US Dollar Index

The rebound of the US dollar was suppressed and it struggled to break through several important levels against most major G10 currencies. The market is preparing for the Fed speaker to convince the market of the Fed's future approach. The US dollar index hovered above 103.00 but struggled to move higher. In the Asia/Europe session at the beginning of the week, the US dollar index fluctuated in the 103 level range. As the US Treasury market was closed for Columbus Day, the trading day will be relatively quiet. The US dollar index is expected to remain in the 102.70-103.20 range. Fed hawk Rafael Bostic signaled that there may be no interest rate cut in November, and US retail sales data will be the main catalyst this week. At this stage, the US dollar continued its monthly recovery against the backdrop of continued warming risk appetite in the foreign exchange market, while investors are also warming up for the upcoming important US data and Fed speakers. The US economy showed mixed signs, both signs of slowing down and signs of resilience. The US dollar index rose to a new high above the 103.00 mark against the backdrop of generally warming risk appetite.

In terms of recent technicals, the US Dollar Index maintains its upward momentum, with indicators showing overbought conditions around the key 100-day simple moving average (103.23). That said, the 14-day relative strength index (RSI) and moving average convergence divergence (MACD) are approaching overbought territory {latest at 69.30}, signaling a potential pullback. On the downside, 102.73 {9-day moving average} is the first line of defense, while 102.62 (38.2% Fibonacci rebound from 106.61 to 100.16), and the key 102.00 (market psychological level) form support areas. As for the upside, the 200-day 103.77 level is identified as the first resistance level this week. Once above there, the key 104.00 round number level is in play.

Consider shorting the US dollar index near 103.33 today, stop loss: 103.48, target: 103.00 102.90

WTI Crude Oil

Crude oil prices fell sharply after Israel's Galant held firm talks. The market believes that the International Energy Agency reported that the supply glut will continue at least until the new year. WTI crude oil prices fell for the third consecutive trading day, trading below $71.00 per barrel during the Asian session on Tuesday. Crude oil prices are facing downward pressure after media reports that Israel is willing to avoid targeting Iranian oil facilities, easing concerns about potential supply disruptions. The Washington Post reported on Monday that Israeli Prime Minister Benjamin Netanyahu informed the United States that Israel plans to focus on Iranian military targets instead of nuclear or oil infrastructure. Oil prices were supported last week as investors worried about supply risks after Israel said it planned to retaliate against Iran's missile attacks. At the beginning of the week, crude oil prices fell nearly 5% after the release of OPEC's monthly market report, which revised the global oil demand growth outlook for 2024 and 2025. OPEC also lowered its forecast for China's crude oil demand growth for the third consecutive month in October, citing the increasing popularity of electric vehicles and slow economic growth as key factors.

From the daily chart, WTI oil prices rebounded from the low of $66.18 on October 1 to a high of $77.93 on the 8th, but the rebound encountered resistance at the 200-day simple moving average of $77.15 and turned back to the recent downtrend line. The 14-day relative strength index (RSI) of the technical indicator has also turned down to around 46, and the decline in oil prices is expected to continue. The price has corrected downwards, such as breaking below $70.00 (market psychological level), and $69.78 (61.8% Fibonacci retracement of $64.75 to $77.93). Extending losses to $67.86 (76.4% Fibonacci retracement). Bulls will look for a break above the 20-day moving average at $71.51, and $71.34 (50.0% Fibonacci retracement) to put $72.37 (55-day moving average) back in play.

Today, consider going long on crude oil around 70.20, stop loss: 70.00; target: 71.50; 71.70

