US Dollar Index

The dollar rose in US trading following surprising comments from Federal Reserve Vice Chair Barr. All eyes are on the first debate between Trump and Harris in Philadelphia on Tuesday evening. The dollar index recovered and moved higher. The dollar index, which measures the greenback against a basket of six currencies, extended its recovery on Monday ahead of the release of key inflation data this week. Following the mixed labor market data released last Friday, investors' attention turned to the upcoming inflation data, with the Consumer Price Index data expected to show a mild reading. Technical analysis suggests that there is potential for further gains for the dollar in the short term. Despite the positive growth indicators, the US economy faces potential risks. While the economy remains strong, the market may be overly optimistic in pricing future rate cuts. The dollar index rose to a three-day high near 101.80 as investors see a 25 basis point rate cut as the most likely at the Fed's next meeting. The NFIB Business Optimism Index and the American Petroleum Institute's weekly report on US crude oil supplies will be released on September 10.

The net long position in the US dollar increased for the second consecutive week. The net long position in the US dollar increased for the second consecutive week, driven by a reduction in short positions. This shows that the US dollar index still has the possibility of a technical rebound in the short term. Although the 14-day relative strength index (RSI) indicator shows some momentum, it still remains negative {45.20}, giving investors a false impression that a rebound has begun, so bulls need to work hard to recapture last week's high of 101.92, and the 102.00 (market psychological barrier) resistance area, and a breakout of this level would signal a buying opportunity and strengthen the short-term outlook to the 102.66 {50.0% Fibonacci rebound level from 104.80 to 101.51} level. On the downside, if the bearish momentum continues to the 101.00 level, the US dollar index will fall to the "triple bottom" support area formed by the 100.60 (28/12/2023); 100.51 (27/8); and 100.56 (last Friday) lows, and then fall to the psychologically important 100.00 level.

Today, it can be considered Short USD Index around 101.75, Stop Loss: 101.90, Target: 101.40, 101.35

WTI Crude Oil

Crude oil prices fell more than 3% due to the OPEC monthly report. The OPEC monthly report remained optimistic about its demand and economic activity outlook, which is expected to drive demand. Oil prices rebounded after falling to their lowest point in more than a year last week as traders looked forward to important market reports. So far in the third quarter, WTI crude oil, the benchmark for US crude oil prices, has fallen 16%, while Brent crude oil, the benchmark for global crude oil prices, has fallen 17%. That's all. Traders will get plenty of market insight this week when the three main forecasters - OPEC, the U.S. Energy Information Administration and the International Energy Agency - release their monthly outlooks. The reports come at a time when sentiment is very subdued, with fund managers' bullishness on crude hitting a 13-year low. Crude prices have fallen sharply over the past three weeks, selling off along with other commodities and stocks. There has also been widespread weakness in product markets, including for gasoline in the U.S. and diesel in Europe. The weakness prompted OPEC+ to delay plans to resume some production by two months. When it comes to oil, the fundamentals remain unchanged and inventories are building. However , the financial markets are the source of bearish sentiment, trading on future prospects, not today.

After leading experts Trafigura and Gunvor both issued statements that fossil fuels will decline further, it is time for oil prices to fall further. In fact, seeing that US export levels are at historical highs and Russia cannot sell crude oil to China and India without stepping on the toes of OPEC+ partners, more recessions are inevitable. The economic slowdown will only further expose the problem of oversupply, which may mean more recessions in the future. On the upside, $69.74 (8-day moving average) will be the first level to return to. Next, the $70.00 {market psychological mark}, and the 70.73 (10-day moving average} level. If the bulls can break through this, the 20-day moving average of $72.70 may trigger more buying follow-up. Before the weekend, the key level of $66.72 {low since May last year} was the first target support level. While $66.20 {lower line of the downward channel on the daily chart} is seen as a risk of another decline. The next level will fall further to $64.31 {last May low} level.

