US Dollar Index

The dollar closed lower on Monday as markets braced for a data-intensive week in the US. Hopes of a gradual easing by the Federal Reserve and speculation of a Trump victory have limited the dollar's downside so far. The dollar is on track for its best monthly performance in the past two years. Intensified tensions in the Middle East and uncertainty about the US presidential election are likely to boost safe-haven currencies such as the dollar in early Asian trading on Monday. In addition, strong US economic data could prompt the Federal Reserve to take a more cautious stance, boosting the dollar to 104.56, forming a "double top" pattern with last week's high of 104.57. After the European open, the dollar, as measured by the US dollar index, fell to 104.17 as investors brace for an eventful week. In the coming days, the US third-quarter GDP, personal consumption expenditures price index and non-farm payrolls reports will all be released. However, the big picture remains positive as investors' hopes for a big rate cut by the Federal Reserve fade. A string of strong US economic data and speculations that former US President Donald Trump will win the US presidential election on November 5, coupled with his inflationary policies, are pushing US Treasury yields higher and driving the dollar higher.

The US dollar continues to find good support in the coming days, both from the US macro and political dynamics. The US dollar index is expected to extend its gains. In the 4-hour chart, the US dollar index remains within a bullish channel, with steadily higher highs and lows. The pullback from Monday's high of 104.56, and last week's high of 104.57 is seen as a correction. The 4-hour Relative Strength Index (RSI) indicator shows some bearish divergences, but there are no signs of a trend change yet, with the price action well above the 4-hour 50-period simple moving average. Immediate support is found at 103.95, where the mentioned 50-period simple moving average intersects with the price, and then at 103.40 (last week's low). On the other hand, the important resistance is located in the 104.56-104.57 double top range, and after breaking through this area, the resistance is located at 104.85 (78.6% Fibonacci rebound from 106.13 to 100.16). If it breaks, it will challenge 105.00 (market psychological level).

Today, you can consider going long on the US dollar index around 104.20, stop loss: 104.10, target: 104.50 104.55

WTI crude oil

Oil prices plunged by more than 5% as Israel did not attack Iranian oil facilities over the weekend. Investors await the third quarter GDP data from the eurozone and the United States to understand the current health of the global economy. US Trump vowed to increase import tariffs on China by 60%. Commodity markets saw a big move after the Asian market opened on Monday (October 28). The scale of the attack was small because Israel's air strikes on Iran last weekend did not hit key oil facilities. WTI crude oil futures also opened lower, and crude oil prices plummeted to $67.03 after opening, a drop of more than 6%. The scale of Israel's attack last weekend was relatively small, which led some market participants to speculate that tensions may not escalate significantly. At present, the crude oil market is mainly affected by changes in tensions in the Middle East. In addition, the United States is about to hold a presidential election on November 5, and the market is closely evaluating the impact of policy changes brought about by the election on the energy market.

From the perspective of market analysis, oil prices are relatively small in Israel's attack this time, and tensions may not escalate significantly. The current WTI oil price has fallen below $70/barrel to around $67.03, a near one-month low, and more driving factors need to be waited for to drive price changes. After the decline at the beginning of the week, the current $70.00 and $69.78 (61.8% Fibonacci retracement of $64.75 to $77.93) levels are particularly important. If oil prices re-reach this level in the next few trading sessions, it may be possible for oil prices to test $71.34-71 42. Next, the important technical level of $72.89 (38.2% Fibonacci retracement)) and the 100-day moving average (75.02) may be the next big obstacle in the future. On the downside, the main support levels of the short-term market are $67.03 (low at the beginning of the week) and $67.12, which supported prices in May and June 2023. If this level is broken, the downward pressure on oil prices will increase significantly, and the break will point to a lower $66.18 (October 1 low).

Consider going long on crude oil near 67.65 today, stop loss: 67.40; target: 69.00; 69.20

Spot gold

Gold is having a hard time building on Friday’s gains, trading in a narrow range below $2,750 on Monday. However, safe-haven demand from tensions in the Middle East and the US election helped limit losses. Gold fell more than half a percent on Monday and is now trading near $2,740, but still within the small range of the previous week. The precious metal lost ground on reports that demand in China, the largest market for the precious metal, is weakening. However, the precious metal remains supported by safe-haven flows as the conflict in the Middle East continues. The conflict in the Middle East was exacerbated by Israel’s bombing of Iran over the weekend, although Israel’s decision to target only military facilities and, crucially, not oil and nuclear facilities offset the impact of the conflict. The rise in gold was further fueled by the increased uncertainty over the outcome of the US presidential election and the overall downward trend in global interest rates, which makes it more attractive to investors relative to other assets because it does not pay interest. China tops the list of countries seeking to increase their gold reserves. On the other hand, the Fed's slowing pace of rate cuts amid stronger U.S. economic data has weakened gold's trend.

