USD

After a partial recovery triggered by ISM data, the dollar rebounded from Monday's lows. The Asian markets were rattled on Monday, with Japanese indices dropping over 12%. The Dollar Index fell below 103.00 but rebounded significantly due to strong ISM data. The dollar was under pressure due to continued deterioration in the US labor market, with the unemployment rate rising to 4.3% in July, marking the fourth consecutive month it exceeded expectations and breaking the Fed's year-end forecast of 4%. Fed Chair Jerome Powell has now shifted focus to full employment within its dual mandate, and the Fed is likely to ease more comfortably than previously anticipated. However, the dollar's weakness is expected to be temporary as the economic slowdown in the world's largest economy may trigger risk aversion trades in global financial markets, where risk-off sentiment typically strengthens the dollar. The dollar's price action initially followed the yen's movements, with new geopolitical concerns and renewed fears about a potential US economic slowdown prompting fresh inflows into the dollar amid broader risk aversion this week.

The Dollar Index decisively broke below the key 200-day moving average near 104.27, paving the way for a continued decline at least in the short term. Below this critical area, the dollar's outlook remains bearish. Bears continue to take the lead, with the Dollar Index dropping to 103.00 (psychological level), 102.86 (61.8% Fibonacci retracement from 100.61 to 106.51), and below 102.70 (lower boundary of the descending channel). Further down, the March 8 low of 102.35 lies just before the psychological level of 102.00. On the upside, initial resistance for the Dollar Index is at 103.56 (50.0% Fibonacci retracement) and 103.60 (middle line of the descending channel). This resistance appears to be reinforced by the psychological barrier at 104.00. Once this area is broken, the Dollar Index could begin advancing towards the 200-day moving average at 103.27.

Today, consider shorting the Dollar Index around 102.90, with a stop loss at 103.05, and targets at 102.50 and 102.40.

AUD/USD

AUD/USD successfully rebounded after hitting a new low near 0.6347, briefly returning to the 0.6500 area early Tuesday before the Reserve Bank of Australia's (RBA) key rate decision. Late in the Asian session on Monday, AUD/USD rebounded to around 0.64500 after dipping to near a five-month low of 0.6347. The disappointing Judo Bank Services PMI in Australia pressured the Aussie. The RBA is set to announce its rate decision on Tuesday. Last Friday's weaker-than-expected US employment data, coupled with Thursday's weak ISM Manufacturing PMI, has fueled market expectations for a Fed rate cut in September. This could put some short-term selling pressure on the dollar. As for the Australian dollar, expectations for another rate hike by the RBA at Tuesday's policy meeting have weakened, limiting the Aussie’s upside potential. Traders have priced in nearly an 80% chance of an RBA rate cut by the end of the year. According to the latest data released by Judo Bank and S&P Global on Monday, Australia's July Judo Bank Services PMI final reading fell to 50.4, below the expected and previous value of 50.8. The July Composite PMI dropped to 49.9 from 50.2.

Daily chart analysis shows that the Aussie traded near 0.6450 at the beginning of the week. AUD/USD initially broke below the lower boundary of the descending channel at 0.6420 to 0.6347, but then returned to consolidate within the channel, indicating a bearish bias. The 14-day Relative Strength Index (RSI) hovers below the oversold level of 23, indicating potential for an upward correction. AUD/USD may find immediate support near the retracement support levels of 0.6440 (middle line of the descending channel) and 0.6420 (lower boundary of the descending channel). A break below these levels could test the early-week low of 0.6347 and the psychological level of 0.6300. On the upside, resistance is first seen at 0.6500 (psychological level), followed by the 10-day moving average at 0.6542. The next significant resistance is at 0.6580 (50.0% Fibonacci retracement from 0.6362 to 0.6798).

Today, consider going long on AUD before 0.6480, with a stop loss at 0.6465, and targets at 0.6550 and 0.6560.

