US Dollar Index

At the start of the week, the US Dollar Index held steady just below the 102 level. A rebound in AI-related stocks—following a sharp sell-off last week—provided a boost to the dollar. Previously, market concerns that waning investor enthusiasm for AI stocks might hinder capital inflows and dampen demand for the greenback had placed the currency under pressure. A clear market reaction pattern has emerged: even when inflation remains stubbornly high, stock market volatility is sufficient to significantly diminish expectations for further monetary tightening by the Federal Reserve. This logic is likely linked to the "wealth effect" from the stock market, which many believe underpins the resilience of the US economy. This suggests that if market turbulence originates within the tech and AI sectors, the US dollar may no longer be the preferred safe-haven asset—it could even lag behind several other G10 currencies. Recent comments from Federal Reserve officials—including remarks from Fed Governor Warsh—indicate that policymakers are in no rush to raise interest rates again. While Warsh expressed optimism regarding the strength of the US economy last Friday, he offered no hints as to whether further rate hikes are necessary or when they might occur. Meanwhile, traders in the federal funds rate futures market anticipate that the Fed will keep interest rates unchanged at its October 27–28 meeting, while assigning a 91% probability to a rate hike in December.
Looking toward the end of the year, the US dollar appears to have more upside potential than downside risk, though any sustained rally is unlikely to be a smooth ride. Inflation, the Federal Reserve’s tightening bias, and geopolitical uncertainty should continue to provide support. This outlook could shift, however, if US economic activity slows significantly or if there is a convincing decline in inflation—particularly if accompanied by a drop in US Treasury yields. From a technical perspective, reclaiming the 100.00 psychological level would bring the 25-day simple moving average (currently near 101.55) into focus. A breakout above that level could pave the way for further gains toward 102.00 in the coming weeks. However, if the rebound continues to face resistance, a pullback toward 101.50—as well as the 125-day simple moving average (SMA) at 101.45, or even 101.00—cannot be ruled out.

For today, one might consider shorting the US Dollar Index at 101.86, with a stop-loss at 101.95 and targets at 101.50 and 101.40.

AUD/USD

The AUD/USD pair has retreated slightly following two consecutive days of gains, trading near 0.7000 during Tuesday’s Asian session. The pair remains generally subdued, having maintained its downward trend following the latest interest rate announcement from the People's Bank of China (PBOC). On Tuesday, the PBOC decided to keep its benchmark Loan Prime Rates (LPR) unchanged, maintaining the one-year LPR at 3.00% and the five-year LPR at 3.50%. Nevertheless, the Australian dollar may find support following hawkish remarks from a senior central bank official. Christopher Kent, Assistant Governor at the Reserve Bank of Australia (RBA), questioned whether current interest rates are sufficiently restrictive, noting signs that neutral interest rates—both in Australia and globally—are on the rise. Meanwhile, former Federal Reserve Governor Kevin Warsh expressed optimism last week regarding the strength of the US economy, though he offered no hints as to whether or when further interest rate hikes might occur. According to the CME FedWatch Tool, traders in the federal funds futures market anticipate that the Federal Reserve will hold rates steady at its October policy meeting, while pricing in an 82.8% probability of a rate hike in December.

On the daily chart, AUD/USD is trading at 0.7000, with the price remaining capped below both the 100-day SMA (0.7035) and the 200-day SMA (0.7046). Furthermore, the 55-day SMA, located at 0.7075, serves to reinforce the supply zone overhead. The Relative Strength Index (14) is hovering below the 50 level, while the Average Directional Index (14) remains elevated at approximately 39. This indicates that the downtrend is still in play, though the selling momentum is moderate rather than aggressive. On the upside, immediate resistance is concentrated around the 100-day Simple Moving Average (SMA) at 0.7035 and the 200-day SMA at 0.7046, followed by the 55-day SMA at 0.7076 and the horizontal resistance level near the 0.7100 mark. On the downside, initial support appears near the 0.6900 round-number level, with further support located at 0.6894 (last week’s low). A sustained break below these levels would expose broader support zones.

For today, consider going long on the AUD at 0.7000; stop-loss: 0.6990; targets: 0.7040 and 0.7050.

GBP/USD

After a slight decline the previous day, the GBP/USD pair rebounded, trading near 1.3370 on Tuesday. The pair rose alongside a weakening US dollar, driven by growing market expectations that the Federal Reserve will keep interest rates unchanged. Simultaneously, the British pound has strengthened as traders have slightly increased their bets on interest rate hikes by the Bank of England. Futures markets are currently pricing in four 25-basis-point rate hikes through July 2027, with the first potential hike as early as November. Investor attention is also shifting toward the UK budget, due to be announced next week. Several major asset management firms are positioning themselves, betting that fiscal discipline will bolster UK government bonds. Should the Chancellor provide assurances to investors that public spending and government borrowing will remain under strict control, demand for these bonds could strengthen further. Last week, Federal Reserve Governor Kevin Warsh expressed optimism regarding the resilience of the U.S. economy, though he offered no specific guidance on the timing or likelihood of future interest rate adjustments. Financial markets appear to be aligned with this cautious stance; traders in the federal funds futures market anticipate that the Fed will keep interest rates unchanged at its October policy meeting, while pricing in an 82.8% probability of a rate hike in December.

