DXY

The U.S. dollar saw slight support from Fed's Bowman, while the U.S. calendar began slowly with the Chicago PMI and the Dallas Fed Manufacturing Survey. The Dollar Index has been hovering near its 2024 lows, searching for significant support. Last week, U.S. PCE data continued to cool, raising expectations for significant rate cuts, which put pressure on the Dollar Index. The index broke its previous low to reach 100.15, the lowest level since July 20, 2023, before rebounding slightly to around 100.70. This week, markets will closely watch the U.S. Non-Farm Payroll (NFP) report due on Friday, along with other key economic data such as Europe’s CPI, U.S. ISM Manufacturing PMI, and ADP employment data. Fed Chair Jerome Powell's speech at the National Association for Business Economics (NABE) conference will also be in focus. Additionally, the escalating geopolitical risks, particularly in the Middle East and Ukraine, will continue to influence the dollar’s direction.

Recent technical analysis shows that the Dollar Index remains in a downward correction phase, with bearish momentum dominating the short-term trend. The 14-day Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) continue to trend lower, indicating difficulty in building upward momentum. The 100.83 level (14-day moving average) and the psychological level of 101.00 remain strong short-term resistance, limiting the dollar's upside potential. The inability of the index to break through the 101.00 level suggests that downward momentum may persist in the short term. Key support is found at the psychological level of 100.00, with a break below targeting the July 14, 2023 low of 99.58 and the 99.68 area (the 61.8% Fibonacci retracement from 90.35 to 114.78). Resistance is at 100.83 (14-day moving average), 101.00 (psychological level), and 101.23 (September 23 high).

Today’s recommendation is to go short on the Dollar Index around 100.85, with a stop loss at 100.95 and targets at 100.50 and 100.40.

AUDUSD

The AUD/USD outperformed its risk-linked counterparts, extending its upward momentum early in the week to a year-to-date high in the 0.6940-0.6945 range, mainly driven by the recently announced Chinese stimulus measures. During the Asian session on Monday, AUD/USD climbed to around 0.6920. Rising bets on another substantial rate cut by the Federal Reserve in November have put pressure on the U.S. dollar. Last week, AUD/USD surged to a high of 0.6937, its highest level since February of last year. Optimism surrounding China’s stimulus efforts, including monetary easing policies from the People’s Bank of China, supported the Australian dollar, boosting investor risk appetite. Additionally, weak U.S. Personal Consumption Expenditures (PCE) data for August also weakened the dollar. On the one hand, the Reserve Bank of Australia (RBA) is not planning to cut rates, while the Fed has already started its easing cycle, adding downward pressure on the currency pair. U.S. inflation data, as measured by the PCE price index, fell by 2.2% year-over-year in August, more than expected, paving the way for another Fed rate cut in November, which led to a broader decline in the dollar.

From a technical standpoint on the daily chart, AUD/USD shows strong indicators, with the 14-day Relative Strength Index (RSI) ranging between 60 and 66.50, still pointing upwards, and the Moving Average Convergence Divergence (MACD) showing rising green bars, signaling strengthening bullish momentum. All of this suggests that the pair has more room for upside movement. The next target is the 200-week simple moving average at 0.6964, with a break of that level opening the door to a test of 0.7000 (a key psychological level) and potentially extending the rally toward 0.7156 (the high from February 2, 2023). On the downside, if AUD/USD sees a technical pullback before reaching 0.6739 (the 38.2% Fibonacci retracement from 0.7661 to 0.6170), the pair could first drop to the 9-day simple moving average at 0.6851, with a further decline potentially targeting the 0.6700 (key round number) level.

Today’s recommendation is to go long on AUD around 0.6900, with a stop loss at 0.6885 and targets at 0.6940 and 0.6945.

EUR/USD

On Monday, EUR/USD gave up its initial gains after falling back slightly above the 1.1200 level, as the U.S. dollar staged a strong rebound ahead of key U.S. data releases later in the week. During the Asian session, EUR/USD strengthened, trading around 1.1160. According to a report by the Financial Times, St. Louis Fed President Alberto Musalem stated on Friday that the Federal Reserve’s 50 basis point rate cut at the September meeting was larger than usual, and that after this, a "gradual" rate-cutting approach should follow. Musalem acknowledged the possibility that the economic weakness could be worse than expected, saying, “If that’s the case, then it may be appropriate to accelerate the pace of rate cuts.” Inflation in France and Spain came in lower than expected, fueling market speculation that the European Central Bank (ECB) might implement another rate cut in October. If this happens, it would mark the ECB's third rate cut in its ongoing policy easing cycle that began in June. After remaining on hold in July, the ECB resumed cutting rates in September.

From a technical standpoint, the pair’s repeated failures to break above the 1.1200 level have formed a bearish “double top” pattern. The 14-day Relative Strength Index (RSI) on the daily chart has retreated from above 60 to around 54.50, indicating that further selling pressure could target immediate support at 1.1100, potentially leading to deeper losses. EUR/USD may break below last week’s low around 1.1083, with spot prices possibly falling to the 50-day simple moving average (SMA) support near 1.1032. This would be followed by the psychological 1.1000 level, and a decisive break could signal that the pair has peaked, paving the way for further losses. On the upside, the 1.1200 level remains a strong immediate barrier, with the next significant resistance seen around 1.1215, the 14-month high reached on Wednesday. Any further buying pressure could be seen as a bullish trigger toward 1.1275 (the July 14, 2023 high).

Today’s recommendation is to go long on the U.S. dollar around 1.1120, with a stop loss at 1.1110 and targets at 1.1160 and 1.1170.

