US Dollar Index

The US dollar is about to hit a two-month high of 103.61. Not only betting sites, but also financial markets are doubling down on Trump's victory. The US dollar index has broken through key resistance and is heading towards 104.00. The US dollar/Japanese yen slipped due to the decline in risk appetite and US Treasury yields. The US 10-year benchmark bond rate plunged by more than 8 basis points and weighed on the US dollar/Japanese yen as it maintained a positive correlation with the US dollar/Japanese yen. The US dollar traded near its recent levels against the backdrop of falling global bond yields, and the US economy is facing mixed signals, with certain sectors indicating a slowdown while others remain strong. Nevertheless, the Federal Reserve has said that its approach to easing monetary policy will be guided by emerging economic indicators. Market participants continue to focus on the messages from Fed officials on the possible path of interest rates. A disappointing New York manufacturing report showed an unexpected contraction in October, which put pressure on the recent momentum of the US dollar. The US dollar index may find it difficult to move higher and remain at the upper end of the trading range of the 103.00 low.

From the daily chart, the technical analysis of the US dollar index shows a positive outlook and strong momentum in the indicator. The index has touched the 100-day moving average at 103.23, and has seen a two-month high of 103.35, and the 200-day moving average close to 103.78. This will be a key resistance level. Once the 200-day moving average is broken, the key 104.00 round number level will act as resistance. Despite this, the relative strength index (RSI) and moving average convergence divergence (MACD) indicators are still showing overbought signals, indicating potential profit-taking. And it shows that the US dollar index has potential correction pressure, while 102.78 {10-day moving average} is the first line of defense, and 102.62 (38.2% Fibonacci rebound level from 106.61 to 100.16) constitutes a key support area. The next level will point to the 102.00 (market psychological level) level.

Consider shorting the US dollar index near 103.65 today, stop loss: 103.80, target: 103.25 102.20

WTI Crude Oil

The recent correction in crude oil is starting to lose momentum, but it is still down more than 6% so far this week. Headline risks caused by harsh remarks from the Israeli opposition bombing Iranian oil fields are currently laying the foundation for crude oil prices. In the Asian market on Wednesday, WTI crude oil prices rebounded from a two-week low of $66.18 to $77.93 overnight, but it was difficult to continue the rise, attracting some selling, and oil prices fell below the $70.00 mark. Commodity crude oil is currently trading just above $70.00 and seems vulnerable to further declines. Despite market concerns about escalating conflicts in the Middle East, reports that Israel will not strike Iran's nuclear facilities and oil bases have eased market concerns about supply disruptions. Earlier, China's oil imports fell for the fifth consecutive month, raising market concerns about weak demand in the world's largest crude oil importer. In addition, the Organization of the Petroleum Exporting Countries (OPEC) has lowered its global oil demand growth forecast for 2024 and 2025, thus validating the bearish outlook for crude oil prices. A stronger dollar tends to weaken demand for dollar-denominated commodities and supports the prospect of a continued decline in short-term WTI oil prices from the monthly high near $78.00 reached last week.

In terms of recent weekly technical trends, if crude oil wants to return to the psychological resistance of $75.00 and $75.36 (00-day moving average), its recovery path is challenging. First, the key levels of $71.58 (20-day moving average) and $71.34 (50.0% Fibonacci retracement) are enough to prevent oil prices from rebounding. Once oil prices break through, they must once again surpass the 55-day moving average of $72.23. Once from there, $70.60 (70-day moving average) may be the first big obstacle ahead. On the downside, the previously mentioned key level of $71.58 - $71.36 has now turned into resistance and no longer has any support value. Instead, traders need to see lower prices, which is $69.26, the low of Tuesday. If this level is broken, the year-to-date low will face pressure at $64.75, followed by the 2023 low of $64.38.