On the daily chart, GBP/USD is trading at 1.3370. The overall short-term tone leans slightly bearish, as the spot price remains below the 50-day simple moving average (SMA) of 1.3410, though it sits above the 9-day SMA of 1.3262. The 14-day Relative Strength Index (RSI) is at 52.37—hovering near the neutral zone—suggesting a phase of consolidation rather than strong, directional momentum. Meanwhile, market sentiment, as reflected by the FXS Fed Sentiment Index, remains relatively stable, failing to provide a clear bullish catalyst. To the upside, initial resistance lies at the 50-day SMA of 1.3410; a daily close above this level would be required to alleviate the current downward bias and pave the way for a more sustained rebound toward the 1.3498 level (the high from September 16). To the downside, the 9-day SMA at 1.3262 provides initial support. A break below this short-term benchmark could expose lower levels, allowing sellers to regain control and extend the recent corrective phase toward the 1.3200 mark.

For today, consider going long on GBP at 1.3365, with a stop-loss at 1.3355 and targets at 1.3410 and 1.3420.

USD/JPY

During Tuesday’s Asian trading session, USD/JPY stabilized near the 158.20 level. Traders are inclined to adopt a wait-and-see approach ahead of the release of Japan’s national Consumer Price Index (CPI) inflation data later on Friday. Meanwhile, elevated U.S. bond yields are providing some support to the USD/JPY pair. Sanae Takaichi, a contender for the Japanese premiership, has denied responsibility for the weakness of the yen and high interest rates. Takaichi stated that her administration would bolster confidence in the domestic currency by building a strong economy, adding that she would exercise appropriate control over the issuance of Japanese government bonds in the next fiscal year's budget. Furthermore, Bank of Japan (BOJ) Governor Kazuo Ueda noted that underlying inflation is rising and is very close to the BOJ’s 2% target. Ueda also remarked that long-term bond yields could climb if the market perceives that the BOJ is not raising its benchmark policy rate at an appropriate pace.

On the daily chart, USD/JPY maintains a short-term bearish bias, as the spot price remains below the 100-day simple moving average (SMA) of 159.45. The price holds above the middle line of the Bollinger Bands at 158.05, while the 14-day Relative Strength Index (RSI) sits at 56.14—indicating mild positive momentum, though this only partially offsets the pressure from overhead trend resistance. On the upside, initial resistance is found near the upper Bollinger Band at 158.91, followed by the 100-day SMA at 159.45, which serves as a stronger barrier. On the downside, initial support appears at the middle Bollinger Band of 158.05, with further support located near the lower Bollinger Band at 157.18; bulls may attempt to temper any deeper pullback as the price approaches the 157.00 psychological level. Consider shorting the USD at 158.40 today; stop-loss: 158.55; targets: 157.80, 157.60.

EUR/USD

During Tuesday’s early European session, EUR/USD remained in positive territory near 1.1230. However, the pair’s upside potential may be limited as violent protests in France exacerbate concerns regarding the country’s deteriorating fiscal outlook. The BBC reported on Monday that French authorities have imposed nighttime curfews in parts of central Paris and other cities following nationwide riots and looting over the weekend. French official Sébastien Lecornu stated on Monday that he is "fully determined to restore public order," noting the potential for "localized and partial" curfews where necessary, while ruling out a blanket curfew across entire cities. This measure has provided little support for the euro. Traders will be closely monitoring developments related to France’s fiscal and political risks; any signs of escalation could exert pressure on this major currency pair. Across the Atlantic, Federal Reserve official Kevin Warsh expressed optimism last week regarding the strength of the U.S. economy, though he did not indicate whether—or when—further interest rate hikes might be required.
On the daily chart, EUR/USD maintains a short-term bearish bias. Trading at 1.1215, the pair remains under downward pressure, as the current price continues to hold below the 20-day simple moving average (SMA) of 1.1260. The currency pair has failed to reclaim this simple moving average (SMA), indicating that the recent rebound remains constrained by overhead supply. Meanwhile, the Relative Strength Index (RSI-14) stands at 40.28; while it has recovered from the oversold zone, it remains below the midline, suggesting only a modest improvement in downward momentum rather than a clear shift toward a bullish outlook. On the upside, immediate resistance lies at the 20-day SMA of 1.1260—a hurdle the bulls must clear to alleviate the current downward bias and pave the way for a more sustained corrective phase toward the 1.1300 psychological level. On the downside, the early-week low of 1.1180 serves as a key support level. A break below this would point toward 1.1108 (the lower Bollinger Band) and the 1.1100 round-number mark.

