US Dollar Index

The US dollar index, which measures the value of the greenback against a basket of six currencies, fell on Wednesday following mixed economic data. The September ADP employment change report exceeded market expectations for October, but a downward revision to third-quarter GDP growth sent the dollar lower. However, investors remained cautious ahead of Friday's nonfarm payrolls report, which could paint a different picture of the labor market. The dollar remained stable, closing almost unchanged from Monday's close. The dollar's stability came amid a slowdown in the rise in US bond yields, uncertainty ahead of the US election, and expectations for key US data releases. The US dollar index remained volatile around the 104.30 low amid generally cautious trading in global markets. The US dollar index extended its gains at the start of the week and hit a three-month high of 104.63. Despite a slight decline in JOLTS job openings in September, the US labor market remains strong, as indicated by solid hiring and quits rates. The US dollar index stabilized in the 0.5% range for the fifth trading day, quietly finding its footing after rising nearly 5% in the past thirty days. Since last week, foreign exchange market participants have adopted a wait-and-see attitude after four weeks of gains fundamentally changed the technical situation of the US dollar. However, major news next weekend could strengthen or reverse the current trend.

In terms of this week's trend, the US dollar index is likely to remain in the 104.00-104.60 range before the release of the US October non-farm payrolls data on Friday. Bullish investors should proceed with caution as the 14-day relative strength index (RSI) is about to break into the overbought area (latest at 65.50). Therefore, once the US dollar index makes a short-term technical adjustment, the index may first give back to the 103.82 (200-day moving average), and 103.53 (23.6% Fibonacci retracement of 100.16 to 104.57) support area. However, only a sustained consolidation below 103.00-102.7 will change the main outlook to another decline in the US dollar. On the other hand, a rebound above 104.63 (Tuesday's high) on the back of all the important news will take the US dollar index to the next stop of 104.85 (78.6% Fibonacci rebound from 106.13 to 100.16), and 105.00 (market psychological level).

Today, consider shorting the US dollar index around 104.22, stop loss: 104.35, target: 103.90, 103.80

WTI crude oil

After two days of decline, WTI crude oil prices rebounded to around $68.80, up about 2.2%. The unexpected decline in US crude oil inventories supported crude oil prices. After two days of decline this week, WTI crude oil prices stabilized at around $67.40 in the Asian trading session on Wednesday. The unexpected decline in US crude oil inventories supported crude oil prices. Data from the American Petroleum Institute (API) on Tuesday showed that U.S. weekly crude oil inventories fell by 573,000 barrels in the week ending October 25, contrary to expectations of a 2.3 million barrel increase. Inventory levels last week were 1.643 million barrels. Investors now await the EIA crude oil inventory report. In addition, Israeli Prime Minister Benjamin Netanyahu will soon meet with several ministers and military and intelligence leaders to discuss a diplomatic solution to the Lebanon war, and oil prices are under downward pressure. Therefore, although oil prices will rebound slightly this week due to the announcement of the SPR and technical reasons, the broader trend is bearish. Weak demand forecasts, coupled with ongoing geopolitical risks, may limit significant gains in oil prices. Unless tensions in the Middle East have a direct impact on supply, crude oil prices are expected to remain under pressure, with the possibility of retesting recent lows.

From the perspective of the trend in the past two weeks, crude oil prices have tilted the balance towards bears after falling below the psychological mark of $70.00 again. In October, they managed to keep the price above the 30-month moving average (75.92), which is roughly the same as the 50-week moving average (76.10), which has been a key support line since the beginning of the year and was broken by the bears in July. As the new week begins, the price is testing the double bottom level of the past year and a half at 64.30-64.38 support. A close below the above support area in October will be a major bearish sign and may accelerate the decline of oil prices, with the risk of a price collapse. The next downside target is $62.34 (December 1, 2021 low), which is an important psychological level. If oil prices re-cross $68.35 (Tuesday's low) and $69.78 (61.8% Fibonacci retracement of 64.75 to 77.93) in the short term. Next, $70.00 (market psychological mark) may be the next big hurdle in the future.

