US Dollar Index

The US Dollar Index ended its streak of recovery on Wednesday after a disappointing US jobs report and a mixed outlook from the Federal Reserve's Beige Book. Overall, the US economy remains in expansion mode, growing faster than expected, but the soft tone in the labor market gives the market reason to bet on a dovish Fed. The US dollar traded roughly stable midweek, officially starting its trading week after the US market was closed on Monday for Labor Day. The dollar rose slightly against almost all major currencies on the quote board, with the exception of the Japanese yen. Meanwhile, the economic calendar on Tuesday includes the Institute for Supply Management (ISM) manufacturing survey for August. The market began to expect an outperformance from the data again, as US data last week tended to be stronger than expected, but the same could not be said for the ISM results, which were slightly weaker but very much in line with expectations. The dollar and the market may be more sensitive to the busy US labor market related data this week, which may be tricky to interpret given that the market has already priced the Fed's results this year as very dovish.

From the recent trend observation, the US dollar index is at a crossroads in the middle of the week. It is expected that the US dollar index will fluctuate greatly on the chart this week, and a large amount of economic data will appear almost every trading day. If the US dollar index moves upward, 102.00 {market psychological barrier} will be easily broken by bulls. The next level will reach 102.85, the 9-week moving average. And 103.65 {50.0% Fibonacci rebound level from 104.79 to 100.51}, on the downside, the US dollar index broke through 101.52 (23.6% Fibonacci rebound level) yesterday, so the position looks quite weak. After the breakthrough, it will point to 101.00 {round mark}, and 100.62 (December 28 low) will be the level to watch.

Consider shorting the US dollar index around 101.40 today, stop loss: 101.50, target: 101.00, 100.90

WTI spot crude oil

Crude oil prices are still trading sharply lower after some adverse factors emerged in the middle of the week. Delegates said that OPEC is considering delaying the increase in oil production. The US dollar index traded above 101.00 before the release of the US employment report on Friday. Crude oil prices extended losses for a second consecutive day, trading at $70.60 in Asian trading on Wednesday. Crude oil prices fell due to the possible resolution of the political dispute over Libya's suspension of exports and the market's continued concerns about slowing global demand growth. Libya's two legislatures agreed on Tuesday to jointly appoint a central bank governor, which may ease the dispute over control of Libya's oil revenues that has sparked recent disputes. Although the US manufacturing industry recovered slightly in August from the low level in July, it still remained in the doldrums. The U.S. ISM Manufacturing Purchasing Managers Index rose to 47.2 in August from 46.8 in July, below the expected value of 47.5. Data from China, the world's largest crude oil importer, showed that manufacturing activity fell to its lowest level in six months in August, and ex-factory prices fell sharply.

WTI crude oil fell 2% per barrel last week despite an initial 3% increase, and has fallen in seven of the past eight weeks. The technical situation is also unfavorable, with the 50-week moving average (78.74) about to fall below the 200-week moving average (78.26), forming a "death cross". This happened after oil broke out of a consolidating triangle that has been in place for more than two years. These signs point to huge selling pressure, but so far, long-term support for WTI is around $70 per barrel. A break of this support level would lead to a low of $69.18 (the lowest this year). On the upside, $72.10 {August 5 low}, and $72.08 {67.79 to 87.84 78.6% Fibonacci retracement} are the first key resistance levels, and a breakout points to $74.91 {10-day moving average}, and $75.44 {61.8% Fibonacci retracement}.

Today, consider going long on crude oil around $69.80, stop loss: 69.60; target: 70.80; 71.10

Spot gold

After hitting its lowest level since mid-August at $2,470, gold prices rebounded and traded around $2,500. The benchmark 10-year Treasury yield remained in the red below 3.8% after the U.S. data was released, boosting gold prices. Gold prices hovered above the $2,490 mark in Asian trading on Wednesday, taking a breather after three straight losses and waiting to see what is expected ahead of the release of the closely watched July U.S. jobs data. Gold prices are consolidating their sharp rebound from an eight-day low of $2,473. Weak U.S. economic data has increased market bets on a 50 basis point rate cut by the Federal Reserve this month. Increased bets on the Fed's aggressive easing policy could keep demand for zero-yielding gold prices afloat, allowing bulls to regain control. Hopes of new policy support measures from China will also support gold prices. Looking ahead, if risk aversion intensifies and boosts safe-haven demand for the Japanese yen (JPY), gold prices and U.S. government bonds.