Today, consider going long on crude oil around 70.25, stop loss: 70.05; target: 71.60; 71.80

Spot gold

On Wednesday, gold prices rose for the second consecutive day, marking the fourth day of gains in the previous five days, and climbed to the all-time high of $2,685.80 set in late September. Gold prices fluctuated higher as the US Treasury bond yields retreated and the US dollar's gains were blocked. The economic events were light at the beginning of the week, with the 10-year U.S. Treasury yield falling 8 basis points to 4.03%, making zero-yielding gold more attractive and signaling increased demand for U.S. Treasury bonds. Precious metals prices rebounded from a daily low of $2,638 and continued to rise. In addition, speeches by Fed officials continued to be the focus. San Francisco Fed President Mary Daly said that the Fed's dual-mandate risks are currently balanced and the labor market is not a source of inflation. She also said that she is cautiously optimistic about the economic outlook and expects one or two rate cuts "if economic conditions meet expectations." Gold/dollar tends to strengthen during periods of geopolitical risk. Israel revealed that it would target military targets as retaliation against Iran and Hezbollah after the October 1 missile attack. Gold prices remain supported by investors.

The uptrend remains intact after gold prices climbed above $2,660. The 14-day relative strength index (RSI), a technical indicator, shows that the upward momentum is increasing. With the RSI pointing upwards, it suggests that bulls are still in control. If the gold/dollar breaks above the high of $2,670 on October 4, it will pave the way for challenging the year-to-date high of $2,685.80 and then the $2,700 mark. On the downside, once gold falls below $2,650, it will pave the way for further declines. The next key support level will be $2,600. If it breaks above this level, it will face support from the 55-day MA at $2,650 and $2,648. Falling below the above area, the next level points to $2,630 (25-day MA).

Consider going long on gold today before 2,670.00, stop loss: 2,665.00; target: 2,685.00; 2,690.00

AUD/USD

The selling pressure on AUD/USD has not eased, this time the pair broke below the key 0.6700 support level and opened the door for a possible touch of the key 200-day moving average of 0.6626. AUD/USD encountered further selling pressure mid-week, testing the 0.6700 level again, and the 100-day moving average of 0.6693 support level. This key area was finally broken by the bears yesterday. The continued bearish momentum for the Australian dollar comes from the uncertainty about the US dollar price trend. In addition, the market's perception of uncertainty about China's latest stimulus measures has also contributed to traders' cautious sentiment. The Australian dollar also faced downward pressure from the decline in copper prices, while iron ore prices were basically unchanged from Monday's closing level, all due to the market's continued uncertainty about the effectiveness of China's economic stimulus measures. On the monetary policy front, the Reserve Bank of Australia (RBA) held the cash rate steady at 4.35% at its September meeting. Although the RBA acknowledged the risk of inflation, Governor Michelle Bullock stressed that rate hikes are not currently on the table.

From the daily chart, AUD/USD fell below the psychological barrier of 0.6700 this week, while the 14-day relative strength index (RSI) remains below the 50 mark {latest at 36.50}, indicating that bearish momentum remains. Further declines would see AUD/USD fall to 0.6645 (50.0% Fibonacci retracement of 0.6348 to 0.6942). Then there is the September low of 0.6622 (September 11), and finally the 0.6600 (market psychological barrier) support level. On the upside, the first challenge is the 50-day simple moving average of 0.6747. Then it will test the key psychological resistance at 0.6800

Consider going long AUD before 0.6650 today, stop loss: 0.6640; target: 0.6700; 0.6710.

GBP/USD

On Wednesday, the British pound remained low, hovering just below the key 1.3000 area, as investors continued to weigh lower-than-expected UK inflation data and the possibility of more aggressive easing by the Bank of England. GBP/USD remained volatile for the fourth consecutive trading day. GBP/USD continued to fluctuate between 1.3100 and 1.2980 before choosing a downward direction as GBP traders waited for important UK economic data. The number of initial jobless claims in the UK unexpectedly rose in September, with the number of applicants jumping to 27,900 in the month. In addition, the UK's ILO unemployment rate also fell to 4.0% from the expected 4.1%. Dollar traders will focus on US retail sales data for September due on Thursday, while UK retail sales data will be released on Friday. US retail sales are expected to rebound to 0.3% on a month-on-month basis from 0.1% in the previous month, while UK retail sales are expected to fall from 0.1% to -0.3% on a month-on-month basis, in contraction territory.

GBP/USD continues to fluctuate in a volatility trap, oscillating between 1.3100 and 1.2980. As GBP/USD struggles at the lower end of the decline from the peak near 1.3434 in late September, the 14-day relative strength index (RSI) indicator, a technical indicator, is around 36, reflecting continued bearish momentum in the short term and has been mired in recent congestion warnings. GBP/USD continues to maintain narrow fluctuations. On the upside, at 1.3140 (38.2% Fibonacci retracement of 1.2665 to 1.3434), the next level is 1.3211 (200-day simple moving average). On the downside, the 100-day exponential moving average near 1.2954 and 1.2958 (61.8% Fibonacci retracement of 1.2665 to 1.3434) form key support. The next support area will point to the psychological market level of 1.29000.