Consider going long on crude oil near 68.60 today, stop loss: 68.40; target: 69.80; 70.00

Spot Gold

Gold prices retreated from the all-time high near $2,790 set earlier in the day, trading around $2,787. However, the downside for gold prices remains limited as the dollar struggles to find demand after the release of mixed macroeconomic data. On Wednesday, gold prices broke through the $2,770 mark as market participants continued to seek safe havens ahead of multiple blockbuster data and the looming US election. Gold prices gained upward momentum before the US stock market opened, and the rise accelerated after the release of US economic data. Investors are focused on the non-farm payrolls report to be released on Friday, and caution is pervasive. In between, the US will also release the personal consumption expenditures (PCE) price index, which is the most valued inflation indicator by the Federal Reserve. This combination of measures could set the tone for the upcoming Federal Reserve monetary policy decision, which is scheduled to be held next week and announced on Thursday, November 7.

After recovering to a new all-time high of $2,774.80 on Tuesday, gold prices hit a new high of $2,790 on Wednesday. The 14-day relative strength index (RSI) of the technical indicator is firmly in the positive overbought zone of 73.30, but there is still room to run. If buyers extend the gains of gold prices above $2,790, gold prices will test $2,800. The next is the psychological level of $2,850, and the round number level of $2,900. On the other hand, if sellers step in and push the price below $2,758 (previous all-time high), the next support will be $2,721.90 (23.6% Fibonacci retracement of 2603.50 to 2758.50), and a break below that will target $2,700 (market psychological level) and $2,681 (50.0% Fibonacci retracement).

Consider going long on gold before 2,783.00 today, stop loss: 2,780.00; target: 2,798.00; 2,800.00

AUD/USD

AUD/USD regained upside momentum, falling for three consecutive days, rising to just below the key 0.6600 level, supported by the continued bid-ask bias around the US dollar. AUD/USD continued to face downward pressure during the week, falling for the third consecutive day and revisiting the two-month low of 0.6545-0.6540 area. The continued decline of AUD/USD also continued the recent momentum of breaking below the key 200-day moving average, which is currently located at 0.6627. AUD/USD is under further downward pressure as the downward bias re-emerges, which also keeps most risk-related assets depressed. In addition to the strengthening of the US dollar, the main reason for the continued weakness of AUD/USD is that the effect of the new economic stimulus measures introduced by China earlier this month remains unclear. In addition, the renewed rise in copper prices and the slight decline in iron ore prices highlight the market's view that the outlook for the Chinese economy is uncertain, which has combined with the continuous selling pressure on the Australian dollar so far. Although the potential interest rate cut by the Federal Reserve later this year may provide some support for AUD/USD, the continued uncertainty of the Chinese economic situation may weigh on AUD/USD.

From the recent technical trend observation, as of now, the market generally no longer expects the Reserve Bank of Australia to cut interest rates this year. Against the background of a strong US dollar, the Australian dollar may consolidate in a sideways and bearish trend in the short term. The 14-day relative strength index (RSI) of the technical indicator has dropped to around 33. If AUD/USD falls further, it may push AUD/USD to Wednesday's low of 0.6545 (October 29), and then the 2024 low of 0.6400 (round mark). On the upside, the first key resistance level is 0.6600 (market psychological level), and the 200-day moving average of 0.6627. If it breaks, it will further challenge the 14-day simple moving average of 0.6655, and the 89-day moving average of 0.6700).

Today, you can consider going long on the Australian dollar before 0.6560, stop loss: 0.6550; target: 0.6600; 0.6610.

GBP/USD

GBP/USD briefly recovered above 1.3000 from Wednesday's intraday low below 1.2950. Investors assessed the UK Autumn Budget and US data that showed the US economy expanded at a slower pace than expected in the third quarter. In early Asian trading on Wednesday, GBP/USD remained near 1.3000 despite the dollar's consolidation. The Job Openings and Labor Turnover Survey (JOLTS) report released by the US Bureau of Labor Statistics (BLS) showed that the US JOLTs job openings were 7.443 million, lower than the previous value of 7.861 million (revised from 8.04 million) and lower than the expected value of 7.99 million. The report may prompt the Federal Reserve (Fed) to make dovish bets and weigh on the dollar against the pound. All 111 economists in a Reuters poll believe the Fed is likely to cut its key interest rate by 25 basis points on November 7, with a majority of more than 90% expecting another 25 basis point cut at the December meeting.

