US Dollar Index

The US Dollar Index rose slightly as funds flowed to the US dollar as the conflict in the Middle East may escalate. The Fed spokesperson began to align with market expectations of gradual to no rate cuts this year. The rebound in the US Dollar Index may gather pace if Donald Trump leads further in the polls. The US dollar strengthened again last week, extending its gains for the third consecutive week, with the US Dollar Index testing the key 200-day moving average of 103.80 for the first time since the summer, and once re-entering the vicinity of 104.00. It is worth recalling that the US dollar began its current rise shortly after investors digested the Fed's unexpected 50 basis point rate cut on September 18. Since then, the strong performance of the US economy, the gradually cooling labor market, and the growing investor speculation that the Fed will cut interest rates by 25 basis points instead of 50 basis points next month have all supported the US dollar.

As the US Dollar Index continues to rise, the next key target is the October high of 103.87 (October 17), which is supported by the 200-day moving average (103.80). If the US Dollar Index continues to rise above this area, it may pave the way for a test of the key psychological level of 104.00, which is also the 300-day moving average, and a break above it will pave the way for 104.72 (76.4% Fibonacci rebound from 106.13 to 100.16), and the weekly high of 104.79 set on July 30. On the other hand, although the downward pressure on the US Dollar Index has weakened in recent days, the year-to-date low of 100.15 set on September 27 still provides strong support. If the US dollar index sees selling pressure again, the first support targets are 103.00 (23.6% Fibonacci retracement of 100.16 to 103.87), and 102.88 (14-day moving average), and if it breaks, it will challenge 102.46 (38.2% Fibonacci rebound).

Today, consider shorting the US dollar index near 104.10, stop loss: 104.20, target: 103.70 102.65

WTI crude oil

Oil prices rebounded to nearly $70.00 after the People's Bank of China slashed the loan price rate. Iran's oil and nuclear facilities are expected to be spared from Israeli attacks. Investors await new guidance on the outlook for oil demand from the S&P Global Purchasing Managers Index. As long as tensions in the Middle East do not escalate again, oil prices are likely to fall further on weak fundamental data. Oil prices may fall further. Last week, oil prices fell sharply after a U.S. daily report said Israel would spare Iran's oil and nuclear facilities in an upcoming retaliatory strike. This further escalates the conflict between Israel and Iran and reduces the possibility of a disruption to the oil market. Since Monday, oil prices have fallen by about 8%, with a downward trend at the beginning of this week and over the weekend. In early October, oil prices rose rapidly. However, all bullish attempts have encountered resistance at the 200-day moving average at $77.12, and in the past week, oil prices have fallen back below $70.00. If the United States strongly dissuades Israel from attacking Iran's oil facilities, shorts will be strengthened. This is a major signal that foreign policy on the part of the United States is contributing to the bearishness of oil prices.

After the close of last week, WTI crude oil prices encountered resistance at $70. In early October, oil prices rose rapidly. However, all bullish attempts have encountered resistance at the 200-day moving average at $77.12, and over the past week, oil prices have retreated below $70.00 to a 3-week low of $68.15. The weekly trend for WTI crude oil prices is even bleaker, with resistance at the 50-week (76.23) and 200-week (78.98) moving averages. This is a bearish signal, which is further confirmed by the death cross of the moving averages (the 50-week moving average fell below the 200-week moving average). Therefore, the support below can be noted at $68.05 (lower line of the daily horizontal channel) and $66.65 (lower line of the downward channel). As for the upside, $70.00 is the first key resistance level, and a break above it will break through the $71.11 (20-day moving average) and $71.34 (50.0% Fibonacci retracement) zone.

Today, consider going long on crude oil around 69.50, stop loss: 69.30; target: 71.00; 71.20

Spot gold

Gold narrowed its early gains and hit a record high of $2,740, currently hovering around $2,720 per ounce as the recovery in dollar demand put pressure on safe-haven metals. The recovery in U.S. Treasury yields and the approaching U.S. election exacerbated the situation. In early Asian trading on Monday, continued geopolitical tensions in the Middle East, the uncertain prospects of the U.S. election, and the Federal Reserve's expected easing of monetary policy all boosted gold prices. As the conflict intensified, especially after Hezbollah announced an escalation of the war with Israel, investors rushed to gold, a traditional safe-haven asset, and concerns about the US presidential election and expectations of loose monetary policy further boosted gold prices. In addition, the prospect of further interest rate cuts by the Federal Reserve also continued to support gold prices. On the other hand, China's economic downturn may weigh on precious metals. Since China is the world's largest gold consumer, this may put pressure on gold prices.