From the daily chart, gold prices are still on an upward trend, although they have stabilized in the $2,700 to $2,760 range over the past week. The 14-day relative strength index (RSI) of the technical indicator reversed the downward trend and moved upward in the bullish area, indicating that buyers are gaining strength. If gold clears $2,747 (Friday's closing price), the next resistance level will be the year-to-date high of $2,758.50. Once exceeded, the next target will be $2,768 (the central axis of the ascending channel) and $2,800 (the round number level). On the downside, if gold prices fall instead of rising and fall below 2,721.90 (23.6% Fibonacci retracement of 2603.50 to 2758.50), the next targets will be $2,700 (market psychological level) and $2,681 (50.0% Fibonacci retracement).

Today, you can consider going long on gold before 2,738.00, stop loss: 2,735.00; target: 2,755.00; 2,760.00

AUD/USD

AUD/USD maintained its decline in early Asian trading on Monday, trading slightly below 0.6600. A stronger US dollar weighed on AUD/USD amid a less dovish Fed stance and a strong University of Michigan sentiment index. Strong US economic data could prompt the Federal Reserve to take a more cautious stance, boosting the dollar against the Australian dollar. However, the Australian dollar rebounded modestly during the early European trading hours on Monday, briefly re-entering 0.6600. Investors are bracing for a week of dense US data as the dollar weakens. Investors are likely to become more cautious ahead of a series of key indicators, including the US third-quarter GDP on Wednesday, the PCE price index on Thursday and the non-farm payrolls report on Friday. In Australia, continued concerns about China offset the impact of hawkish rhetoric from the Reserve Bank of Australia. Data released this weekend showed that industry profits fell 27% year-on-year, highlighting the shaky recovery of Australia's major trading partners, hindering a sharp rebound in the Australian dollar.

At the beginning of the week, the AUD/USD exchange rate was slightly below 0.6600, while the 14-day relative strength index (RSI), one of the technical indicators on the daily chart, was close to 35, reinforcing bearish sentiment. Analysis suggests a bearish outlook in the short term. The pair is trending down in a descending channel pattern. On the support side, AUD/USD may test the area near the middle axis of the descending channel, which is around 0.6580, and 0.6574 (61.8% Fibonacci retracement of 0.6348 to 0.6942), and break towards 0.6507 (August 8 low), and 0.6500 (market psychological level) area levels. Regarding resistance, the immediate obstacle is located at 0.6628 (200-day moving average), followed by the upper line of the descending channel at 0.6650. Breaking this level may allow the pair to test the 100-day exponential moving average level at 0.6695.

Consider shorting the AUD before 0.6605 today, stop loss: 0.6615; target: 0.6560; 0.6550.

GBP/USD

GBP/USD remained firm, rising to the 1.3000 area in the second half of Monday. After the previous week's rebound, the US dollar struggled to find demand as risk sentiment improved on Monday, pushing the pair higher. GBP/USD opened weak on Monday, trading around the 1.2960-1.2955 area in Asian trading, below 1.3000 (market psychological level), and 1.3003 (89-day moving average). However, GBP/USD is still some distance away from the lowest level since August 16th, near the 1.2900 mark, hit last week, and looks vulnerable to continuing the month-long decline in the context of bullish US dollar. In London session, GBP/USD is trading in a narrow range around 1.2980 - 1.2990. GBP/USD is trading sideways as investors focus on a series of US economic data this week and the UK Autumn Forecast Statement to be released on Wednesday. On the other hand, as the UK Consumer Price Index fell to its lowest level since April 2021 and below the central bank's 2% target, market bets on more rate cuts by the Bank of England in November and December are growing, weighing on the pound.