The British pound has breached 1.3000 (a psychological level) for the first time in five days after the US jobs report increased the likelihood of a rate cut at the Fed's last two meetings in 2024. Currently, GBP/USD is trading just below 1.3000. GBP/USD has been range-bound between 1.2907 (nearly 2-month low last week) and 1.3049 (50.0% Fibonacci retracement of 1.2665 to 1.3434), unable to break through the bottom/top of this area. In the short term, the pair is inclined to fall, with the initial target leaning towards the 120-day simple moving average of 1.2936, and a breakout towards 1.2907 (last week's near 2-month low). If the former pushes GBP/USD above 1.3000 - 1.3006 (14-day moving average) and achieves a daily close above the latter, further gains can be seen, with 1.3049 being the next key resistance. Once exceeded, the 25-day moving average of 1.3094 will be targeted.

Today's recommendation is to go long GBP before 1.2950, ​​stop loss: 1.2935, target: 1.3000, 1.3020

USD/JPY

On Wednesday, USD/JPY was on the defensive at 153.30 as the yen traded with a mild positive bias, although it lacked bullish confidence. Uncertainty about the Bank of Japan's rate hike, coupled with optimistic market sentiment, limited the yen's upside. Traders also seem reluctant ahead of the release of key US data. The yen was trading in a narrow range against the US dollar during the Asian session as the market was concerned that the Japanese authorities would intervene in the market to support the local currency. However, the yen may lack bullish momentum amid expectations that the loss of the ruling coalition's parliamentary majority may make it difficult for the Bank of Japan to tighten monetary policy further. In addition, high market sentiment is also considered to be another factor weighing on the safe-haven yen. Traders also seem reluctant to make aggressive directional bets and may choose to wait and see ahead of the key decision of the Bank of Japan on Thursday. Apart from this, investors will also face important US macro data this week, namely the US PCE price index on Thursday and the non-farm payrolls report on Friday, which will be released later this week. This will play a key role in influencing the recent US dollar price dynamics and provide some notable thrust to the USD/JPY pair.

From a technical perspective, the 151.50 level, which is the 200-day moving average, was seen as a new trigger by bulls last week. That said, multiple rallies this week have been capped by 153.40 (61.8% Fibonacci rebound from 161.95 to 139.58). Moreover, the 14-day relative strength index (RSI) is in overbought territory, so a recent consolidation or a small correction before a fresh rally cannot be ruled out. However, any subsequent break below the 153.00 mark could find some support near the overnight swing low, around the 152.75 area, and then above 152.00 (round number); 152.20 (lower line of the daily ascending channel); and 152.22 (last weekend’s close). On the other hand, the $153.85-153.90 area now appears to be a strong resistance. If USD/JPY continues to strengthen and breaks through the 154.00 mark, USD/JPY may break through the 154.35-154.40 resistance zone and recapture the 155.00 psychological level. USD/JPY may eventually climb to around 155.20, testing the high of the range in late July.

Today, it is recommended to go short before 153.55, stop loss: 153.75; target: 152.60, 152.50

EUR/USD

On Wednesday, EUR/USD rebounded to around 1.0870. EUR/USD moved further higher, extending its weekly recovery for the third consecutive day and testing the key 200-day moving average at 1.0870 area amid a renewed USD downtrend. Upside for EUR/USD remains limited amid uncertainty over the US presidential election and upcoming heavy US data. US JOLTs job openings fell by 418,000 to 7.443 million as of September, the lowest level since January 2021. Meanwhile, the consumer confidence index rose to 108.7 in October from an upwardly revised 99.2 in September. The reading was a nine-month high as sentiment on the labor market improved. Traders increased bets on the Fed cutting interest rates by just 25 basis points at its November meeting, attracting USD buyers. In the eurozone, the ECB is widely expected to cut the deposit facility rate again, but traders are divided on whether the ECB will continue the rate-cutting cycle at the usual pace of 25 basis points or introduce a deeper cut.

EUR/USD is under pressure to stay above the upward sloping trendline around 1.0750, which started on October 3, 2023, and the daily chart shows the pair at a low of around 1.0450. However, the overall outlook for EUR/USD remains bearish as it remains below the 200-day moving average (1.0870). While the 14-day relative strength index (RSI) is rising, it is still in the negative zone of 42, suggesting more downside ahead. On the downside, if it falls below 1.0750, the major currency pair may weaken further to the round-number support level of 1.0700. Meanwhile, the 200-day moving average near 1.0870 and the psychological figure of 1.09000 become key resistance levels. A breakout point to 1.0933 (38.2% Fibonacci rebound from 1.1214 to 1.0761).

Today, it is recommended to go long on the euro before 1.0855, stop loss: 1.0840, target: 1.0900, 1.0920.

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