USD

The U.S. dollar remained very calm on Wednesday and further rebounded during the U.S. trading session. The Dollar Index traded around 106.70 as market sentiment turned risk-on ahead of NVIDIA's earnings release after the U.S. market close. The Dollar Index, which measures the value of the U.S. dollar against a basket of currencies, rose steadily to 106.70. The upward trajectory of the Dollar Index has been driven by factors such as recent strong economic data, rising yields, and a less dovish stance by the Federal Reserve. Other contributing factors include geopolitical tensions, the Fed’s cautious comments on interest rates, and robust U.S. economic data. Supported by the resilience of the economy and limited expectations for aggressive easing by the Federal Reserve, the uptrend remains intact. That said, a pullback or a period of consolidation may occur after the index reaches the annual high of around 107.00.

From a recent technical perspective, the Dollar Index continues to maintain its bullish momentum, supported by positive technical indicators. The 14-day Relative Strength Index (RSI) is approaching the overbought zone (last reported at 67.20), indicating potential consolidation. However, the Moving Average Convergence Divergence (MACD) remains bullish, suggesting the uptrend may continue. If these technical indicators continue to improve, the Dollar Index could have the opportunity to target 107.00 (psychological round number) and 107.07 (last week's high). A breakout could lead to testing the 2023 high of 107.34 (October 3). On the downside, key support zones to watch include 106.06 (Wednesday’s low) and the 106.00 (psychological threshold) area. A break below could further test 105.53 (April 11 high), which should prevent any decline to 105.38 (the 38.2% Fibonacci retracement of 114.78 to 99.57).

Today, consider shorting the Dollar Index around 106.78, with a stop-loss at 106.90 and targets at 106.30 and 104.20.

WTI Spot Crude Oil

On Wednesday, U.S. WTI crude oil prices traded near and slightly above $69.00. WTI prices were muted following Ukraine's first use of U.S.-supplied ATACMS missiles to strike Russian territory. On Tuesday, Russia's Ministry of Defense reported that Ukraine attacked a facility in the Bryansk region with six ATACMS missiles. The escalation of geopolitical tensions may temporarily support WTI prices. This highlights a renewed intensification of the Russia-Ukraine conflict, bringing the risk of supply disruptions in the oil market back into focus. Additionally, Iranian Supreme Leader Ayatollah Ali Khamenei warned of a "harsh response" to Israel’s recent airstrikes, raising concerns about potential crude supply interruptions in the region. These developments could provide support for WTI prices.

On the other hand, China’s oil demand has significantly slowed this year. In October, China’s crude oil demand fell by -5.4% year-on-year, which might exert selling pressure on crude oil prices, as China is the world’s second-largest consumer of crude oil.

Earlier this week, crude oil prices rebounded, but the upward momentum stalled near the first key resistance at $70.00 (a psychological threshold). Concerns over China persist, and from a fundamental perspective, ignoring developments between Russia and Ukraine, downside risks outweigh upside potential.

On the upside, $70.00 (psychological level) and $70.05 (the 30-day simple moving average) are the first obstacles before reaching $71.34 (the 50.0% Fibonacci retracement of $64.75 to $77.93). The next resistance zone lies at $72.55 (October 7 high). On the downside, traders should look for initial support at $67.12 (the level sustained in May and June 2023). If broken, the year-to-date low of $64.75 will come into play, followed by the 2023 low of $64.38.

Today, consider going long on crude oil around $68.80, with a stop-loss at $68.60 and targets at $70.00 and $70.20.

XAUUSD

After a pullback during the European trading session, gold regained its appeal and climbed to $2,650. Escalating geopolitical tensions supported gold prices, while rising U.S. Treasury yields limited the upside. Gold attracted follow-through buying for the third consecutive day mid-week, climbing to a one-and-a-half-week high during the Asian session, trading around the $2,638–$2,640 region. Intensifying Russia-Ukraine tensions boosted demand for traditional safe-haven assets, and a subdued U.S. dollar also benefited the precious metal. Nonetheless, comments from Russian and U.S. officials overnight helped alleviate fears of a full-scale nuclear war, as reflected in the generally positive tone in equity markets. Heightened concerns about the Russia-Ukraine crisis triggered further gold price increases. Notably, renewed geopolitical tensions stemmed from reports that the Biden administration authorized Ukraine to use U.S.-made weapons to attack Russian territory over the weekend.

