Technical analysis on the daily chart shows that AUD/USD approached 0.6930 at the start of the week, trending upwards within an ascending channel. The pair remains above the lower boundary of the channel, indicating that the bullish bias is intact. Moreover, the 14-day Relative Strength Index (RSI) is just below the 70 level, reinforcing positive momentum. In terms of resistance, AUD/USD could aim for the 200-week simple moving average at 0.6964. A successful break above this level could signal further bullish momentum toward the psychological level of 0.7000. On the downside, immediate support lies near the lower boundary of the ascending channel around 0.6890, followed by the 10-day exponential moving average at 0.6858. A break below this level could weaken the bullish bias and lead AUD/USD toward the psychological support at 0.6800.

Today’s recommendation is to go long on AUD around 0.6875, with a stop loss at 0.6860 and targets at 0.6920 and 0.6925.

EUR/USD

At the start of the week, EUR/USD remained range-bound, holding above the 1.1100 level but failing to gain further strength. European Central Bank (ECB) President Christine Lagarde noted the possibility of inflation rising in October, as ECB policymakers try to manage market expectations of rate cuts. On the U.S. side, the market is focusing on Friday’s U.S. Non-Farm Payrolls report for September. After several Federal Reserve officials spoke early in the week, Fed Chair Jerome Powell said that unless there is a significant downturn in U.S. economic data, investors should not expect the Fed to implement further aggressive rate cuts. This statement strengthened the U.S. dollar and led rate traders to reassess their expectations for a 50-basis-point rate cut in November. Powell indicated that following the sharp rate cut in September, the Fed is likely to implement two more 25-basis-point cuts in the short term, which has dampened expectations for a 50-basis-point cut in November.

In the early part of the week, EUR/USD continues to consolidate between the 1.1083 (last week’s low) and 1.1200 (key psychological level) range, testing the 1.1200–1.1213 area (last week’s high). Despite the recent rebound from the September low of 1.1000 to 1.1213, the bullish and bearish outlook remains evenly balanced. Further upside in EUR/USD is expected to face initial resistance at the 2024 high of 1.1213 (September 25), followed by the 2023 high of 1.1275 (July 18). The next downside targets are the 50-day moving average at 1.1036, followed by 1.1001 (the September 11 low) and the 1.1000 psychological level. Meanwhile, as long as the pair remains above the critical 200-day moving average at 1.0875, the uptrend is expected to continue.

Today's recommendation is to go long on EUR around 1.1055, with a stop loss at 1.1040 and targets at 1.1095 and 1.1110.

GBP/USD

Further selling pressure has pushed GBP/USD below the 1.3300 support level, supported by confidence in the strong U.S. dollar, with the dollar’s sharp rise gaining additional momentum from the escalating tensions in the Middle East. Early in the week, GBP/USD hovered just below the 1.3400 mark, but after Fed Chair Powell's cautionary comments diminished rate cut expectations and boosted the dollar, GBP/USD dropped sharply below this key level. This week offers limited impactful economic data for GBP traders, though attention will turn to the Bank of England’s Monetary Policy Report hearing scheduled for early Thursday. On the U.S. side, the market’s focus will be on Friday’s U.S. Non-Farm Payrolls (NFP) report for September. Fed officials spoke on Monday and suggested that further rate cuts are likely, depending on economic data. If the NFP report comes in below 100,000, it could trigger more aggressive action from the Fed. Following Atlanta Fed President Raphael Bostic, Fed Chair Powell warned that unless there’s a significant downturn in U.S. economic data, investors should not expect larger rate cuts, which supported the dollar's strength.

The daily chart shows that GBP/USD remains within the ascending channel since September 12, with the 14-day Relative Strength Index (RSI) hovering near 60 (now around 56). On the upside, 1.3434 (last week’s high) will serve as the next resistance before the psychological level of 1.3500 and 1.3520 (the upper boundary of the ascending channel). A break above this could target the February 24, 2022 high at 1.3550. However, as bulls struggle to push GBP/USD to new highs, warning signs are emerging, indicating a potential bearish correction. Initial support lies at 1.3231 (the 20-day moving average), with the psychological level of 1.3200 acting as the next line of defense for buyers. Should there be a significant shock, GBP/USD could fall to the ultra-low level of 1.3178 (34-day moving average).