The 14-day relative strength index (RSI) indicator on the daily chart remains above 70 (72.60), indicating that gold is close to turning technically overbought. On the upside, the upper line of the rising channel since June, $2,790, is consistent with the next resistance level of $2,800 (market psychological level), followed by $2,850, and the round number level of $2,900. If gold sees a technical correction, $2,700 (round mark) can be seen as $2,675 (lower line of the daily upward channel), and the 20-day simple moving average of $2,660.00 and $2,615 (the first previous support level.

Today, consider shorting gold before 2,725.00, stop loss: 2,730.00; target: 2,710.00; 2,705.00

AUD/USD

After a negative start to the week, the AUD/USD pair resumed its strong downtrend and revisited the 0.6650 area on the back of a rebounding US dollar, which reached a two-month high. The Australian dollar extended its winning streak against the US dollar for the third consecutive trading day in early Asian trading on Monday. Investors will be closely watching speeches from Federal Reserve officials later in the day, including Neel Kashkari and Jeffrey Schmid. The Australian dollar strengthened as positive employment data made it less likely that the Reserve Bank of Australia would choose to cut interest rates this year. On the other hand, US economic data continued to show that the US economy is strong and does not require aggressive easing by the Federal Reserve, which may prevent the US dollar from falling further. In addition, the uncertainty of the US election and geopolitical tensions in the Middle East may support safe-haven currencies such as the US dollar in the short term.

Technical analysis of the daily chart shows that the AUD/USD exchange rate was trading near the 0.6700 level on Monday. The pair is below the 14-day moving average (0.6740), indicating that there is still a short-term bearish bias in the short term. In addition, technical indicators are still bearish in the short term. The 14-day relative strength index (RSI) remains below 50, confirming the prevailing bearish sentiment. On the support side, the current level to watch is 0.6653 (100-day moving average). A break below this level could exert downward pressure on the AUD/USD pair, pushing it towards the eight-week low of 0.6622, last seen on September 11, and 0.6627 (200-day moving average). On the upside, AUD/USD could retest 0.6700 (a psychological level), and the 14-day moving average of 0.6740, followed by the 20-day moving average of 0.6785. A break above the latter could support the pair to test the psychological level of 0.6800.

Consider going long on AUD today before 0.6645, Stop Loss: 0.6630; Target: 0.6700; 0.6705.

GBP/USD

GBP/USD extended its slump in the US market, trading below the 1.3000 mark and close to the multi-week low of 1.2974 posted in mid-October. Risk-averse market sentiment boosted demand for the dollar in the absence of relevant data. GBP/USD struggled to strengthen after a small recovery in the past two days in Asia on Monday, fluctuating in a narrow range around the upper 1.3000 area. GBP/USD is around the one-month low of 1.2974 hit last Thursday, and seems to continue the recent correction from the highest level since March 2022, the 1.3434 area. The UK consumer price index unexpectedly fell to the lowest level since April 2021 and below the Bank of England's 2% target, which increased bets on a 25 basis point rate cut at the November 7 meeting. In addition, the currency market is pricing in the prospect of another rate cut by the Bank of England in December, which may continue to weaken the pound. This and the potential bullish outlook around the US dollar suggest that the GBP/USD maintains a bearish outlook. Apart from this, geopolitical risks are another factor supporting the safe-haven USD.

In terms of near-term technicals, the current fundamental backdrop suggests that GBP/USD has the least resistance to move down. Therefore, any upside move in GBP/USD could be seen as a selling opportunity. However, the bears may wait for a break below the psychological 1.3000 level before launching fresh bets and setting up positions for a drop towards the 100-day moving average support, currently around 1.2961. The 14-day relative strength index (RSI) of the technical indicator is firmly below the 50 level and is currently close to 39. Therefore, any attempt to recover in GBP/USD could be sold off, so a break below 1.2961 will target 1.2870 (lower line of the downtrend channel on the daily chart), and 1.2798 (200-day moving average) levels. On the other hand, the upside obstacles are located at the 14-day moving average of 1.3080, and 1.3100 (round number). If this level is broken continuously, a meaningful upward trend may occur, opening the door to test the 1.3204 (50.0% Fibonacci rebound level of 1.3434 to 1.2974) level.