Additionally, the strong recovery in U.S. Treasury yields supported the dollar, necessitating caution before positioning for further gold price gains.

On the daily chart, gold’s rebound from its all-time high of $2,790 to last week’s low of $2,536 has gained significant momentum, breaking above the bullish 100-day Simple Moving Average (SMA) near $2,554.50 per ounce. This region is slightly above the November low of $2,536. As gold prices briefly surpassed the initial resistance at $2,640 per ounce, technical indicators like the 14-day Relative Strength Index (RSI) rebounded sharply from around 33 to near 48, indicating potential for further intraday gains toward the 14-day SMA around $2,649. Gold could then rise toward the congested area of $2,670–$2,672. Follow-through buying might push gold back to the psychological $2,700 mark.

On the downside, the $2,622–$2,620 area currently seems to protect the immediate downside ahead of the psychological $2,600 level. A convincing break below this level could accelerate the decline toward $2,580 (the November 14 high), followed by the 89-day SMA near $2,572. A decisive breach of this level would be seen as a new trigger point for deeper bearish moves.

Today’s trade recommendation: Consider going long on gold before $2,645.00, with a stop-loss at $2,642.00 and targets at $2,665.00 and $2,670.00.

AUDUSD

On Wednesday, the AUD/USD faced strong downward pressure again, falling to the 0.6500 support level and hitting a two-day low as the U.S. dollar continued to improve. The U.S. dollar alternated between gains and losses mid-week amid escalating geopolitical tensions and solid safe-haven demand. Nonetheless, the Australian dollar performed well, reaching a one-week high near 0.6545 and rising for the third consecutive day. This was partly supported by the Reserve Bank of Australia (RBA)’s hawkish tone in its meeting minutes.

Additionally, the sustained rise in copper and iron ore prices contributed to the Aussie’s notable rebound. Despite lingering investor skepticism over China’s recent stimulus measures, the continued strength in copper and iron ore prices boosted optimism earlier this week. Domestically, the RBA kept the policy rate unchanged at 4.35% during its November 5 meeting, in line with market expectations. Australian inflation data provided further evidence of cooling, with September’s Consumer Price Index (CPI) down to 2.1% and annual inflation for Q3 falling to 2.8%.

The prospect of Federal Reserve rate cuts might support AUD/USD, but risks remain. Notably, if Donald Trump takes office in the U.S. and brings inflationary pressures, the U.S. dollar might remain resilient, limiting significant upward potential for the Aussie.

On the daily chart, AUD/USD climbed back above the 0.6500–0.6545 range mid-week. In the short term, if the bulls regain control, the next resistance is at 0.6600 (a psychological level). A breakout could lead to 0.6629 (the 200-day Simple Moving Average), followed by 0.6678 (the 100-day SMA) and 0.6687 (the November 7 high). Technical indicators like the 14-day Relative Strength Index (RSI) remain in negative territory near 43.

On the downside, initial support lies at 0.6500 (round number). A break below could target the November low of 0.6440 (November 14), followed by the 2024 low of 0.6347 (August 5).

Today’s trade recommendation: Consider going long on AUD/USD before 0.6490, with a stop-loss at 0.6480 and targets at 0.6545 and 0.6560.

GBPUSD

On Wednesday, GBP/USD lost traction and retreated to 1.2650. Despite stronger-than-expected UK inflation data that initially boosted the pound earlier in the day, a risk-averse market environment caused the pair to reverse its gains. GBP/USD fluctuated near 1.2700 mid-week, with no significant U.S. economic data released on Wednesday, leaving room for the pound to dominate market attention. Investors are focused on whether the Bank of England (BoE) will cut rates further this year. During Tuesday's monetary policy report hearing, the BoE adopted a cautious stance, stating that interest rates remain "moderately restrictive," leading rate traders to believe that further cuts may not be imminent.

On Thursday, U.S. initial jobless claims for the week ending November 15 will be released, expected to show a slight increase. The U.S. S&P PMI activity data, a key event for the week, will not be published until Friday. Last week, GBP net long positions rose for the first time in six weeks, suggesting some bottoming support for the pound. The recent weakness in the pound was primarily due to softer UK labor market data, but the BoE's cautious stance on rate cuts may help limit the downside.