GBP/USD

The noticeable rebound of the U.S. dollar has put fresh downward pressure on GBP/USD, pushing it below the key support level around 1.3400 ahead of Fed Chair Powell’s speech. During the Asian session on Monday, GBP/USD strengthened to around 1.3370. Expectations of further rate cuts by the Federal Reserve, coupled with market bets that the Bank of England will maintain a relatively less dovish stance, provided some support for the GBP/USD pair. Fed Governor Michelle Bowman is scheduled to speak later on Monday. U.S. inflation has cooled, nearing the Fed’s 2% target. Data released last Friday showed the U.S. PCE price index rose by 2.2% year-on-year in August, in line with expectations. The CME FedWatch tool indicates that rate futures contracts have priced in a nearly 54% probability of a 50-basis-point rate cut in November, while the odds of a 25-basis-point cut stand at 46%. The expectation that the Bank of England’s rate-cutting cycle may be slower than the U.S.'s continues to support the pound’s upside. In the absence of key economic data from the UK this week, GBP will be driven by market expectations of the Bank of England’s monetary policy for the rest of the year.

GBP/USD has built on recent gains from the past two weeks, rising to its highest level since March 2022, near 1.3434, during the Asian session last Wednesday. The fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside. Despite the slight overbought condition on the daily chart (latest reading at 64), the bulls still dominate the market. Near-term upside resistance lies at last week’s high of 1.3434, with a break above this level pointing towards the psychological level of 1.3500, and further gains toward the February 24, 2022 high at 1.3550 and 1.3540 (the upper boundary of the daily ascending channel). On the downside, the first support target is around the 9-day simple moving average at 1.3342. The next defense for buyers lies at the psychological level of 1.3300. Without a major shock, GBP/USD is unlikely to fall back to the ultra-low 1.30 level. On the contrary, the market has been pricing in a more aggressive Fed easing policy, which has kept the dollar languishing near its year-to-date lows, acting as a tailwind for GBP.

Today’s recommendation is to go long on GBP around 1.3360, with a stop loss at 1.3345 and targets at 1.3405 and 1.3415.

XAU/USD

Gold started the week extending its downward correction, trading in the negative zone around $2,625. Profit-taking before the Chinese holiday and cautious market sentiment seemed to exert pressure on gold prices as the market awaited Fed Chair Powell's speech. During the Asian session on Monday, gold briefly rose to around $2,665. Escalating geopolitical risks and firm expectations of another substantial rate cut by the Federal Reserve in November helped to support gold prices. Tensions in the Middle East escalated after Israel's assassination of Hezbollah leader Hassan Nasrallah, heightening conflict at the Israel-Lebanon border, which could boost safe-haven flows and benefit gold prices. The U.S. PCE price index increased by 0.1% month-on-month, in line with analysts' expectations. This provided the latest evidence of easing U.S. price pressures, reinforcing expectations that the Fed will cut rates further this year, which could increase the appeal of zero-yield assets like gold.

Gold hit an all-time high of $2,685 and remains in an uptrend. However, the failure to establish new highs has opened the door for a potential pullback. The 14-day Relative Strength Index (RSI) has exited overbought territory and slightly corrected to around 64.50, nearing the 60 level, suggesting that short-term momentum may favor sellers. If gold falls below $2,650, the $2,635 level (the 23.6% Fibonacci retracement from $2,471.90 to $2,685.50) will be tested. Further key support would be around the psychological barrier at $2,600 (the high from September 18). On the upside, if gold resumes its rally past this year’s peak of $2,685, the next resistance would be the psychological level of $2,700, followed by $2,750, and then $2,800.

Today’s recommendation is to go long on gold around $2,630.00, with a stop loss at $2,626.00 and targets at $2,650.00 and $2,655.00.

XTI/USD

Crude oil is entering the trading week in negative territory. Geopolitical tensions remain at the forefront following the escalation of the weekend's Lebanon attacks. Ahead of Fed Chair Powell's speech later on Monday, the U.S. Dollar Index is hovering near its annual lows. During the Asian session on Monday, WTI crude oil prices held above $68.00 per barrel. However, concerns about potential supply disruptions in the Middle East are growing as Israel intensifies its attacks on Iranian-backed Hezbollah and Houthi forces. This could push oil prices higher as the market increasingly worries about regional instability impacting oil supplies. The recent escalation of Middle East attacks has heightened the possibility of Iran becoming directly involved in the conflict. Iran is a key producer and member of the Organization of the Petroleum Exporting Countries (OPEC). Meanwhile, oil traders are also closely monitoring China’s recent monetary measures aimed at stimulating economic activity and boosting energy demand.

From a technical perspective on the daily chart, the 14-day Relative Strength Index (RSI) continues to trend downward, and oil prices have been capped by resistance at $69.24 (the 61.8% Fibonacci retracement from $33.84 to $126.51) and the psychological level of $70.00. This suggests that short-term downward pressure is likely to persist. Support is estimated around the three-week low of $66.80 and the September 10 low of $65.27. The next key support level is $64.80, which forms a "triple bottom" with the March-April 2022 and September 2023 lows, as well as the 100-month moving average at $64.50. On the resistance side, levels to watch include $69.24 (the 61.8% Fibonacci retracement) and $70.00 (the psychological level), with the critical zone around $71.89 (the 40-day moving average) and $72.20 (last week’s high) playing a significant role. If oil prices can break through this resistance zone, it would signal a reversal of the recent two-month technical weakness.

Today's recommendation is to go long on crude oil around $68.00, with a stop loss at $67.70 and targets at $69.30 and $69.40.

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