US Dollar Index

The US dollar is in a tight range after climbing to an 11-week high. US stocks retreated further from their all-time highs as the Federal Reserve may not cut interest rates as much as initially expected. On Tuesday, the US dollar index broke through 104.00 points and traded in a narrow range. Although the US dollar closed slightly lower on Friday, it has strengthened again in the past few days, closing positive for three consecutive days. US Treasury yields rose by more than 2% at the beginning of the week. The rise was driven by signs of economic strength and concerns about the possible resurgence of inflation in the United States. Market expectations of a possible small rate cut in November, coupled with geopolitical tensions and strong fundamentals, once again supported the rise of the US dollar. The US dollar index rose for the third consecutive week, briefly re-crossing the psychological level near 104.00. It is worth recalling that the current rise of the US dollar began soon after investors digested the Federal Reserve's unexpected 50 basis point rate cut on September 18. Since then, the dollar has been supported by strong U.S. economic performance, a cooling labor market, and growing investor speculation that the Fed will cut interest rates by 25 basis points instead of 50 basis points next month.

As the dollar index continues to rise, the next key target is Monday's high of 104.00 (which is also the 300-day moving average). If the dollar index continues and stays above this area, it may pave the way for a hit to 104.72 (76.4% Fibonacci rebound from 106.13 to 100.16), and the weekly high of 104.79 set on July 30. A breakout points to the 105.00 (round mark) level. On the other hand, although the downward pressure on the US dollar index has weakened in recent days, if the US dollar index re-emerges selling pressure, it may retest 103.45 (120-day moving average), and 103.00 (23.6% Fibonacci retracement level of 100.16 to 103.87), and then challenge 102.46 (38.2% Fibonacci rebound level).

Today, consider shorting the US dollar index near 104.20, stop loss: 104.30, target: 103.70 102.65

WTI crude oil

Oil prices have re-crossed above $70.00 for more than a day, and more upside is expected. But traders expect demand to remain sluggish as the market re-prices the prospect of a Fed rate cut. In the Asian session on Tuesday, US WTI crude oil struggled to strengthen after a small rise the day before, fluctuating in a narrow range around $69.70-69.75. Meanwhile, commodity prices are still hovering near the three-week low hit last Friday, and seem prone to continue the downward trend of the past two weeks or so. The initial reaction of the market to the People's Bank of China's interest rate cut on Monday was short-lived, as the market was worried about slowing demand, which continued to weigh on crude oil prices. China's weak economy will continue to drag down global oil demand in the coming years, which further exacerbated market concerns. In addition, the recent rise of the US dollar to its highest level since early August, triggered by the prospect of loose policy from the Federal Reserve, has contributed to the upward resistance of crude oil prices. That said, the risk of further escalation of the conflict in the Middle East could affect the supply of major oil-producing regions, which provides some support for crude oil volatility.

From the daily chart, the 14-day relative strength index (RSI) of the technical indicator is in the negative area of ​​49.50, showing initial signs of recovery, and oil prices are expected to rebound in the short term. As crude oil prices seem to show more bullish factors, oil prices rose above $70.67 (8-day moving average, which represents the first resistance position on the upside. The next level of resistance is estimated at $71.30 (21-day moving average) and $71.34 (50.0% Fibonacci retracement level). The reference to the 65-day moving average is $72.47. On the downside, the target is first to break below $70.00 (market psychological level), followed by $68.15 (low of the 18th of this month) to confirm the continuation of the bearish trend, and then move towards $66.18 (low of October 1st). Due to the negative impact of the double top pattern, the bearish trend continues to be suggested for some time to come.

Today, consider going long on crude oil near 71.00, stop loss: 70.80; target: 72.50; 72.70

Spot gold

Gold continues to rise, trading near a record high of $2,749 as the conflict in the Middle East continues unabated while the market assesses the changing outlook for global interest rates. Technically, gold prices are trending higher as the multi-timeframe uptrend continues. At the beginning of the week, gold prices hit another record high in the US session, but the rise in gold prices paused amid rising US Treasury yields and a stronger dollar. Gold prices hit another record high on Monday after breaking through the key $2,700 level last Friday. Currently, gold prices are only $251 away from $3,000. USD. Gold demand has never been higher. The World Gold Council reported record demand for gold in the second quarter, and after further price gains, it is expected to remain strong in the third quarter. Meanwhile, gold thrives in an uncertain environment. The US election is too close to call, tensions remain in the Middle East, and the possibility of an Israeli attack on Iran remains. As long as the macro and geopolitical environment remains sensitive, gold prices are likely to rise.