Technical outlook:

Despite finding temporary support and rebounding from last week’s low of 1.2596 to just below 1.2700, GBP/USD’s short-term trend remains bearish. The pair has dropped 6.23% from its September high of 1.3434. On the daily chart, the 14-day Relative Strength Index (RSI) has consolidated around the low level of 30 this week, suggesting spot prices might continue to seek support near the 1.2600–1.2650 region. A break below 1.2600 (psychological level) and 1.2596 (last week’s low) could pave the way for further declines. Conversely, if GBP/USD rebounds in the short term, it could rise towards the resistance zone between 1.2752 (10-day moving average) and 1.2800 (psychological level).

Trade recommendation: Consider going long on GBP before 1.2635, with a stop-loss at 1.2620 and targets at 1.2700 and 1.2710.

USDJPY

The USD/JPY extended its overnight turnaround from a more-than-one-week low. A decline in safe-haven demand, coupled with uncertainty surrounding the Bank of Japan (BoJ), weakened the yen. Expectations that the Federal Reserve will not aggressively ease policy provided some support to the dollar and the currency pair. Mid-week, the yen experienced two-way fluctuations with little overall change against the dollar.

Russia’s announcement of lowering its nuclear strike threshold prompted some safe-haven flows into the yen. Global risk aversion caused a sharp drop in U.S. Treasury yields, further benefiting the low-yielding yen and pushing USD/JPY down to a more-than-one-week low near the 153.30–153.25 region. However, the initial market reaction quickly faded after comments from Russian and U.S. officials alleviated fears of a full-scale nuclear war. Additionally, continued uncertainty over the timing of further BoJ policy tightening suppressed the yen, offsetting the slight softness in the dollar.

Following Japan's trade balance release, the yen remained subdued, and USD/JPY continued to rise, extending the previous night’s sharp rebound of over 150 pips. That said, speculation about potential Japanese intervention in the forex market to support the yen, combined with geopolitical uncertainties, could limit yen shorts and cap USD/JPY gains.

Technical Analysis:
USD/JPY’s robust overnight rebound indicates that the recent corrective decline from multi-month highs has ended. Subsequent upside moves, coupled with bullish daily chart oscillators, suggest that USD/JPY may advance further. However, bulls need to confirm strength by breaking through the 155.00 psychological level. A sustained move above the weekly high near 155.35 would reinforce the bullish outlook, paving the way for USD/JPY to climb to the mid-point resistance at 155.70, then to the 156.00 round number. This momentum could further extend to retest the multi-month high near 156.75 reached last Friday.

On the downside, the 154.40–154.35 region currently serves as initial support, followed by the 154.00 psychological level. Further declines could find support around the 153.30–153.25 zone (the overnight swing low). Below this, the next relevant support levels are near the 153.00 round figure and the 152.70–152.65 area.

Trade Recommendation: Consider shorting USD/JPY below 155.60, with a stop-loss at 155.90 and targets at 154.50 and 154.30.

EURUSD

Renewed buying pressure provided additional support for the U.S. dollar, dragging EUR/USD to the edge of the critical 1.0500 zone after yet another failed attempt to break above the key 1.0600 level. Mid-week, EUR/USD fluctuated between 1.0550 and 1.0600, testing lower levels before recovering. The final reading of the Eurozone Harmonized Index of Consumer Prices (HICP) did not impact the euro, as the U.S. dollar faced weakness due to a lack of economic data. The Eurozone's October HICP annual rate stood at 2.0%, unchanged from the preliminary figure. The euro showed little reaction to this data, with limited interest from both bulls and bears.

U.S. economic data releases have remained light in the first half of the week. Ahead of Thursday’s U.S. initial jobless claims and retail sales data, the market has been subdued. Initial jobless claims are expected to show a slight increase for the week ending November 15. Additionally, U.S. S&P PMI activity data, a key indicator this week, will not be released until Friday.

Technical Analysis:

From the daily chart, EUR/USD has dropped nearly 6.5% from its early September high above 1.1200, rebounding off a low near 1.0500 toward 1.0600. Despite the recent uptick, bullish momentum remains limited, with the pair still bearish overall. Technical indicators like the 14-day Relative Strength Index (RSI) hover near a bearish 36.50, signaling weak short-term upward potential. If EUR/USD falls below the 1.0550–1.0500 zone again, the next target is the 1.0448 level (October 3, 2022, low).If EUR/USD rebounds, the first upside target is at 1.0683 (14-day moving average), followed by 1.0728 (20-day moving average).

Trade Recommendation: Consider going long on EUR/USD before 1.0525, with a stop-loss at 1.0515 and targets at 1.0580 and 1.0690.

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.