From the daily chart, GBP/USD is currently trading around 1.2970, below 1.3000 (market psychological level), and 1.3003 (89-day moving average). It is the fourth consecutive week of decline. The 14-day relative strength index (RSI) of the technical indicator is well below the 50 level and is currently around 38, supporting the downside bias. If it falls below 1.2907 (last week's near 2-month low), and 1.2900 (round number), the next bearish target is the June 12 high of 1.2861, below which it will challenge the key 200-day simple moving average of 1.2804. Conversely, a correction higher would require a sustained break above the 1.3000 - 1.3003 heart level, followed by support at 1.3049 (50.0% Fibonacci retracement of 1.2665 to 1.3434). Further up, it would point to the 21-day moving average of 1.3072.

Today, we recommend shorting GBP before 1.2985, stop loss: 1.2995, target: 1.2940, 1.2930

USD/JPY

USD/JPY gave up most of its intraday gains after a sharp rebound at the opening. The pair gave up gains as the dollar fell due to uncertainty ahead of the US data release. The scenario of a coalition government in Japan weakens the prospects of a rate hike by the Bank of Japan. After the release of the Japanese election results, the US dollar retraced most of its losses and has so far retreated to 152.50 from a three-month high of 153.88. The yen fell across the board during the Asian session on Monday as the Japanese election resulted in a big defeat for the ruling party. The result opened an uncertain political scenario and called into question the government's support for the Bank of Japan's normalization plan. This situation effectively confirmed that the Bank of Japan will remain on hold at its meeting on Thursday. On the other hand, the US dollar opened the week slightly weaker. Investors may cut some US dollar longs in preparation for a busy week of US GDP, PCE price index and non-farm payrolls reports in the coming days. In addition, the rising odds of Donald Trump winning the presidency have helped the dollar index stabilize near its highest level since July 30 and suggest that the low-yielding yen still has the least downside resistance.

From a technical perspective, the recent breakout above the 150-day moving average (152.11), and 152.00 (round-number mark), followed by a breakout above 153.40 (61.8% Fibonacci rebound from 161.95 to 139.58) to 153.88 (nearly three-month low) can be seen as a new trigger for USD/JPY bulls. This further validates the near-term bullish outlook for USD/JPY and supports a breakout above 154.50 (mid-term uptrend channel axis) to move towards around 156.67 (76.4% Fibonacci rebound). Meanwhile, the daily relative strength index (RSI) has just started to enter the overbought area (70.50), and bulls need to remain cautious. Therefore, the prudent approach is to wait for a near-term consolidation or a small pullback before establishing a position for further gains. However, the USD/JPY consolidation and pullback currently seem to find support at 152.00 (round mark); 152.20 (lower line of the daily rising channel); and 152.22 (last weekend's closing price). Downward sustainable direction is 151.44 (200-day moving average) level.

Today, it is recommended to short before 153.50, stop loss: 153.70; target: 152.50, 152.30

EUR/USD

On Monday, an acceptable recovery in risk-related areas provided additional support for EUR/USD and lifted it back above 1.0800 after uncertainty about the dollar's price action ahead of key data releases from across the ocean. During the Asian trading session on Monday, EUR/USD remained stable just below 1.0800. However, EUR/USD may come under pressure from a stronger dollar as recent US economic data has been positive, reinforcing market expectations that the Fed will be less dovish in November. After the European market opened on Monday, during the trading session, EUR/USD rose slightly above 1.0800. In the data-intensive week ahead, traders will receive economic growth and inflation data from the United States and the eurozone, two major indicators that usually determine the direction of interest rates, which are important drivers of currencies. In addition, the heightened uncertainty of the conflict in the Middle East may boost the safe-haven appeal of the dollar.

From the daily chart, the 14-day relative strength index (RSI) and the stochastic index of the euro against the US dollar have slightly recovered from the oversold area, and in the short term, there may be signs that the euro's current round of decline will be slowed down. After hitting the low of 1.0777 on August 1, the currency pair has revisited this area and re-entered the psychological barrier of 1.08. Therefore, once the currency pair falls back to the low of 1.0760 last Wednesday, the next level of attention is 1.0700. At this stage, if there is no clear break below this area in the short term, it is estimated that the euro against the US dollar will be brewing a round of rebound. The first target is 1.0835 (the upper track resistance line of the large triangle on the daily chart). If it breaks, it may push the currency pair to 1.0871 (last week's high) and 1.0880 (50-week moving average) resistance. The next level will point to 1.0921 (38.2% Fibonacci retracement level from 1.0448 to 1.1214).

Today it is recommended to short the Euro before 1.0830, stop loss: 1.0840, target: 1.0790, 1.0780.

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