Today, consider going long on crude oil around 66.50, stop loss: 66.30; target: 67.80; 69.00

Spot gold

Gold struggled to build on Monday's gains, but managed to hold nearly $2,500 on Tuesday. Investors avoided holding large positions ahead of Wednesday's much-anticipated U.S. August inflation data, limiting gold's volatility. Spot gold re-entered around $2,500 on Tuesday. As Treasury yields performed well at the start of the day, gold hit a high of $2,506 in early Asian trading. Gold prices soared above $2,500 an ounce on Monday, with gold traders ignoring the overall strength of the U.S. dollar and the continued tension in the Middle East, which provided momentum for gold prices to rebound. Gold prices resumed their uptrend and broke through $2,500/oz, but buyers seem to have failed to gather momentum above $2,510/oz. Momentum remains bullish, but gold may consolidate in the short term before resuming its uptrend or turning to the downside.

From a technical perspective, the daily chart shows that bulls are in control, but remain cautious. Gold prices are currently hovering around the mildly bullish 20-day simple moving average at $2,499.00, and buyers have been quick to add positions on a break below it. Meanwhile, the 14-day relative strength index (RSI), a technical indicator, is above the 58.50 level, which supports the gold price rebound and adds credibility. Finally, the large-scale moving averages maintain a mild bullish bias and are well below the current price. On the upside, the first resistance is $2,520.00, which will lead to $2,529.50 (last week's high), and the all-time high of $2,531.70, above which the psychological level of $2,550 will come into play. On the downside, consider $2,500 (market psychological barrier), and the 20-day moving average of $2,501. A break above the latter will challenge last week's low of $2,472. Further down, sellers need to break through $2,467.50 (34-day moving average) to start a sustained downtrend.

Consider going long on gold today before 2,513.00, stop loss: 2,510.00; target: 2,525.00; 2,530.00

AUD/USD

AUD/USD is trading uncertainly, in line with the overall sentiment in the FX market, hovering in the 0.6650 range as investors prepare for the release of US CPI data on Wednesday. The US dollar maintains its bullish trend, extending its gains after last Friday's non-farm payrolls and keeping risk assets under pressure at the beginning of this week. Conversely, AUD/USD is hovering around the 100-day moving average around 0.6647, which again seems to be providing some initial support. Although the Australian dollar has closed lower over the past two weeks, the outlook for the Australian dollar remains positive with support from the key 200-day simple moving average at 0.6618. However, recent strength in the US dollar and continued concerns about China's economic outlook challenge this optimism. AUD/USD is wavering as copper prices rebounded solidly while iron ore prices fell slightly. As for the latter, continued weakness in iron ore prices could limit further gains for the Australian dollar, as it is closely tied to China's economic activity. AUD/USD's upside could be limited by China's slow economic recovery.

From the daily chart, the 14-day relative strength index (RSI) of the technical indicator has fallen below 45 {latest at around 44.50}, further confirming the continued bearish momentum. Bears may first push AUD/USD down to the September low of 0.6647 (September 9), followed by the key 200-day moving average of 0.6618. A breakout would point to 0.6600 {market psychological level}, and continue to test the 250-day moving average of 0.6580. On the upside, further gains in AUD/USD are expected to hit 0.6700 {round mark}, followed by 7-month high 0.6798, and 0.6800 {market psychological mark} area, and further pave the way for the pair to 0.6823.

Today, consider going long on AUD before 0.6640, stop loss: 0.6625; target: 0.6685; 0.6700.

GBP/USD

GBP/USD surged to a daily high of 1.3107 after a solid UK jobs report, but has fallen below 1.31 as traders await the release of US inflation data. The pair is trading at 1.3070. In Asian trading on Tuesday, GBP/USD fell for three consecutive days and traded around 1.3070. The decline in GBP/USD could be attributed to a stronger dollar, which was supported by the latest US labor data, which increased uncertainty about the prospects of aggressive rate cuts by the Federal Reserve at its September meeting. In the UK, investors are closely watching employment data for the quarter ending July, which is scheduled to be released on Tuesday. This labor market report could greatly influence market expectations for the Bank of England's interest rate decisions for the rest of the year. Forecasts show that the ILO unemployment rate is expected to fall to 4.1% from the previous value of 4.2%. Slowing wage growth may strengthen expectations for further rate cuts by the Bank of England as it may indicate that inflationary pressures in the services sector may ease.