Today’s recommendation is to go long on GBP around 1.3270, with a stop loss at 1.3255 and targets at 1.3325 and 1.3335.

USD/JPY

After the release of the summary of opinions from the Bank of Japan's September monetary policy meeting, the Japanese yen saw a slight rebound, with mixed economic data on Tuesday. USD/JPY continued to strengthen for the second consecutive day after a strong recovery from the near two-week low of 141.65 overnight. During the Asian session, USD/JPY rose to around the 144.50 level, driven by several factors. The U.S. dollar gained support from Fed Chair Jerome Powell’s relatively hawkish tone on Monday. On the other hand, Japan’s new Prime Minister Shigeru Ishiba stated that the Bank of Japan’s monetary policy must remain accommodative to support the fragile economic recovery. Furthermore, the underlying bullish sentiment in global financial markets was seen as reducing demand for the safe-haven yen, boosting USD/JPY. The Bank of Japan's September meeting summary of opinions indicated that the central bank would adjust its accommodative stance if economic conditions improve, sparking interest from yen bulls.

From recent technical trends, if USD/JPY decisively breaks above the 144.00 psychological level and 144.20 (the lower boundary of the daily descending channel), it could trigger a stronger rebound toward 145.68 (the 50-day moving average). In the short term, USD/JPY has a chance to rise toward 144.95 (the midline of the daily ascending channel) and the 145.00 psychological level. However, a sustained break above this level is necessary for further upside momentum. Given that the 14-day Relative Strength Index (RSI) is around 48.00 in the negative territory, momentum has not significantly increased, and the chances of reaching the next major resistance at 146.60 (the upper boundary of the daily ascending channel) and 147.00 appear limited for now. On the downside, strong support is seen initially around 142.92 (the 20-day moving average) and 142.90 (the lower boundary of the ascending channel). A break below this level would suggest that the accumulated bullish momentum may have dissipated. From here, USD/JPY could continue to test lower levels, such as 141.25 (the midline of the descending channel) and 141.00 (the psychological level).

Today’s recommendation is to go short on USD around 143.75, with a stop loss at 144.00 and targets at 142.95 and 142.85.

XAU/USD

XTI/USD

Earlier, crude oil prices surged over 3% following Israel's military action along the Lebanese border. Fed Chair Powell’s cautious stance on rate cuts and geopolitical risks helped drive the oil price higher. During the Asian session on Tuesday, WTI crude oil remained around $69.00. Despite concerns over supply disruptions due to the escalating Middle East conflict, oil prices have remained subdued, as expectations of increased oil supply and weak global demand, particularly from China, continue to weigh on the market. Israel announced a “limited” ground operation targeting Hezbollah positions in southern Lebanon, with Israeli warplanes launching significant airstrikes on southern Beirut after civilians were ordered to evacuate. If geopolitical tensions spread and ignite a broader Middle Eastern proxy war, oil prices could surge. Should Iran and Egypt become involved in the conflict, it’s possible that other Gulf nations may also deploy forces to the region, adding further risk premiums and potentially driving prices back toward $80.00 or higher.

At current levels, $72.00 remains a key focus after last week’s brief false breakout. If supportive catalysts remain, oil prices could first recover to $69.24 (the 61.8% Fibonacci retracement from $33.84 to $126.51) and then face resistance at $70.00 (a key psychological level). A break above this would target $71.00 (34-day moving average) and $72.20 (last week’s high). Surpassing these levels would then point toward the 55-day moving average at $73.14. On the downside, $67.11, which represents a triple bottom from the summer of 2023, should provide strong support against further economic downturns and could trigger a rebound. If prices continue to drop, the next key level would be $64.75 (the September 10 low).

Today’s recommendation is to go long on crude oil around $70.30, with a stop loss at $70.10 and targets at $71.70 and $71.80.

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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.