From the daily chart, the short-term technical outlook for gold prices remains bullish as long as bulls hold above the 21-day simple moving average of $2,485.00. The 14-day relative strength index of the technical indicator rebounded slightly and was above the 50 level, reporting 54.70, indicating that there may be an upward trend in the future. On the upside, the daily closing of the $2,500 mark is crucial for gold prices to regain their upward momentum. The next important upward resistance is at the historical high of $2,531.70. If it breaks through this level, it will test $2,546 {the central axis of the upward channel on the daily chart}. Once the gold price channel is above this level and confirms it as a support level, it may target the $2578.20 {176.4% Fibonacci rebound level from 2,531.70 to 2,470.80} level. If the gold price consolidates and falls again, it may challenge the 21-day moving average ($2,485) again. After breaking through, it will test the support level of the symmetrical triangle resistance reversal ($2,462). If the gold price falls below this support, a new round of decline will begin.

Consider going long on gold before 2,492.00 today, stop loss: 2,488.00; target: 2,505.00; 2,510.00

AUD/USD

AUD/USD regained balance and returned above the 0.6700 mark, rebounding from a two-week low of 0.6685-0.6680 against the backdrop of renewed weakness in the US dollar. Australia's second quarter GDP quarterly rate was 0.2%, 0.1% higher than the previous value, but 0.3% lower than the expected value. In addition, Australia's August Purchasing Managers' Index was positive, which may provide some support for the Australian dollar and limit the downside of AUD/USD. Currently, traders are focusing on the speech of Reserve Bank of Australia Governor Bullock to be delivered on Thursday to further understand the hawkish stance of the Reserve Bank of Australia on monetary policy. The US dollar was supported as traders assessed the economic and monetary outlook. Currently, traders are waiting for more economic data to be released this week, including the ISM Services Purchasing Managers Index and Non-Farm Payrolls (NFP), to reveal the extent of the Fed's possible rate cut this month.

The daily chart shows that the Australian dollar was trading just above $0.6700 on Wednesday. AUD/USD has fallen below the 14-day moving average of 0.6749, suggesting a short-term bearish trend. In addition, the 14-day relative strength index (RSI) of the technical indicator has also fallen to the 50 level, confirming the bearish bias. On the downside, AUD/USD may fluctuate around the support of 0.6642 {38.2% Fibonacci retracement of 0.6347 0.6824}, and further declines may point to the support of 0.6600 {market psychological level}. On the resistance level, AUD/USD may test the 14-day moving average (0.6749) and then the seven-month high of 0.6798. If it breaks through 0.6798, it will test the seven-month high of 0.6798. The high of 0.6871 on December 28 last year.

Today, you can consider going long on AUD before 0.6710, stop loss: 0.6700; target: 0.6760; 0.6770.

GBP/USD

GBP/USD traded in positive territory above 1.3150 in the second half of Wednesday. The dollar struggled to find demand after weak US data, while the improvement in risk sentiment further supported the pair. GBP/USD was flat around slightly above 1.3100 in early European trading on Wednesday. However, risk aversion ahead of important US events may provide some support to the dollar and drag the pair lower. According to the CME FedWatch tool, a barometer of market expectations for the Fed Funds target rate, the Fed has a 61% chance of a 25 basis point rate cut at its September meeting, while the probability of a 50 basis point cut is 39%. Fed Chairman Jerome Powell said last month that the "time has come" for monetary policy adjustments, suggesting that the U.S. central bank may begin easing monetary policy at its upcoming meeting on September 17-18. Firmer Fed rate cut bets could weigh on the dollar in the short term.

