US Dollar Index

The US dollar traded significantly stronger and reversed last week's losses in several pairs. The greenback, as measured by the US dollar index, recovered slightly mid-week. The 10-year US Treasury yield was just above 3.80%, supporting the dollar. The dollar benefited from the cautious stance of the market during the mid-week, and strengthened against major rivals. The US dollar index rose mid-week after hitting its lowest level in more than a year near 100.50 at the beginning of the week, and then entered a consolidation phase near 1 above 101.00. Meanwhile, US stock index futures were mixed as investors assessed chip giant Nvidia's performance after the recent Fed-driven plunge. The market expects core yields to remain near the recent bottom level before the release of key US data next week. The US dollar is not expected to rebound for a long time. The US dollar is likely to remain in a narrow range.

From the daily chart, the US dollar index is currently hovering near the key support level of 100.61, the bottom of December 2023, and the "double bottom" formed by last week's low of 100.60. Market participants are waiting for new catalysts, causing the index to consolidate sideways in the past few trading days {100.60 - 101.50}. The 14-day relative strength index (RSI) of the technical indicators has moved out of the oversold area (39.00), while the red bar of the moving average convergence divergence (MACD) indicator indicates a decrease in selling pressure. Therefore, short-term downside support is at 100.60 - 100.61; the next level will be to look at 100.00 {market psychological barrier}, while the upside resistance is at 101.59 (23.6% Fibonacci rebound from 104.80 to 100.60), and 101.88 (16-day simple moving average) area levels.

Today, consider shorting the US dollar index around 101.50, stop loss: 101.65, target: 101.10, 101.00

WTI spot crude oil

Oil prices rose more than 2% on Thursday, with Iraq making headlines. The Iraqi Ministry of Oil confirmed that the country exported about 3.485 million barrels of crude oil per day in July. On Thursday, US WTI crude oil traded around $76.50. WTI oil prices once fluctuated lower as investors worried about China's slowing economic growth. However, oil supply risks in the Middle East and Libya may help limit the decline of WTI oil prices. China's economic downturn and slowing oil demand have raised market concerns about the economic health of the world's largest oil importer, which has put pressure on WTI oil prices. On the other hand, the possibility of oil supply disruptions in Libya may limit the downside of WTI oil prices in the short term. Considering that there will be crude oil supply disruptions in Libya, it should tighten the oil market, but investors want to see a decline in Libyan crude oil exports first. Crude oil prices climbed at the beginning of the week due to the intensification of positions between political parties in Libya, which has the largest crude oil reserves in Africa.

Oil prices fell for a second consecutive day after a strong recovery rebound earlier this week and fell below the 200-day line of $77.81 again. Subsequently, under the pressure of the bears, it continued to fall below the key support levels of $75.93 {20-day average} and $75.45 {76.4% Fibonacci rebound level from $72.62 to $84.65}, and the lowest price was $74.55. This increased the downside risk. The 14-day relative strength index (RSI) of the technical indicator is still in the negative range (49.00), indicating the possibility of further downward adjustment. The next level will point to $75.08 {23.6% Fibonacci rebound level from $84.73 to $72.10}, and then $74.07 {last Friday's low} is the next relevant support level. On the upside, the double level of $77.65 is consistent with the downtrend line and the 200-day simple moving average of $78.08. If the bulls are able to break it, $76.65 {30-day moving average) could be the first resistance area, followed by $77.81 at the 200-day moving average.

Consider going long on crude oil near $76.80 today, stop loss: 76.50; target: 78.00; 78.20

Spot gold

On Thursday, gold quickly fell to $2,500 during the US session in immediate reaction to the release of optimistic US data before regaining traction and trading around $2,520. It had recovered to $2,500 earlier on Thursday. The prospect of a rate cut in the US could boost demand for gold as lower interest rates would reduce the cost of holding zero-yielding assets such as gold. In addition, the current political uncertainty in the US, geopolitical tensions in the Middle East and concerns about the global economy are all contributing to the rise in precious metal prices. On the other hand, the resumption of US dollar demand could weigh on gold prices denominated in US dollars as it makes gold more expensive for most buyers. Investors will closely watch the release of the US PCE price index, which will be the focus. To find more clues about the scale and pace of the Fed's interest rate cuts.

