Dollar Index

The dollar index, which measures the greenback's value against a basket of six currencies, rose to a near three-month high of 104.57 on Wednesday as traders flocked to the greenback. The rally was driven by continued divergence in the global economy, a more hawkish Federal Reserve and an upbeat forecast for U.S. growth from the International Monetary Fund (IMF). The Fed's Beige Book suggested slower inflation and sustained economic activity. As investors continue to be immersed in the "Trump deal" "Fed's further easing prospects and the upcoming release of important US economic data, the foreign exchange market did not change anything, and the US dollar gathered further momentum and reached a new high in another trading day. The US dollar index rose further and finally broke through the key 104.00 mark to 104.57, setting a new high despite a slight slowdown in US bond yields. In fact, the International Monetary Fund (IMF)'s updated growth forecast is expected to be favorable for the US economy, which helps the US economy outperform other countries and support the US dollar, which may trigger a more cautious stance from Fed officials.

From the daily chart, the US dollar index rose above the key 200-day moving average of 103.81 in the middle of the week, and 104.00 (round mark) to 104.57 near the three-month high. But the 14-day relative strength index (RSI) is in the overbought area of ​​73.40, while the moving average convergence divergence (MACD) shows a flat green bar, The upward momentum seems to be fading, indicating that it may present a strong technical pullback in the short term. Therefore, the index may test the 200-day moving average of 103.81 in the short term, and if it breaks, it will point to 103.45 (120-day moving average), and 103.00 (23.6% Fibonacci retracement of 100.16 to 103.87). On the other hand, although the downward pressure on the US dollar index has weakened in recent days, the US dollar index will once again challenge the 104.72 (76.4% Fibonacci rebound of 106.13 to 100.16), and 104.75 (July 29 high) area levels.

Today, consider shorting the US dollar index near 104.55, stop loss: 104.70, target: 104.10 104.00

WTI Crude oil

Crude oil faced selling pressure, pushing crude oil prices back to $71.00. Traders flocked to safe-haven assets such as the US dollar, while bonds and stocks fell sharply. In Asia on Wednesday, US WTI crude oil prices traded in a bullish trend for the third consecutive day, trading near $71.00. WTI oil prices remained close to more than a week high hit on Tuesday, as China's demand is expected to improve and the ongoing geopolitical risks caused by the conflict in the Middle East. Investors still hope that China's recently announced massive stimulus measures will lead to a lasting economic recovery in the world's second-largest economy and boost fuel consumption in the world's largest crude oil importer. In addition, concerns about further escalation of the conflict in the Middle East may affect supply in major oil-producing regions and tighten market balances in the coming months. This provided support for crude oil prices. Meanwhile, US crude oil inventories rose more than expected last week, while the US dollar continued to strengthen to 8 The highest level since the beginning of the month has made bulls reluctant to open new bets, thus inhibiting further strength in crude oil prices.

Crude oil prices are facing increasing pressure, and according to the recent report of the U.S. Energy Information Administration (EIA), although the supply is sufficient, the market seems to be awash with oil for the rest of 2024. The road to recovery in crude oil in the coming days is challenging. First, the key level of the 65-day moving average of $72.47 must be recaptured again. From there, $73.04 (50.0% Fibonacci rebound from $77.93 to $68.15), coupled with the 100-day simple moving average of $75.11 could be the first big hurdles ahead. On the downside, traders need to set their sights on lower levels, namely $70.00 (market psychological level), a break of which will move towards $68.15 (the 18th low of this month), and $66.18 (the low of October 1st).