Spot gold

On Tuesday, gold prices closed the first day of the week with little change, but still rose slightly above $2,660. Increasing signs of a recession in China have made it difficult for gold prices to gain momentum in the short term. Gold prices were mildly under pressure at the start of the week, retreating slightly after hitting a high of $2,666.70 earlier in the day. Gold prices held steady near $2,645 as the positive tone on Wall Street limited demand for the dollar. However, the dollar stabilized on Monday amid continued geopolitical tensions in the Middle East and news from China. Chinese Finance Minister Lan Fuan held a press conference over the weekend but failed to provide specific measures on further support for the battered economy, disappointing investors. In addition, Chinese data fell short of expectations, casting doubts on the economic outlook of the Asian giant. Otherwise, stocks rose slightly during the European session as investors awaited clearer clues. This week, Canada and the UK will release the latest inflation data, while the European Central Bank will announce its monetary policy decision on Thursday. Meanwhile, Federal Reserve officials will speak, which may provide new clues on the central bank's next possible move. So far this week, gold prices have been supported above the key 21-day moving average, which is currently at $2,634.50. The 14-day relative strength index (RSI) indicator has also turned down but remains near the positive (53) territory. This suggests that any dip in the price of gold in the short term could be a good buying opportunity. Meanwhile, the price of gold is developing above all its moving averages, which maintain a mild bullish bias. Overall, the risk of a further decline seems limited, but bulls appear to have moved to the sidelines. If the price of gold recovers, the next bullish target is the previous high of $2,667, followed by the intermittent high of $2,670. The all-time high of $2,685.80 will then come into play. Conversely, the immediate support is at the 21-day moving average of $2,634.50, below which the price of gold could test the three-week low and the psychological level of $2,600. If the decline continues, the decline could extend to the low of $2,585 on September 20.

Consider going long on gold today before 2,658.00, stop loss: 2,655.00; target: 2,675.00; 2,680.00

AUD/USD

The AUD/USD pair fell, exacerbating Monday's decline, despite a lot of debate around the 0.6700 mark on Tuesday, but all this happened against the backdrop of a modest uptrend in the US dollar. The AUD/USD pair remained subdued on Tuesday, dragged down by the weak trade balance released by China, Australia's largest trading partner on Monday. In addition, China's fiscal stimulus package announced last weekend also failed to boost the Australian dollar as investors were uncertain about the size of the package. The weekly survey of Australian consumer confidence showed that the ANZ-Roy Morgan consumer confidence index remained stable at 83.4, with little change. Although the data was basically flat, the longer-term trend shows that the consumer confidence index has been below the record high of 85.0 for 89 consecutive weeks. The indicator is currently 1.3 above the weekly average of 82.1 in 2024. The dollar is supported by growing expectations that the US Federal Reserve will avoid aggressive rate cuts.

Daily technical analysis shows that AUD/USD is hovering around 0.6700. It is testing the 50-day simple moving average of 0.6744. A successful break above this level could signal a shift in momentum from bearish to bullish. However, the 14-day relative strength index (RSI) remains below the 50 mark {latest at 43}, suggesting that the momentum of the bears remains. Assuming that AUD/USD breaks above the 50-day moving average, then in this case, it may face initial resistance at the 10-day moving average around the 0.6769 level, and then test the key psychological resistance at 0.6800. On the downside, AUD/USD may point to the 0.6700 round number level, with further support at 0.6645 (50.0% Fibonacci retracement of 0.6348 to 0.6942).

Consider going long on AUD today before 0.6685, stop loss: 0.6670; target: 0.6730; 0.6740.

GBP/USD

GBP/USD remains in positive territory, having risen as high as 1.3100 on Tuesday. UK data showed that the ILO unemployment rate fell to 4% in the three months to August, and employment change increased by 373,000 pounds, helping the pound to gain resilience. GBP/USD started the week above 1.3022, a low in more than a month, with the market showing a wait-and-see attitude ahead of key UK data due in the first half of the trading week. UK consumer price index (CPI) and producer price index (PPI) inflation data will be released on Wednesday. US retail sales data will be released mid-week on Thursday, followed by UK retail sales data scheduled for Friday's London session. UK CPI inflation data will be released on Wednesday, with the headline consumer price index expected to fall to 1.9% year-on-year from 2.2% previously, although the UK core CPI inflation rate is expected to continue to rise sharply, but will still fall from 3.6% to 3.4%. The market is looking forward to the continued slowdown of the UK labor force data for the quarter ending August. The change in the number of unemployment benefits in the UK in September is expected to fall to 20.2K from 23.7K in August.