Today, it is recommended to go long on GBP before 1.2972, stop loss: 1.2960, target: 1.3025, 1.3030

USD/JPY

The yen faces new supply and hinders its recovery from more than two-month lows. Uncertainty and optimism about the Bank of Japan's rate hike plans weakened the safe-haven yen. Bets on a less aggressive Fed easing boosted dollar demand and provided support for the USD/JPY pair, which reached as high as 150.90. The yen opened slightly stronger against the dollar on Monday, with recent verbal intervention from Japanese authorities providing some support for the yen, although uncertainty about the timing and pace of further BoJ rate hikes should prevent the yen from gaining significantly against the dollar. Bank of Japan Governor Kazuo Ueda warned on Friday that there is still a lot of uncertainty about the outlook for Japan's economic recovery and stressed the need to closely monitor the impact of market volatility on the economy. This came after Japanese Prime Minister Shigeru Ishiba unexpectedly opposed further rate hikes. This, coupled with the market's maintenance of a risk-on environment, should prevent the safe-haven yen. Meanwhile, expectations of modest Fed rate cuts next year have kept U.S. Treasury yields higher and limited the extent of the dollar's decline from more than two-month highs. This could further weigh on the low-yielding yen and support the prospect of buying on dips in USD/JPY.

From a technical perspective, the 14-day relative strength index (RSI) of the daily chart is still in the positive area near 65.60, and caution should be exercised before actively betting on the bearish side. In other words, if USD/JPY falls below 150.00 (market psychological level), 149.70-149.75 USD area horizontal support, the conversion line of 148.55-148.50 area will become the first line of defense for bulls. And suppress USD/JPY to fall below 148.07 (38.2% Fibonacci rebound level from 161.81 to 139.58), and 148.00 round number area. On the other hand, the area around the August swing highs of 150.85 and 150.84 (100-day moving average) currently appears to be an immediate resistance before the $151.31 (200-day moving average), and $152.00 area (round numbers). If the strength continues, it will pave the way for a move to the 153.32 (61.8% Fibonacci rebound) area.

Today, it is recommended to short the US dollar before 151.00, stop loss: 151.20; target: 150.00, 149.70

EUR/USD

EUR/USD quickly lagged behind Friday's recovery attempt at the beginning of the week and faced increasing selling pressure at the beginning of the week, which was always against the backdrop of the continued upward movement of the US dollar. The pair hit another weekly low of 1.0811 yesterday. In the Asian market on Monday, EUR/USD remained stable after the previous trading day's rise, hovering around 1.0860. Speculations that the Federal Reserve will cut interest rates by 50 basis points in November have been dispelled as the latest data showed the resilience of the US economy, and potential downside is looming. The market interpreted recent comments from ECB officials as a sign of increasing comfort with the inflation outlook in the eurozone. As a result, the ECB appears to be shifting its focus to supporting regional economic growth. This has fueled market speculation that the ECB may accelerate the pace of easing, including a possible deeper rate cut of 50 basis points. Such a move could weigh on the euro and put downward pressure on EUR/USD. The euro has come under downward pressure after the ECB decided to cut interest rates by 25 basis points last week.

EUR/USD hit a low near the 1.0811 level again yesterday and is currently trading around just above the 1.0800 level. However, the broader bearish structure remains intact as long as the pair remains below the 200-day moving average at 1.0872 and the 14-day moving average at 1.0931. The recent rebound could see further gains, but bears are likely to defend the psychological 1.0900 area vigorously. Rejection at this level will reaffirm the downtrend and could push the pair back to 1.0811 (last week's low), and the psychological support of 1.0800. A break below this level will test 1.0740 (61.8% Fibonacci retracement of 1.0448 to 1.1214), while the technical indicator Moving Average Convergence Divergence (MACD) continues to point to downward pressure, indicating that the current recovery may be limited. Therefore, a break above the 200-day moving average of 1.0872 will be a necessary factor to turn from weakness to strength to indicate a meaningful shift in momentum, and the rebound targets are 1.0931 (14-day moving average) and the 1.1000 round resistance level.

Today, it is recommended to go long on EUR before 1.0800, stop loss: 1.0785, target: 1.0850, 1.0860.

Disclaimer:

The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.