Gold prices will continue to rise, but the formation of a "gravestone doji" at the close of the week could open the door for a pullback. Momentum shows that bulls are still in control, but as depicted by the 14-day relative strength index (RSI), the long short money may be losing some momentum. Although the RSI is bullish, it has turned flat. If XAU/USD re-breaks the October 22 high of $2,749, the next stop will be $2,765, followed by the upper line of the rising channel since June at $2,790, and $2,800. On the downside, if gold prices fall from the record high of $2,700, the next stop will be $2,765, followed by the upper line of the rising channel since June at $2,790, and $2,800. On the downside, if gold prices fall from the record high of $2,700, the next stop will be $2,765, followed by the upper line of the rising channel since June at $2,790, and $2,800. A pullback below the dollar could pave the way for a pullback. The first support level will be 2,720.00 (upward channel middle axis), the next level is the high of October 17 at 2,696, then the high of October 4 at $2,670, and $2,675 (lower line of the daily upward channel).

Today, consider going long on gold before 2,745.00, stop loss: 2,742.00; target: 2,760.00; 2,765.00

AUD/USD

Despite continued strength in the US dollar, AUD/USD has regained its footing, rebounding from multi-week lows around 0.6650 and approaching the key 0.6700 level again. Investors remain focused on assessing the impact of China's stimulus measures. At the beginning of the week, AUD/USD encountered some new selling pressure after rising for two consecutive trading days. After the strength of the US dollar, AUD/USD has been moving down and returned to the area around 0.6650. The reason for the daily decline of AUD/USD is the continued strong rise of the US dollar since the beginning of this month and the market's continued concerns about China's recent stimulus measures. The Australian dollar weakened again when copper prices fell significantly and iron ore prices fell slightly. This trend came against the backdrop of market skepticism about the real impact of China's economic stimulus measures. In terms of monetary policy, the Reserve Bank of Australia kept the cash rate stable at 4.35% at its September meeting. Although acknowledging the risk of inflation, RBA Governor Bullock said that a rate hike is not imminent. Although a potential rate cut by the Federal Reserve may bring some relief to AUD/USD later this year, the uncertainty of China's economic outlook and the intensity of stimulus still pose key challenges.

From the daily chart, if AUD/USD falls further, it may fall to yesterday's low of 0.6650 (October 21), then 0.6627 (200-day moving average), and the September low of 0.6622 (September 11), breaking through it will look at the support of 0.6600 (market psychological level). The 14-day relative strength index shows that the momentum is still bullish, so on the upside, the first focus can be on 0.6700 (round number), and 0.6702 (9-day moving average). The next level will look at the 0.6774 (20-day moving average) level. In terms of positions, non-commercial participants (speculators) remain net long on the Australian dollar for the third consecutive week amid a slight correction in open interest. These positions will be tested in the coming weeks, which always depends on the progress (or lack thereof) of China's stimulus plan.

Consider going long on AUD today before 0.6670, stop loss: 0.6655; target: 0.6720; 0.6730.

GBP/USD

GBP/USD lost traction and traded in negative territory after failing to stabilize above 1.3000 earlier in the day. The deterioration in sentiment did not allow the pair to make a decisive rebound as the market's focus remains on geopolitics and central bank rhetoric. GBP/USD maintained mild bearish pressure, falling towards 1.3000 at the start of the new week after gains on Thursday and Friday. A close below 1.2960 could open the door to the next leg of decline. Cautious risk sentiment in early trading helped the dollar remain resilient against its rivals and forced GBP/USD to remain weak and fluctuate at a low level, but the recovery of GBP/USD ended abruptly after retesting the 1.3000 mark after the opening. Later this week, investors will scrutinize the preliminary S&P Global October manufacturing and services PMI data for the UK and the US.