The British pound retreated from multi-month highs above 1.3266 to lows of 1.3087 last week as dollar selling pressure cooled, but the pair stubbornly held on to recent highs just above 1.31 after surging to a 29-month high in August. Price action remains firmly biased to the bullish side, while the 14-day relative strength index (RSI) oscillates in the bullish range of 59, indicating that upside momentum remains valid. If GBP/USD can hold above 1.31 this week, the upward resistance can focus on 1.3198 {last Friday's high}, and 1.3200 {market psychological barrier} area, breaking through the level points to 1.3266 {previous high} level. Once the bears can break down through 1.3100 {round mark}, and 1.3087 (Tuesday's low), the downside technical target will be the high of July 17, 1.3045. If it cannot stay above this level, it may trigger a new round of decline to the 1.30 psychological level, which is the key support position for bulls.

Today, it is recommended to go long on GBP before 1.3130, stop loss: 1.3115, target: 1.3170, 1.3180

USD/JPY

The yen rose after the release of the Purchasing Persons Index of the Bank Services Industry on Wednesday. USD/JPY plunged in late North American trading, falling below 144.00 to 143.70 for the first time since last Wednesday, a drop of more than 1%. The yen continued to strengthen against the dollar after the release of the Jibun Bank Services Purchasing Managers' Index (PMI) data on Wednesday. The index was revised to 53.7 in August from an initial estimate of 54.0. While this marked the seventh consecutive month of expansion in the services sector, the latest data was still unchanged from July. Chief Cabinet Secretary Yoshimasa Hayashi said on Wednesday that he is "closely watching the development of domestic and international markets with a sense of urgency." He also stressed the need to calmly assess market movements, but declined to comment on daily stock fluctuations. The dollar was supported as traders took a cautious approach ahead of the release of US employment data, especially the August non-farm payrolls (NFP). The data may further shed light on the potential timing and size of the Fed's rate cut. From a technical perspective, USD/JPY is biased to the downside, forming a "head-breaking" bearish pattern at the beginning of the week. This is further confirmed by the 14-day relative strength index {RSI}, a technical indicator, which once again shows that momentum supports the bears. As the path of least resistance favors the downside, the first support level for USD/JPY will be at 143.70 {daily chart descending triangle support line}. If it falls below this level, the next cycle low of 143.45 will be tested, which is the daily low of August 26. Then the low of August 5 will be tested. 141.69, which will be the last line of defense for bulls. For bulls to take the lead, they must first retake 146.47 at the baseline {23.6% Fibonacci rebound level from 161.95 to 141.68}, and then retake 147.21 above the high of this cycle, and then the direct obstacle of the August 19 moving average of 148.05.

Today, it is recommended to short the US dollar before 143.90, stop loss: 144.10; target: 143.00, 142.80

EUR/USD

EUR/USD has found some new support in a data-driven USD pullback, rebounding above 1.1080 on expectations that the Fed may cut interest rates by 50 basis points in September. EUR/USD has found some new support in a data-driven USD pullback, with important European data still limited in the first half of the week, with pan-European July retail sales data on Thursday, followed by a preview of US labor data before the non-farm data on Friday, which will keep EUR/USD traders busy. European GDP data will also be released on Friday, with second-quarter growth expected to be roughly the same as the previous reading. The US ISM Manufacturing Purchasing Managers' Index (PMI) for August came in below expectations at 47.2, below the median market forecast of 47.5. This provides already timid investors with a perfect excuse to pull back from their recent one-sided bullish expectations. Friday's US non-farm payrolls data hits. This is the latest round of key US labor data before the Federal Reserve (Fed) announces its latest interest rate decision on September 18.

From the daily chart, EUR/USD has fallen back to recent technical levels, but demand continues to emerge, trying to keep the bid balanced even if a bullish rebound cannot be fully realized. EUR/USD hit a 13-month high above 1.1200 early last week, and the recent pullback in the US dollar has bulls looking for gains. EUR/USD is currently still above the 30-day moving average of 1.0994, and 1.1000 {market psychological level}. Although EUR/USD is deeply in the bull market, it still faces a bearish correction as bears gather above the 50-day moving average (1.0923). As for the upside, the initial targets are 1.1201 {13-month high}, and 1.1200 {round number}, and a breakout points to 1.1275 {last year's high on July 18}.

Today it is recommended to go long on USD before 1.1070, stop loss: 1.1055, target: 1.1110, 1.1120.

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