USD

Last week, following the U.S. July employment report, the U.S. Dollar Index (DXY) faced significant selling pressure, dropping to its lowest point since March, around 103.12. As the September rate cut approaches, any signs of economic weakness in the U.S. could pressure the dollar further and increase dovish sentiment towards the Federal Reserve. July's Non-Farm Payrolls (NFP) grew by only 114,000, significantly below the market expectation of 175,000. Other report data showed that the unemployment rate rose from 4.1% in June to 4.3% in July. Meanwhile, the year-on-year wage inflation rate for average hourly earnings dropped from 3.8% to 3.6%. These figures highlight weakened labor demand in the U.S. Additionally, the ISM Manufacturing Index for July dropped from 51.7 to 46.8, the lowest in eight months, with a sharp decline in orders and production, and the employment component saw its largest drop in four years. Manufacturing continues to contract, adding pressure to the dollar. The disappointing labor market data led to broad-based selling pressure on the dollar, and Federal Reserve Chairman Jerome Powell commented that if the labor market faces unexpected risks, rate cuts should be implemented sooner rather than later, increasing expectations for a rate cut in September. Traders anticipate the Fed will cut rates three times this year, with a 90% chance of a 50 basis point cut in September.

On the daily chart, following the disappointing employment report, the outlook for the U.S. Dollar Index has worsened. The index has significantly fallen below the 18-day (104.26) and 200-day (104.29) simple moving averages, forming a bearish "death cross" pattern before the weekend. Momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have also been severely impacted, indicating a surge in selling pressure. The index is currently finding initial support around 103.05 (support trendline extending from January 12 low of 102.08) and 103.00 (psychological level). A break below these levels could challenge support at 102.86 (61.8% Fibonacci retracement of the 100.61 to 106.51 range) and 102.70 (lower trendline of the descending channel). Short-term support targets the 102.00 (76.4% Fibonacci retracement) level. On the upside, attention should be given to resistance at 103.56 (50.0% Fibonacci retracement) and 103.60 (midline of the descending channel). The next level of resistance would be 104.80 (last week’s high).

Today, consider shorting the U.S. Dollar Index near 103.30, with a stop loss at 103.45 and targets at 102.90 and 102.80.

AUD/USD

The Australian Dollar (AUD) has rebounded against the U.S. Dollar (USD) due to significant selling pressure on the greenback. The U.S. Bureau of Labor Statistics (BLS) reported a 114,000 increase in Non-Farm Payrolls (NFP) for July, significantly below the market expectation of 175,000. The unemployment rate rose from 4.1% in June to 4.3% in July. The benchmark 10-year U.S. Treasury yield fell more than 3% to below 3.9%, adding further pressure on the USD. Over the weekend, the AUD/USD slightly rebounded, moving above 0.6500. However, Australia's economic weakness and increased expectations for rate cuts by the Reserve Bank of Australia (RBA) limit the AUD’s upside potential. Additionally, recent significant appreciation of the Chinese Yuan has not helped the AUD, indicating a weak short-term outlook. Despite high inflation, the weakness in Australian economic activity has led markets to expect rate cuts from the RBA by the end of the year, potentially capping further gains for the AUD.

On the daily chart, the AUD/USD rebound is constrained by the 20-day (0.6646), 100-day (0.6602), and 200-day (0.6591) simple moving averages, with a bearish "death cross" pattern emerging before the weekend. The 14-day Relative Strength Index (RSI) has been between 30 and 37, reinforcing the bearish outlook. The Moving Average Convergence Divergence (MACD) remains flat with red bars, indicating continued bearish momentum. On the downside, initial support is at 0.6480 (near three-month low), and a break could test 0.6464 (76.4% Fibonacci retracement of 0.6362 to 0.6798) and the May low of 0.6465. The next key support level is around 0.6400 (psychological barrier). Conversely, any bullish moves would face resistance around 0.6551 (250-day moving average), then 0.6580 (50.0% Fibonacci retracement), and 0.6600 (psychological level).

Today, consider going long on AUD/USD near 0.6500, with a stop loss at 0.6485 and targets at 0.6550 and 0.6580.

EUR/USD

The EUR/USD has recently risen, primarily due to the weakening U.S. dollar and positive economic data from Europe. The U.S. Bureau of Labor Statistics (BLS) reported a weaker-than-expected increase in Non-Farm Payrolls (NFP) for July, with a rise of 114,000 compared to the forecast of 175,000. The unemployment rate also increased from 4.1% in June to 4.3% in July, adding to the dovish sentiment around the Federal Reserve’s rate-cut expectations. In contrast, recent data from the Eurozone showed a more stable economic situation, with the Eurozone Composite PMI falling less than expected to 50.0, indicating that the region’s economic activity is stabilizing.