Consider going long on crude oil near 70.80 today, stop loss: 70.60; target: 72.00; 72.20

Spot gold

Gold prices retreated from the all-time high near $2,558.50 set earlier in the day, trading just below $2,720. Rising U.S. Treasury yields and continued strength in the U.S. dollar made it difficult for gold prices to hold their ground midweek. Gold prices hit another all-time high of $2,758.50.00 in Asia on Wednesday. Continued strength in the U.S. dollar and U.S. Treasury yields weighed on gold prices. U.S. bond yields and continued strength in the U.S. dollar are two fundamental factors that affect the price of interest-free gold. In addition, the increased likelihood that the U.S. Federal Reserve will take a gradual path of rate cuts has also become a positive factor for U.S. yields, and a rising U.S. dollar has weighed on gold prices. San Francisco Fed President Mary Daly's latest remarks support expectations of a gradual easing by the Fed. Gold prices hit a new all-time high of $2,758.50 this week despite continued strength in U.S. bond yields and the dollar. Escalating geopolitical tensions between Iran and Israel, as well as the restart of de-dollarization talks, supported gold sentiment.

From the daily chart, gold prices are likely to test a technical pullback from the all-time high of $2,754.00 to the $2,715 level in the short term. A sustained break below the latter could threaten the psychological threshold of $2,700. The last line of defense for gold buyers is currently seen at $2,671.20 (14-day moving average) during the day. The 14-day relative strength index (RSI), a technical indicator, has turned negative, easing from extreme overbought conditions and is currently trading around 64.50. This leading indicator supports the recent downside in gold prices but keeps buyers hopeful. In the event of a rebound, gold prices need to rule out the all-time high of $2,751.20 to ensure progress towards the psychological barrier of $2,800. Before that, $2,765, and $2,790 (upper line of the rising channel since June) may act as a strong resistance.

Consider going long on gold before 2,710.00 today, stop loss: 2,705.00; target: 2,728.00; 2,735.00

AUD/USD

AUD/USD quickly eroded Tuesday's gains and faced fairly strong selling pressure again on Wednesday, challenging the 0.6620-0.6630 area where the key 200-day SMA converges. Following a weak opening to 0.6650, a near one-and-a-half-month low, AUD/USD encountered renewed long interest midweek, managing to climb to just below 0.6700. Despite the dollar's further gains since the beginning of the month and lingering concerns about the effectiveness of China's recent stimulus measures, the Australian dollar remains bullish. A modest rebound in copper and iron ore prices further supported the AUD. This price action reflects some hope that China's economic stimulus measures will be implemented. The minutes of the RBA meeting subsequently released showed a more dovish tone compared with August. In addition, RBA Deputy Governor Hauser tempered expectations of RBA easing on Monday. Although the potential Fed rate cut may provide some support for AUD/USD later this year, the uncertainty surrounding the Chinese economic outlook still poses a challenge to AUD/USD.

From the daily chart, the 14-day relative strength index of the technical indicator fell to around 36.80 levels. Short-term momentum seems to have signs of turning from strong to weak. If AUD/USD falls further, it may once again suppress AUD/USD to 0.6613 (200-day moving average), and the September low of 0.6622 (September 11) support. Further downside test 0.6600 (market psychological level). On the downside, first watch out for the October bottom of 0.6650 (October 22), the next level will point to the 0.6695 (Tuesday's high), and 0.6700 (round mark) area levels.

Today, consider going long on the Australian dollar before 0.6615, stop loss: 0.6605; target: 0.6660; 0.6670.

GBP/USD

The GBP/USD pair rose slightly to 1.3000 in Asian trading on Wednesday. However, the pound faced headwinds due to the decline in consumer and producer inflation data, coupled with weak UK labor market data, and fell to 1.2920. This week, GBP/USD tested a new nine-week low, breaking through 1.3000 to 1.2907, which has kept GBP/USD consolidating below the key level recently. Bank of England Governor Andrew Bailey spoke for the first time in four schedules this week. BoE Governor Bailey generally stuck to the recent middle path, though the BoE governor did express some regrets about the BoE's complacency on recent financial stability risks. With three more meetings to attend this week, GBP traders will be watching closely for any repetition in the content of Governor Bailey's speech. GBP traders will then focus on the UK Purchasing Managers' Index (PMI) data due on Thursday.