EUR/USD

Another difficult day sees the dollar falling to a seven-month low, while EUR/USD briefly surpassed the psychological barrier of 1.1000, marking a strong start to the week. In the Asian session on Monday, EUR/USD continued its rise towards 1.0920. The weakening dollar, following the release of disappointing US employment data, supported the pair's upward movement. Slower-than-expected job growth and rising unemployment in the US have heightened concerns about a broader economic slowdown, weighing heavily on the dollar. Despite recession worries, Federal Reserve Chair Jerome Powell noted last week that the central bank's confidence in a "resilient" economy and declining inflation data is boosting market expectations for a possible Fed rate cut soon. Financial markets have fully priced in expectations for the Fed to cut rates by at least 25 basis points at each of the remaining three meetings this year.

On the eurozone front, rising inflation and stable economic growth have reduced expectations for the European Central Bank to implement more rate cuts this year.

The daily chart shows that EUR/USD broke above 1.0900 last Friday and briefly surpassed the 1.1000 psychological level. Currently, EUR/USD is attempting to break through 1.0948 (previous high), 1.0980 (upper boundary of the ascending channel), and 1.0981 (March 8 high). A break above these levels would target the 1.1000 psychological barrier and the 1.1012 (76.4% Fibonacci retracement) area. At this stage, the price action still has some distance to cover. If buyers can maintain momentum, EUR/USD could see a technical retracement from the 200-day moving average at 1.0827, while sellers will aim to push the pair back towards the previous low below 1.0700.

Today, consider going long on the euro before 1.0935, with a stop loss at 1.0920, and targets at 1.0985 and 1.0990.

GBP/USD

GBP/USD has stabilized above 1.2750 after rebounding from the intraday low near 1.2710. Despite the dollar facing continued selling pressure, strong risk-off sentiment has limited the pair's rebound. In the Asian session on Monday, GBP/USD dipped towards 1.2800, likely due to dollar weakness. The expectation of a Fed rate cut in September has challenged the dollar. Last Friday's data showed that July non-farm payrolls were below expectations at 175,000. Meanwhile, the US unemployment rate rose to 4.3% in July from 4.1% in June, the highest level since November 2021. Additionally, the US ISM Manufacturing PMI for July fell to an eight-month low of 46.8. The pound faces challenges as the Bank of England (BoE) is expected to announce a 25-basis-point rate cut at its August meeting on Thursday, as widely anticipated by the market. Furthermore, BoE Governor Andrew Bailey noted that from his perspective, the increase in the minimum wage has not had adverse effects.

The daily chart shows that GBP has declined for the third consecutive week, dropping from the 12-month high of 1.3045 in mid-July to a trough of 1.2707, a decline of -2.58%. Bulls acted before the weekend to keep the pound at the 1.2800 level, but the downward momentum remains strong. The bearish potential is intact and may continue this week. The 14-day Relative Strength Index (RSI) remains below the 50 level, currently near 46.00, indicating more downside potential. The next relevant support is at 1.2714 (76.4% Fibonacci retracement from 1.2612 to 1.3045). A break below this could see a move towards 1.2683 (100-day moving average). Conversely, any sustained recovery would require stability above the resistance zone of 1.2786 (50-day moving average) and 1.2800 (psychological level). Further up, 1.2880 (38.2% Fibonacci retracement) and 1.2888 (last week's high) could challenge the bearish commitment. If the recovery gains momentum, pound buyers must reclaim the confluence near 1.2900 (psychological barrier).

Today, consider going long on GBP before 1.2760, with a stop loss at 1.2745, and targets at 1.2810 and 1.2820.

USD/JPY

During the European session on Monday, USD/JPY continued to face heavy selling pressure. Concerns about a US economic recession and escalating Middle East tensions have weakened risk appetite, adding further support to the safe-haven yen, which was already buoyed by the policy divergence between the Bank of Japan and the Federal Reserve. Following Friday's sharp decline, USD/JPY extended its losses in the European morning to 141.68. The yen's rise is supported by expectations that the Bank of Japan may further tighten monetary policy and unwind carry trades, which could provide sustained support for the yen in the short term. Escalating geopolitical tensions in the Middle East could further boost the safe-haven yen. Last Friday's weak US labor market data have reinforced expectations for a Fed rate cut in September, putting additional pressure on the dollar. The CME FedWatch Tool indicates a 74.5% probability of a 50 basis point rate cut on September 18, up from 11.5% a week ago.