For today, one might consider going long on the EUR at 1.1220, with a stop-loss at 1.1210 and targets at 1.1260 and 1.1250.

WTI Crude Oil

On Tuesday, crude oil prices climbed above $100 per barrel, reaching their highest level in a month. Escalating conflicts in the Middle East and Eastern Europe have overshadowed signs of robust energy shipments through the Persian Gulf. Iran continues to assert control over the Strait of Hormuz, with maritime authorities reporting attacks on several commercial vessels. Saudi Arabia and the Iranian-backed Houthi rebels in Yemen have also exchanged strikes, while Russia and Ukraine have resumed attacks on energy infrastructure. Meanwhile, U.S. Secretary of Energy Chris Wright noted that oil shipments through the Persian Gulf have recovered to approximately 80% of pre-war levels, though the delivery of refined petroleum products remains limited. The Trump administration has also authorized the sale of sanctioned oil tankers, allowing them to legally transport crude oil. It is estimated that the global "shadow fleet" consists of approximately 1,600 vessels. On the 4-hour chart, U.S. crude oil has initiated a rebound from a low of 86.86. A Fibonacci retracement—measured from the swing high of 106.72 to the low of 86.86—shows the current price hovering above the 100 level; it reached an interim high of 100.60 during the session but is now facing clear short-term selling pressure. Medium-term moving averages are in a bullish alignment, with the price holding firmly above the MA20, MA50, MA100, and MA200. The MA20, currently at 97.42, serves as the most critical short-term support level. As lows continue to shift upward, the medium-term rebound structure remains intact. Regarding technical indicators, the MACD lines remain above the zero axis, signaling that the bullish trend persists; however, upward momentum is gradually waning, and there is a potential risk of a bearish divergence. The RSI, at 65, sits in a strong zone without yet reaching overbought territory—suggesting that while bullish strength remains, the momentum for further gains has been partially depleted. In the short term, the market has entered a phase of high-level oscillation. For the bulls to extend the rebound, they must firmly establish the price above 99.55 (the high from earlier this week) to open up further upside, with the next target being the psychological 100 level, followed by 101. Conversely, if the price falls below the key support at 97.42, this rebound phase will likely conclude, with a high probability of a pullback toward the 95.00 level.

For today, one might consider going long on crude oil near 97.50, with a stop-loss at 97.35 and targets at 99.00 and 100.00.

Spot Gold

During Tuesday’s early trading session, spot gold is trading near $4,130 per ounce. The price is under pressure from a stronger U.S. dollar and elevated U.S. Treasury yields. Investors are awaiting the Federal Reserve’s interest rate decision next week, where policymakers are widely expected to keep rates unchanged. Currently, the gold market is in a phase of oscillation, characterized by a tug-of-war between bullish and bearish forces. Spot gold prices have been fluctuating within the $4,100–$4,200 range, caught between downward pressure from rising real interest rates and a strengthening U.S. dollar, and long-term support driven by safe-haven demand and central bank gold purchases. Taking into account Federal Reserve policy signals, U.S. Treasury yield trends, inflation and economic data, the U.S. Dollar Index, crude oil prices, and the geopolitical landscape, conditions appear ripe for a rebound in gold between late October and early November. For gold, a marginal easing in short-term interest rate expectations directly lowers the opportunity cost of holding a non-interest-bearing asset. Should the October Fed meeting confirm a pause in rate hikes, it would reinforce the narrative that the "policy peak" is near, providing upside potential for gold prices.

A moderate geopolitical risk premium offers a floor for gold, while the absence of extreme shocks allows for a more orderly technical rebound rather than erratic, spike-driven volatility. From a technical perspective, the outlook points toward a potential test of the 50-day moving average (MA50) at $4,321 and the 100-day moving average (MA100) at $4,235. Following a pullback, gold has stabilized in a key support zone; short-term moving averages are converging, and bearish momentum—as indicated by the MACD—is waning, suggesting a recovery from an oversold condition. The MA50 and MA100 serve as medium-term resistance levels; a decisive breakout and consolidation above these points would open the door for further gains. When combined with the aforementioned fundamental factors—cooling expectations for an October rate hike, a decline in short-end Treasury yields, a pullback in the U.S. dollar from its highs, capped crude oil prices, and a contained risk premium ahead of the elections—the probability of a cyclical rally in gold between late October and early November has increased. Overall, the balance between bullish and bearish forces is quietly shifting in favor of the bulls. While marginal tightening in policy expectations and external constraints may create windows for temporary pullbacks, the prevailing logic suggests that gold is well-positioned for a notable upward move. The targets are the $4,100 round-number level and the $4,066 area (the low from October 7).

For today, consider going long on gold at $4,125, with a stop-loss at $4,120 and targets at $4,160 and $4,170.