GBP/USD is facing increasing selling pressure as it falls below the key psychological level of 1.3000. GBP/USD is currently trading around 1.2920, hovering above the 200-day moving average of 1.2801, which acts as key support. GBP/USD has maintained its downward momentum from the September high near 1.3434, indicating that bulls are losing momentum, and has formed lower highs and lower lows since mid-September, which suggests that bears are currently in control. The MACD indicator also paints a bearish picture, which indicates that GBP/USD is at risk of further downside, especially if it falls below 1.2800 (psychological level), and 1.2801 (200-day moving average). The next support level appears near 1.2750. On the upside, a rebound to 1.3000 (market psychological barrier) is needed, and the next step is to rise above the 14-day moving average near 1.3041 to turn market confidence back to the bulls.

Today, it is recommended to go long GBP before 1.2900, stop loss: 1.2890, target: 1.2960, 1.2970

USD/JPY

On Wednesday, USD/JPY rose sharply in the North American session, driven by a close positive correlation with the US 10-year Treasury yield, while traders remained concerned about the US election. The pair reached a high of 153.19. The yen continued to slide against the dollar during Asian trading on Wednesday, falling to a fresh three-month low near 153.00. Uncertainty about whether the Bank of Japan can raise interest rates further this year has been a key factor in the yen's decline since the beginning of the month. This has prompted Japanese officials to issue verbal warnings about potential government intervention, although this has provided little respite for yen bulls. Even risk aversion and tensions in the Middle East have failed to boost the safe-haven yen. Meanwhile, the recent rise in US Treasury yields to three-month highs supports the prospect of further declines in the low-yielding yen in the near term. In addition, the continued strength of the US dollar to its highest level since early August, supported by bets that the Federal Reserve will slow the pace of rate cuts, suggests that the path of least resistance for USD/JPY remains to the upside.

USD/JPY broke through key resistance near 152.00 (market psychological level) and the 150-day moving average of 152.08 yesterday. From a momentum perspective, buyers have the upper hand. The technical indicator 14-day relative strength index (RSI) is making a new high at 71.28, suggesting that bulls are gathering strength. A daily close above 153 - 153.19 could trigger a test of 153.40 (61.8% Fibonacci rebound from 161.95 to 139.58). Further strength could see USD/JPY head towards 154.00 (round number). Conversely, if USD/JPY falls below 152.00, the first key support would be 151.38 (200-day moving average), followed by 151.00 (round number).

Today, we recommend shorting before 153.00, stop loss: 153.20; target: 152.05, 152.00

EUR/USD

Growing downward pressure pushed EUR/USD to a new low around 1.0760 for the first time since late July. This move was mainly due to the strong performance of the US dollar and the lack of meaningful news from ECB policymakers. At the beginning of this week, EUR/USD gained further space at the lows, breaking below 1.0800 and testing into key technical support. If it effectively breaks below the lows, it may test a new 16-week low. ECB President Lagarde made few appearances on Tuesday, but the talking points ranged from lackluster to unremarkable, which did little to support the "euro". ECB President Christine Lagarde noted that the ECB was "not unhappy with what it sees" and added that the ECB "cannot jump to the conclusion that the inflation target is a done deal", but her speech did not inspire anyone in particular and did not provide any forward guidance worth noting for currency markets as EUR/USD has fallen for the fourth consecutive week.

EUR/USD maintains bearish pressure and trades below 1.0800, continuing to show bearish momentum. EUR/USD has been falling since mid-September, breaking below the key support level of 1.0800, and from a momentum perspective, the MACD indicator shows a strong bearish signal, with the MACD line extending further below the signal line. The bar remains in negative territory, indicating that the current downtrend may continue in the short term. As long as EUR/USD remains below these levels, the downtrend remains favored, and is currently testing 1.0736 (July 3 low), 1.0740 (61.8% Fibonacci retracement of 1.0448 to 1.1214) will become the next major support area. The next level will point to 1.0700 (round mark). If it recovers, it needs to break above the 200-day moving average of 1.0870 to release a potential reversal signal to 1.0892 (14-day moving average), and 1.0900 (round mark).

Today, it is recommended to go long on EUR before 1.0770, stop loss: 1.0750, target: 1.0830, 1.0840.

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.