On the daily chart, the EUR/USD has risen to a two-week high of 1.1050, breaking above the 20-day (1.0970) and 100-day (1.0935) moving averages. The 14-day Relative Strength Index (RSI) has climbed to around 60.00, and the Moving Average Convergence Divergence (MACD) shows a bullish crossover. The key resistance levels are 1.1060 (near the 2024 high) and 1.1090 (2024 high). Support levels are at 1.1000 (psychological level) and 1.0970 (20-day moving average). A sustained break above the 1.1050 level could extend gains towards the next resistance levels.

Today, consider going long on EUR/USD near 1.1000, with a stop loss at 1.0980 and targets at 1.1050 and 1.1060.

GBP/USD

The GBP/USD has declined for the third consecutive week, hitting a one-month low, with intense focus on the 1.2700 critical level. Despite ongoing divergence in monetary policy outlooks between the Federal Reserve and the Bank of England, the GBP/USD remains on a bearish trajectory, primarily driven by risk sentiment rather than interest rate differentials. Renewed concerns about the U.S. economy have triggered a sharp sell-off in global equities, which in turn has heightened risk aversion and revived demand for the safe-haven U.S. dollar. Concurrently, traders have been withdrawing from higher-risk assets like the British pound. Both central banks announced their interest rate decisions last week. The Federal Reserve maintained the federal funds rate between 5.25% and 5.5%, but adjusted its policy statement to emphasize "risks to both sides of the dual mandate" rather than focusing solely on inflation risks. Conversely, the Bank of England reduced its key policy rate by 25 basis points to 5.0%. The U.S. July Non-Farm Payrolls came in significantly below market expectations, leading to substantial selling pressure on the dollar and allowing the GBP/USD to recover much of the previous week’s losses.

On the daily chart, the bearish potential for GBP/USD remains intact following a break below 1.2828 (50.0% Fibonacci retracement of the 1.2612 to 1.3045 range), and could persist into the coming week. The 14-day Relative Strength Index (RSI) remains below 50, currently around 47.00, indicating further downside potential but a lack of strong bearish momentum. Immediate support for the pound is at the 100-day simple moving average at 1.2683. A break below this level would likely test the 200-day moving average at 1.2648, potentially triggering a new phase of declines, with the next significant support around 1.2714 (76.4% Fibonacci retracement). Conversely, any rebound will need to stabilize above the 1.2786 - 1.2800 resistance zone (with the former being the 50-day moving average and the latter a psychological barrier) to sustain gains. Further resistance is found at 1.2880 (38.2% Fibonacci retracement) and 1.2888 (last week’s high), which could challenge bearish commitments. Should the rebound momentum strengthen, GBP buyers will need to reclaim the 1.2900 (psychological level) convergence point.

Today, consider going long on GBP near 1.2785, with a stop loss at 1.2770 and targets at 1.2840 and 1.2850.

USD/JPY

The USD/JPY has continued its weekly decline, reaching a low of around 146.41 on Friday, the lowest level since early January. The pair recorded its largest single-week drop since early November 2022, down 4.69%, marking the fourth consecutive week of losses. Weak U.S. labor market data has triggered broad-based selling pressure on the dollar, leading to the ongoing decline of USD/JPY during the U.S. trading session. The U.S. Dollar Index fell over 1.0% to 103.22 on the same day, reflecting the dollar's weakness. According to the U.S. Bureau of Labor Statistics (BLS), July's Non-Farm Payrolls (NFP) increased by 114,000, missing the market expectation of 175,000. Additionally, June’s figure was revised down from 206,000 to 179,000. The unemployment rate edged up from 4.2% in June to 4.3%, and the annual wage inflation rate, measured by average hourly earnings, slowed from 3.8% to 3.6%.

Earlier this week, the Bank of Japan unexpectedly raised its policy rate by 15 basis points. The USD/JPY has fallen more than 9.0% from its peak of 161.95 in early July to last week’s low of 146.41. The outlook suggests a potential decline towards the low of 140.98 set earlier this year.