Daily chart analysis shows USD/JPY trading near 142.00 on Monday. The pair continues its downward trend, and the 14-day Relative Strength Index (RSI) is trending down, approaching below 12, indicating USD/JPY is in an extremely oversold condition and a short-term rebound is possible. USD/JPY is near its lowest point since December 2023, around 140.25. The pair may test support at the 140.00 (psychological level). On the upside, USD/JPY could face strong resistance near 143.42 (early January low) and 144.52 (100-week moving average). If this level is breached, the bearish bias may weaken, supporting the pair in testing the "support-turned-resistance" at 144.89 (78.6% Fibonacci retracement from 140.25 to 161.95), followed by the 350-day moving average at 147.53.

Today, consider shorting USD before 144.30, with a stop loss at 144.50, and targets at 143.00 and 142.80.

XAU/USD

Gold prices rebounded above $2,400 in the US session after briefly dropping below $2,364 in the European session. The continued weakness of the dollar and a significant decline in US Treasury yields helped limit the losses for XAU/USD. In the early Asian session on Monday, gold prices fell below $2,450. Gold was unable to capitalize on the rising expectations of a 50 basis point Fed rate cut in September and the heightened safe-haven demand from escalating geopolitical tensions in the Middle East. During the early Asian session, gold prices dipped to $2,435. However, the growing expectations for a Fed rate cut and persistent geopolitical tensions in the Middle East may limit the downside for gold. The weak US July employment data has sparked concerns about an economic recession and increased the likelihood of a Fed rate cut in September. On the other hand, escalating geopolitical tensions in the Middle East could drive safe-haven flows, benefiting gold. With concerns about the potential escalation of the Middle East conflict, some countries have urged their citizens to leave Lebanon.

Technical indicators on the daily chart show the 14-day Relative Strength Index (RSI) rising to around 58 after last week's rebound, indicating that gold has more room for upside before becoming technically overbought. Before the psychological level of $2,500, $2,483.70 (the previous all-time high) is the immediate resistance level. If gold stabilizes above $2,500 and confirms this level as support, a breakout could target the $2,533.60 level (138.2% Fibonacci extension). The upper boundary of the ascending regression channel since mid-February is considered the next bullish target at $2,600. On the downside, support appears to have formed in the $2,414 to $2,400 region (the 20-day simple moving average and psychological level, respectively) before $2,367 (50-day moving average) and $2,353 (July 25 low).

Today, consider going long on gold before $2,405, with a stop loss at $2,402, and targets at $2,425 and $2,430.

XTI/USD

Oil prices have been in a significant correction, falling for the third consecutive day. The shutdown of Libya's largest oil field and a sharp decline in the dollar index, which is entering a correction phase, have influenced this trend. In early Asian trading on Monday, WTI crude oil prices fell to $72.10, marking a six-month low. However, prices rebounded above $74.00 due to rising supply risks stemming from geopolitical tensions in the Middle East. Ongoing conflict in Gaza has supported crude prices, while concerns about a potential economic recession in the United States, the world's largest oil consumer, have weighed on prices. Last Friday, weak US employment data and a larger-than-expected contraction in the ISM Manufacturing PMI contributed to the decline in oil prices. The Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing nations, including Russia (OPEC+), are maintaining their plan to gradually end voluntary production cuts from October. Nevertheless, a Reuters survey published last Friday showed that OPEC oil production increased in July despite the cuts.

From a technical perspective, Friday's weekly low was $73.45 per barrel, with subsequent consolidation leading to a close at $73.58, forming a large bearish candle with equal-length wicks on both ends. This pattern suggests that crude oil may remain under pressure in the first half of this week. The 14-day Relative Strength Index (RSI) and Stochastic Index have just recovered from the oversold region, indicating potential short-term stabilization. Support levels to watch include the June low of $72.48, followed by $71.32 (February 5 low), with the next support at the psychological level of $70.00. On the upside, resistance is seen at $74.20 - $75.00, with further resistance at $75.90 (the middle line of the daily downtrend channel); the next level to watch is the 200-day moving average at $78.35.

Today, consider going long on crude oil around $74.20, with a stop loss at $74.00, and targets at $75.80 and $76.00.

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