 149.00 psychological level and 149.15 (September 3 high), which also represents the 61.8% Fibonacci retracement of the decline from August’s high. A decisive break above this zone would be seen as a fresh trigger for USD/JPY bulls, potentially paving the way to reclaim the 150.00 psychological barrier and extend momentum toward the August monthly high near 150.92. On the downside, a dip below 148.00 could attract some dip-buying interest around the 147.45–147.40 region, likely limiting further weakness near 147.00. However, a break below the strong support at 146.80–146.70 would shift the short-term bias in favor of sellers, exposing the August low near 146.20 and ultimately opening the door toward the 146.00 round number.

EUR/USD

The euro climbed above $1.1750 on Monday, its highest level since late July, as broad dollar weakness persisted after US jobs data showed further labor market cooling. Nonfarm payrolls came in below expectations, while the unemployment rate rose to 4.3%—the highest since 2021. The report reinforced market expectations for a Federal Reserve rate cut later this month. Focus now shifts to this week’s European Central Bank meeting, where policymakers are expected to hold rates steady against a backdrop of stable growth and inflation close to target. The euro area economy expanded 0.1% in Q2, while August inflation stood at 2.1%. Meanwhile, fiscal risks are once again in the spotlight, with higher defense spending and increased infrastructure investment in Germany under consideration. Political attention is also on French Prime Minister François Bayrou’s September 8 confidence vote.

On the daily chart, EUR/USD continues to consolidate above 1.1700 after touching a five-week high at 1.1760 late last week before easing slightly. Momentum still favors buyers, with the 14-day RSI holding above 50. The next resistance is last week’s 1.1760 high, followed by the psychological barrier at 1.1800. A break above the latter would expose the year-to-date high at 1.1830. On the downside, a daily close below 1.1700 could bring the 50-day SMA at 1.1664 and last Friday’s low at 1.1648 into play. Further weakness could push the pair toward the key 1.1600 support level.

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.