From the daily chart, GBP/USD fell below the 50-day moving average at 1.3114 last week. After hovering around 1.3070, the daily chart shows a recent momentum reversal. GBP/USD has corrected sharply after peaking in late September, with the 50-day moving average {1.3114} and the 9-day moving average (1.3083} starting to form a bearish “death cross” pattern, suggesting that the bullish trend may weaken. If the current trend persists, it may face further downside risks. The MACD histogram moving below zero indicates a bearish divergence, confirming the strength of the downtrend. Key support levels to watch include the 1.3000 psychological level, and the 100-day exponential moving average around 1.2944, and the 1.2958 (61.8% Fibonacci retracement of 1.2665 to 1.3434) area. May constitute key support. On the upside, 1.3100 {round number mark}, and the 50-day moving average around 1.3114 may also be a bearish support. The 15-day moving average is a resistance zone. A break above this level is necessary to regain bullish momentum. The next level will be towards 1.3140 (38.2% Fibonacci retracement of 1.2665 to 1.3434). .

Today, it is recommended to go long on GBP until 1.3060, stop loss: 1.3050, target: 1.3100, 1.3110

USD/JPY

The USD/JPY pair fell on Tuesday amid risk aversion and lower US Treasury yields. The US 10-year benchmark note rate plunged more than 8 basis points and pushed the exchange rate lower due to its positive correlation with the currency pair. The yen rose against the dollar during the Asian session on Tuesday, interrupting some of the previous day's losses and rising to the lowest level since early August at the psychological level of 150.00. However, the yen still seems to have difficulty in achieving significant gains amid the uncertainty of the Bank of Japan's rate hike plans. In addition, the market's maintenance of a general risk appetite may also curb the yen's risk aversion. At the same time, traders no longer expect the Federal Reserve to hold a meeting in November. The US dollar was well supported near two-month highs in January and could further weigh on the low-yielding yen. Therefore, any subsequent decline in the USD/JPY pair could be seen as a buying opportunity and the decline is more likely to remain limited.

From a technical perspective, any further decline in the USD/JPY pair is more likely to attract buying around the 149.00 mark. This could help to find support around the 148.55-148.50 area. This level could be a key pivot point and if broken, it could trigger aggressive selling and push the USD/JPY pair below the 148.00 round mark towards last week's swing lows around 147.35-147.30. On the upside, continued strength and a break above the 150.00 psychological mark would be seen as a new trigger by bulls. Given that the 14-day relative strength index (RSI), a technical indicator on the daily chart, remains in positive territory and has not yet entered overbought territory (latest quotes 56.80), USD/JPY may challenge the monthly swing high in August, which is around the 150.85-150.90 area. If the 151.00 round mark is broken, the follow-up buying will indicate that the spot price has bottomed and pave the way for further gains in the near term.

Today, it is recommended to short before 149.45, stop loss: 149.70; target: 148.50, 148.40

EUR/USD

Extreme weakness has pulled EUR/USD to August levels around 1.0880 in response to the continued northward movement of the US dollar and rising caution ahead of the ECB rate decision later this week. EUR/USD hit a new 10-week low of 1.0881 at the beginning of the week and opened the week with another drop. Before falling to the 200-day moving average (1.0874), EUR/USD fell nearly 3% from the late September high of 1.1214 just above, and the currency pair has been in decline for all but four of the past 13 consecutive trading days. The reason is that the stronger US dollar has been offset by the overall weakness of the euro. The final European CPI inflation figures will be released early on Thursday, but the data is unlikely to cause much movement as the market is watching the ECB, which is widely expected to cut interest rates by 25 basis points on Thursday as well. Important US data is not due until Thursday, when US retail sales are expected to accelerate to 0.3% on a monthly basis in September after a lackluster 0.1% in August.

EUR/USD is under significant bearish pressure, having retreated below the 1.0900 mark while heading towards the 200-day moving average (1.0874). Fluctuations around the 200-day moving average are crucial in determining the near-term direction of EUR/USD. On the other hand, the 20-day {1.1052} and 50-day {1.1056} have formed a bearish "death cross" pattern, which, if broken on a sustained basis, could open the door to further downside, with the next support area around the 1.0850 level. The next level would point to the 1.0800 (round mark) level. If EUR/USD manages to reclaim the 200-day moving average and move back above the 1.0952 {9-day moving average}, it could ease some of the pressure on immediate bears. However, the psychological level of 1.10 is still a key resistance level, and a break above this level is required to start a bullish reversal.

Today, it is recommended to go long on EUR before 1.0870, stop loss: 1.0855, target: 1.0920, 1.0930.

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