GBP/USD continues to be bearish, currently hovering above 1.2980 after failing to hold above the 1.3000 psychological level. GBP/USD is trading at 1.3056, below the 14-day exponential moving average, and the technical signs of the MACD indicator show weakness, with the histogram showing a growing bearish momentum as the MACD line remains below the signal line, reinforcing the bearish outlook. This indicates that short-term bears are in control. The next key support is located at 1.2900 (market psychological level), and 1.2901 (125-day moving average), which constitutes potential support. If the bears maintain the pressure, a break below this long-term support level may accelerate a further decline towards 1.2799 (200-day moving average). Bulls are trying to regain strength, and the failure of GBP/USD to break above the 14-day moving average also increases the downside risks. Therefore, to restore the upside potential, a rebound above 1.3056 (14-day moving average) is needed to have a chance to re-challenge the 1.3100 (round mark), and 1.3141 (20-day moving average) levels.

Today, it is recommended to go long on GBP before 1.2970, stop loss: 1.2960, target: 1.3030, 1.3040

USD/JPY

The yen continues to be affected by the uncertainty of the Bank of Japan's rate hike plan. Rising US bond yields are another factor affecting the low-yielding yen. Concerns about intervention and a weakening risk tone have limited the yen's losses and limited the upside of USD/JPY. During the Asian session on Tuesday, USD/JPY rose slightly and rose to its highest level since the end of July. The recent verbal intervention of Japanese authorities and the slightly deteriorating global risk sentiment have become key factors supporting the yen's safe-haven outlook. However, the yen's upside seems limited due to the uncertain outlook on the timing and pace of further rate hikes by the Bank of Japan. Meanwhile, concerns about a potential rise in deficit spending after the November 5 U.S. presidential election and bets on the extent of the Fed's easing have pushed U.S. Treasury yields to their highest level in nearly three months. This could further help prevent significant strength in the lower-yielding yen. Beyond that, the underlying bullish bias in the dollar supports some prospects for buying on dips in the USD/JPY pair.

Earlier this week, USD/JPY hit a 2.5-month peak of 151.20 as U.S. Treasury yields rose as traders reduced the odds that the Fed will embark on an aggressive easing cycle. As the 14-day relative strength index, a technical indicator on the daily chart, shows, momentum remains bullish and is on the verge of clearing the latest high peak. Once the 151.00 mark is broken, USD/JPY could accelerate its strength and extend its gains after a month of strength. If USD/JPY breaks above the 200-day moving average at 151.36, and 151.94 (July 25 low), the pair could push towards 153.40 (61.8% Fibonacci rebound from 161.95 to 139.58). On the downside, a daily close below 150.00 (psychological level), and 149.97 (89-day moving average) would pave the way for a correction to test the conversion line at 149.27. A break below this level would test key support levels such as 149.00 (round number), and 148.90 (14-day moving average), then 147.72 (20-day moving average).

Today, we recommend shorting before 151.20, stop loss: 151.35; target: 150.40, 150.30

EUR/USD

Increasing downward pressure on the risk complex has pushed EUR/USD below the key support level of 1.0800 for the first time since early August, all the while benefiting from a strong rebound in the US dollar and dovish comments from ECB officials. EUR/USD quickly lagged behind Friday's recovery attempt and faced increasing selling pressure at the beginning of the week, all the while against the backdrop of the continued upward movement of the US dollar, with the pair hitting another low of 1.0792 yesterday. Potential downside looms as speculation that the Federal Reserve will cut interest rates by 50 basis points in November has been refuted as the latest data showed the resilience of the US economy. The market interpreted the recent comments of ECB officials as their increasing comfort with the inflation outlook in the eurozone. As a result, the ECB seems 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 the possibility of a larger rate cut of 50 basis points. Such a move could weigh on the euro and put downward pressure on EUR/USD. The euro is under downward pressure after the ECB decided to cut interest rates by 25 basis points last week.

EUR/USD broke below the 1.0811 level again yesterday after hitting a low near 1.0792 last week and is now trading around 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 bounce could see further gains, but the bears are likely to defend the 1.0900 psychological area vigorously. A rejection at this level would reaffirm the downtrend and could push the pair back below the 1.0800 psychological support level. A break below this level could test the 200-day moving average at 1.0872, and 1.0740 (61.8% Fibonacci retracement of the 1.0448 to 1.1214 range), while the technical Moving Average Convergence Divergence (MACD) indicator continues to point to downward pressure, suggesting 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, indicating a meaningful shift in momentum, and the rebound targets are 1.0931 (14-day moving average) and the 1.1000 integer resistance level.

Today, it is recommended to go long on the euro before 1.0788, stop loss: 1.0770, target: 1.0850, 1.0860.

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