On the weekly chart, the USD/JPY has broken through key support levels at 151.10 (50.0% Fibonacci retracement of the 140.25 to 161.95 range) and 150.86 (50-week moving average) under sustained selling pressure. The pair is likely to continue testing lower prices, including 148.53 (61.8% Fibonacci retracement) and 148.90 (a support trendline extending from the January 2023 low of 127.46). However, strong support is seen at 144.89 (78.6% Fibonacci retracement) and 144.52 (100-week moving average). Sellers will need to push the spot price below these support levels to test lower levels, including the January low of 143.42. The 14-week Relative Strength Index (RSI) indicates that the price may be oversold, potentially leading to a correction in the USD/JPY. For the rebound to continue, bulls need to see a daily close above the 148.53 - 148.90 resistance zone. Once this is achieved, the next resistance level will be around 150.00 (psychological level).

Today, consider shorting USD near 146.80, with a stop loss at 147.10 and targets at 145.80 and 145.60.

XAUUSD

Last week, the U.S. July Non-Farm Payrolls report indicated a significant cooling in the labor market, causing U.S. 10-year Treasury yields to plummet to around 3.82%, the lowest level since December. Precious metals, including gold, rose accordingly. Gold prices increased to $2,478, a near three-week high. The lower yield on interest-bearing assets reduces the opportunity cost of holding non-yielding assets like gold. Increased safe-haven demand due to Middle Eastern tensions and expectations of Fed rate cuts have further boosted gold's appeal, rising 2.35% last week and showing an overall upward trend. At current levels, a pullback and some profit-taking are expected, but fundamentally, gold still has significant upside potential with limited downside risk. The disappointing U.S. labor market data, combined with Powell’s shift in focus towards the labor market, could further drive gold prices up. Conversely, there are doubts about the sustainability of gold’s rise, with the market only expecting two rate cuts by the Fed by year-end, while three cuts have been priced in. Nevertheless, gold has found support from the heightened tensions in the Middle East.

On the daily chart, gold prices are trading within an ascending channel and are approaching the upper boundary at $2,495, reaching a near three-week high of $2,478. After rebounding above the psychological level of $2,400 last week, the trend continues to support the bullish outlook for gold. The 14-day Relative Strength Index (RSI) has risen to around 60.00. If gold can maintain above $2,425 (lower boundary of the ascending channel) and $2,418.30 (50.0% Fibonacci retracement of $2,483.70 to $2,353), the momentum will turn bullish. The first upside target is $2,465 (midline of the ascending channel), and a break could lead to a retest of the recent high of $2,478. If gold surpasses the historical high of $2,483.70, further gains could push it towards $2,514.50 (123.6% Fibonacci extension).

Today, consider going long on gold near $2,438.00, with a stop loss at $2,435.00 and targets at $2,465.00 and $2,470.00.

XTIUSD

Oil prices experienced significant volatility last week. Due to demand concerns, prices came under pressure. Brent crude prices fell to a seven-month low of $76.26 per barrel, while WTI crude oil saw a low of $73.48, marking its fourth consecutive week of declines. Rising tensions in the Middle East, including the killing of a senior commander of Hezbollah and a leader of Hamas near Beirut and Tehran, reportedly in retaliation by Israel, triggered a reversal mid-week. Hamas, Hezbollah, and Iran have announced retaliation actions, and the U.S. expects Iran to potentially attack Israel in the coming days. Depending on the severity of the attack, Israel may retaliate again, potentially escalating the conflict and affecting regional oil supplies. At a minimum, further attacks by Houthi rebels on Red Sea merchant vessels and tankers are foreseeable. The ultimate risk is a disruption in the Strait of Hormuz, which would raise the risk premium for oil prices. However, demand concerns currently overshadow this risk, with weak U.S. economic data re-igniting fears about oil demand.

Last week, WTI crude oil fell for the fourth consecutive week, down 3.37% to a seven-month low of $73.48. The daily chart shows a bearish "death cross" pattern with the 10-day and 200-day moving averages. Bulls are trying to hold support at $73.25 (support trendline extending from February 5 low of $71.32) and $73.50 (midline of the descending channel). This level is crucial, and failure to hold could lead to a test of $72.67 (June 4 low), with a potential further decline to $70.00 (psychological level). In the short term, if there is a bullish rally, the price might rise to $75.90 (midline of the descending channel), and a break could lead to further tests of $77.60 (10-day moving average) and $78.41 (200-day moving average).

Today, consider going long on WTI crude oil near $74.45, with a stop loss at $74.25 and targets at $75.80 and $76.00.

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