From the trend of the past two weeks, gold prices have continued to move in the range of 2,485 to 2,530. Gold prices are still blocked by the upper track of the five-month upward channel and the historical high. However, gold prices are generally bullish, and gold prices are above the key 20-day moving average {2,471.30} on the daily chart. The 14-day relative strength index of the technical indicator is above the midline, at around 61.00, recognizing the upward momentum, indicating that there is potential for further gains. The historical high and the upper track of the trend channel, the $2,530 to $2,535 area, constitutes the key upward resistance for gold prices. If gold prices continue to rise, they may rebound to the $2,551.10 area (161.80% Fibonacci rebound level from 2450.20 to 2286.20). The immediate support level for gold prices is at the $2,500 round number. A clear break below this level could lead to heavy selling near $2,484.50 (Friday's low). The next level is around $2,470, the low of August 22, and above the 20-day moving average of 2,471.50.

Consider going long on gold today before 2,518.00, stop loss: 2,515.00; target: 2,530.00; 2,535.00

AUD/USD

Despite the better tone of the US dollar, the AUD/USD resumed its uptrend, successfully recaptured the key 0.6800 level and refocused on the next upside level in the 0.6870 area (December 2023 peak). In the Asian session on Thursday, the AUD/USD strengthened to around 0.6800. Better-than-expected Australian inflation data pushed down expectations of a rate cut by the Reserve Bank of Australia, providing some support to the Australian dollar. Data released by the Australian Bureau of Statistics on Thursday showed that private capital expenditure in Australia was recorded at -2.2% in the second quarter, compared with an increase of 1.0% in the previous quarter. Meanwhile, spending on buildings and structures was recorded at -3.8%, while spending on plant and machinery was recorded at -0.5%. Australia's inflation data on Wednesday seemed insufficient to trigger expectations of a rate cut by the Reserve Bank of Australia, boosting AUD/USD. Investors will get more clues from Australian retail sales released on Friday. The Fed signaled that rate cuts are finally around the corner, which puts overall pressure on the dollar.

From the recent trend, the 14-day relative strength index of technical indicators fluctuates around 66. It shows that AUD/USD remains strong. AUD/USD is expected to rise further to the August high of 0.6813 (August 28), and 0.6830 {a trend line extending to the right from the high of 0.6999 in July last year}, then the December 2023 high of 0.6871 (December 28) and 0.7000 (market psychological level) level. On the other hand, an attempt by AUD/USD to fall could result in an initial drop to the temporary 0.6760 {Tuesday low} and then to the important 0.6735 {10-day moving average}, and 0.6700 {market psychological level} levels in sequence.

Consider going long AUD before 0.6785 today, Stop Loss: 0.6770; Target: 0.6820; 0.6830.

GBP/USD

GBP/USD remains under bearish pressure, having fallen to 1.3150 on Thursday. An upward revision to the US GDP for the second quarter helped the dollar remain strong, not allowing the pair to regain traction. GBP/USD retreated below 1.3200 mid-week after recent bullish momentum faded. A one-sided risk appetite stance has developed in the market as investors wait for the expected start of the Fed’s rate cut cycle in September. The market is stuck in a one-sided risk-on stance as investors wait for the Fed to start its rate-cutting cycle in September. The UK economic data remains limited this week, leaving the pound subject to the flow of broad market sentiment. The US PCE price index (PCE) inflation, which will be released on Friday, remains the key data for this week, with investors waiting for signs that inflation will continue to decline, or at least not rise rapidly, to match the Fed's eagerly anticipated rate cut on September 18.

GBP/USD retreated mid-week, retreating from the 2.5-year high of 1.3266 set this week. Downward momentum remains limited for the time being, but buying has retreated below the 1.3200 mark, and there is still a lot of room for bearish momentum, with the first downside targets expected to be the 1.3120 (lower limit of the ascending channel), and 1.3100 (market round mark) levels. A break will look to the US dollar support level of 1.3000. The 14-day relative strength index, a technical indicator, is around 65.00, confirming continued bullish pressure in the near term, providing support for the upward momentum. Therefore, once GBP/USD resumes its rise, the upward resistance can focus on 1.3266 (2.5-year high), breaking through to 1.3300 round number, and 1.3331 (76.4% Fibonacci rebound level from 1.4250 to 1.0356).