Today, it is recommended to go long on GBP before 1.2978, stop loss: 1.2963, target: 1.3050, 1.3060

USD/JPY

Due to the uncertainty of the Fed's interest rate outlook, USD/JPY is trading sideways around 149.50. The Fed is also expected to cut rates by 25 basis points in November and December. Investors will be keeping a close eye on Japan's nationwide CPI data for September. The yen remained on top against the dollar earlier this week, remaining close to its lowest level since early August, touched the day before, despite a lack of follow-through buying. However, any meaningful gains in the yen still seem elusive following the uncertainty over the Bank of Japan's rate hike plans. This, coupled with the generally positive risk tone, should keep the safe-haven yen in check. Meanwhile, expectations of less aggressive policy easing from the Fed and increased bets on a scheduled 25 basis point rate cut in November have kept U.S. Treasury yields elevated. This has helped the dollar to gain foothold near two-month highs and helped limit upside for the lower-yielding yen. Therefore, any follow-through declines in the USD/JPY pair are still likely to be seen as buying opportunities and remain limited.

The daily chart shows that USD/JPY is aiming for a steady rise, though the neutral bias is to the upside. Although the technical signal 14-day RSI remains in the positive zone and has not entered the overbought zone (latest at 63.50), indicating that bulls are in control, the RSI cleared the three recent peaks, indicating that the uptrend may be over-extended. Currently, USD/JPY is still below 150.00 {market psychological level} and capped its uptrend. Moreover, although the bullish bias is maintained, the RSI cleared the three recent peaks, indicating that the uptrend may be over-extended. If, USD/JPY climbs above 150.00, it clears the way for its 100-day MA at 150.98, 200-day MA at 151.27. If USD/JPY falls below 149.00, the convertible level at 148.55-148.50 area will become the first line of defense for bulls. Once it breaks, it will push USD/JPY below the 148.00 round mark and fall to the swing low of 147.35-147.30 last week.

Today, it is recommended to short the US dollar before 149.75, stop loss: 149.90; target: 148.50, 148.40

EUR/USD

On Wednesday, EUR/USD fell for the sixth consecutive day, breaking below the key 200-day moving average at 1.0873, hitting a two-month low around 1.0850 ahead of the ECB's key interest rate decision on Thursday. EUR/USD further lost ground this week and broke below the 200-day moving average (1.0873). EUR/USD closed below the 1.0900 mark for the first time since early August. EUR/USD has fallen nearly 3% from its late September high just above the 1.1214 mark. European banks generally reported that the ECB's summer rate cuts had a negative impact, and the rebound in housing loan demand was entirely dependent on the expectation of further rate cuts, which meant that consumers were over-borrowing in the short term. The ECB is about to announce its interest rate decision on Thursday, and the market generally expects the main deposit rate to be cut by 25 basis points, while the ECB's main refinancing rate is also expected to be cut by 25 basis points from 3.65% to 3.4%. Elsewhere, the U.S. market will release U.S. retail sales data for September on Thursday.

EUR/USD lost the 1.0900 mark and fell below the 200-day moving average of 1.0873. In the past 12 consecutive trading days, EUR/USD has been in a downtrend except for three trading days. The technical indicator, the 20-day relative strength index (RSI), remained at a low of 29.36, indicating that the decline may continue, while the moving average convergence divergence was in an oversold state, indicating that EUR/USD was under significant bearish pressure. EUR/USD once fell back below the 1.0900 mark, and the fluctuations near the 200-day moving average position were crucial to determine the recent direction of EUR/USD. The support area after the break is near the 1.0850 level. The next level will point to the 1.0800 (round mark) level. If EUR/USD manages to hold above the 200-day moving average and revisit 1.0945 {10-day moving average}, it may relieve some of the immediate bearish pressure. However, the market psychological level of 1.10 remains a key resistance level, which needs to be broken for a bullish reversal.

Today, it is recommended to go long on EUR before 1.0850, stop loss: 1.0835, target: 1.0900, 1.0905.

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