GBP/USD fell below the 100-hour simple moving average on the 4-hour chart for the first time since mid-August. Meanwhile, the Relative Strength Index (RSI) indicator on the 4-hour chart remains around 24, indicating that the pair is already oversold. Sellers may seek to maintain control of GBP/USD if 1.3122 (100-hour SMA) holds as resistance. On the downside, 1.3040 (38.2% Fibonacci retracement of the latest uptrend) becomes the next support level ahead of 1.3000 (psychological level) and 1.2960-1.2962 (50% Fibonacci retracement, 200 SMA). If GBP/USD manages to flip 1.3100 to support, it may face the next resistance at 1.3130 (23.6% Fibonacci retracement), ahead of 1.3141 (50 SMA) and 1.3200 (psychological level).

Today, long GBP is recommended before 1.3065, stop loss: 1.3050, target: 1.3120, 1.3130

USD/JPY

In early Asian trading, USD/JPY turned stronger for the second consecutive day after falling to the 142.85 area, even though it lacks a bullish bias. USD/JPY is currently trading mildly positive around 142.50, still within striking distance of the one-month low hit on Friday. The yen continues to be affected by data released on Monday, which showed that the economy grew slightly slower than initially reported in the second quarter. This could complicate the Bank of Japan's plans for further rate hikes in the coming months. Otherwise, the stock market maintains a generally positive risk bias, curbing demand for the safe-haven yen and boosting the USD/JPY pair with some dollar buying. However, the market has fully priced in at least a 25 basis point rate cut from the Federal Reserve later this month. In contrast, the Bank of Japan is expected to raise interest rates once more before the end of the year. This could discourage bullish traders from making aggressive bets on USD/JPY and limit its gains.

USD/JPY is testing support at a key low of 141.70 {double bottom}, having retreated from the August high of 149.40 to last week's low of 141.70 {double bottom}, a drop of more than 5.5%. If the pair breaks below the aforementioned double bottom in the future, it could signal a reversal of the long-term uptrend and indicate a major bearish shift in the technical outlook for USD/JPY. The pair has broken below a major multi-year trendline, suggesting that the long-term uptrend has been damaged. However, to confirm a reversal, the price must break and close (daily or preferably weekly) below the 141.70 {double bottom} level. Strong support is seen at 140.25 (December 2023 low), and 140.00 {market psychological barrier}, which could slow the pair's decline. As for the upside, 143.80 {early this week high} is in the spotlight, with a break pointing to 145.55 {descending triangle resistance on the daily chart}, and 145.40 {22-day moving average} area levels respectively.

Today, it is recommended to short the USD/JPY before 142.68, stop loss: 142.90; target: 141.80, 141.60

EUR/USD

EUR/USD fell slightly as sentiment on the dollar wavered ahead of the release of US inflation data. The euro fell at the beginning of the week and continued to search for a bottom after breaking the 1.1100 support level. Expectations that the ECB will cut interest rates at its September 12 meeting weighed on EUR/USD. As the market prepares for an ECB rate cut and key US inflation, the ECB is expected to maintain its cautious easing guidance that "the ECB will remain sufficiently restrictive as long as necessary" and that policy will continue to depend on economic data. The ECB is expected to release its economic forecasts. Money market traders continue to expect the ECB to cut monetary policy by 50 to 75 basis points by the end of this year. In the US, if inflation falls, the probability of a 50 basis point rate cut by the Fed increases. Otherwise, the market will price in a gradual adjustment of the Fed's monetary policy.

From a technical perspective, EUR/USD remains neutral to the upside, but a clear break below the September 3 low of 1.1025 could open the door to further downside. The key psychological support level of 1.1000 will be tested, followed by the 50-day moving average at 1.0958. If the latter is broken, the pair may test the confluence of the 100- and 200-day moving averages at 1.0867/58. To resume the bullish trend, buyers must make EUR/USD rise above the September 9 high of 1.1070 {a trend line extending upward from the early August low of 1.0861}, before there is a chance to challenge 1.1100 {round mark}.

Today, it is recommended to go long on the EUR/USD before 1.1005, stop loss: 1.0995, target: 1.1060, 1.1070.

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