Today, it is recommended to go long on GBP before 1.3150, stop loss: 1.3135, target: 1.3200, 1.3210

USD/JPY

During the European trading session on Thursday, USD/JPY was trading sideways below the key resistance level of 145.00. The asset is struggling to find direction as investors await the US July personal consumption expenditures inflation (PCE) report to be released on Friday. During the Asian trading session on Thursday, the USD/JPY pair remained in a defensive position around 144.50. Dovish comments from Fed officials continue to weaken the dollar in the short term. Bank of Japan Deputy Governor Ryozo Himino The Bank of Japan said on Wednesday that it will continue to raise interest rates if inflation remains at normal levels while keeping a close eye on financial market conditions. His comments echo those made by Bank of Japan Governor Kazuo Ueda last week, who said recent market volatility would not derail its long-term rate hike plans. A Reuters poll showed that most economists expect the Bank of Japan to raise interest rates again this year, starting in December instead of October. On the other hand, dovish comments from the US central bank weighed on the dollar against the yen. Federal Reserve Chairman Jerome Powell said, "It's time to adjust policy."

The daily chart shows that USD/JPY continues to "trade relatively sideways" with sellers stepping in ahead of the release of key US inflation data on Friday. However, from a technical perspective, if traders clear some hurdles on the way down, the pair will retest the August 5 low of 141.69. At this stage, momentum favors sellers, as depicted by the 14-day relative strength index (RSI), a technical indicator, which remains bearish. That being said, the first support for USD/JPY will be 143.44 on August 26. Once exceeded, the next stop will be the psychological 143.00, followed by 142.25 {the downtrend channel axis of the weekly chart}, and then challenge the 5-cycle low in August near 141.69. . On the contrary, if USD/JPY breaks through 145.00 (round mark), and 145.17 (this week's high), the currency pair may aim upward and challenge higher prices. The next resistance will be around 146.38 (23.6% Fibonacci rebound level from 161.80 to 141.61), followed by the 147.00 mark.

Today, it is recommended to short the USD/JPY before 145.15, stop loss: 145.35; target: 144.30, 144.20

EUR/USD

Building on Wednesday's losses, EUR/USD retreated below the 1.1100 support level, with some initial debate around 1.1050 driven by continued USD gains ahead of Friday's PCE data. EUR/USD pared recent gains midweek, retreating after hitting a new year-to-date high as risk appetite was kept in check by widespread expectations that the Federal Reserve will cut interest rates in September. The mid-week economic calendar was mostly empty, but Friday's data schedule showed the potential for markets to fall into a bored trance, with the latest pan-European Harmonized Index of Consumer Prices (HICP) inflation data due in early European trading. EU core HICP inflation is expected to continue to trend lower across the board, with August's year-on-year growth forecast at 2.8%, compared to 2.9% previously. US PCE inflation remains the key data point this week, with investors awaiting signs that inflation will continue to slow, or at least not rise as quickly, to ensure the Fed's eagerly anticipated rate cut on September 18.

From the daily chart, EUR/USD fell back below the 1.1100 mark in the middle of the week, despite the bulls' attempts to push up. EUR/USD is still testing below 1.1100 {round mark}, and the next level will be 1.1037 {20-day simple moving average}. The key near-term support is around 1.0851 {200-day simple moving average}. But if the currency pair rises instead of falling, it will soon rise above 1.1201 {Monday's high}, and if it breaks, it will rise to 1.1273 (July 18, 2023 high) and 1.1275 (61.8% Fibonacci rebound level from 1.2351 to 0.9535) will become the recent key level of upward obstacles. The short-term ultimate is 1.1300 (market psychological level).

Today it is recommended to go long on EUR/USD before 1.1065, stop loss: 1.1050, target: 1.1130, 1.1140.

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