US Dollar Index

The dollar fell as ADP weakened. The dollar index fell to the previous level of 100.90. The dollar index ended its streak of recovery in the middle of the week after a disappointing US jobs report and a mixed outlook from the Fed's Beige Book. The foreign exchange market is in (mostly) risk-off mode; the Japanese yen and Swiss franc are once again outperforming among the major currencies, as is the domestic RMB. However, the dollar exchange rate fell as the market continues to consider the risks of the Fed's easing policy. The market is gradually pricing in more risks of a 50 basis point rate cut (currently priced in at around 40%), but this weekend's employment data remains the key factor in determining the Fed's policy outlook. The greater focus on weak employment trends in the Fed's Beige Book may strengthen the view that the Fed has a relatively low bar for a 50 basis point rate cut on September 18. The dollar index is close to short-term range support at 101.55; if it falls below this level, the decline may extend to 101.

From the daily chart, the US dollar index rose from last week's low of 100.51 to 101.92, an increase of more than 1%. However, it encountered resistance at the 20-day simple moving average (101.75), leading to a selling frenzy to slightly above the integer mark of 101. The 14-day relative strength index (RSI) of the technical indicator is in the negative area (37.50), indicating that the overall trend is in a bearish momentum. The moving average convergence divergence (MACD) is still in a negative state, reinforcing the downward trend to 101.00 {integer mark}, and a break will point to 100.51 (last week's low), and 100.62 (the low of December 28 last year) will be a double bottom level worth paying attention to. If the US Dollar Index moves upward, 101.52.00 {23.6% Fibonacci rebound from 104.79 to 100.51} can be easily broken by the bulls. The next level will reach 101.92, the high of this week, and 102.00 {market psychological level}.

Consider shorting the US Dollar Index around 101.20 today, stop loss: 101.35, target: 100.80, 100.70

WTI spot crude oil

As the market prepares for more US data in the future, the impact of OPEC headlines gradually fades. The recent pessimistic demand outlook may lead to further declines in oil prices. On Thursday, US WTI spot crude oil traded around $70.00. As the market maintains a negative outlook for oil demand in the coming months, WTI oil prices remain under selling pressure and hit their lowest level since December 13, 2023. The Organization of the Petroleum Exporting Countries and its allies, or OPEC+, are discussing delaying an oil production increase that was scheduled to begin in October as Libyan output is expected to rise. With demand growth uncertain and major supply disruptions looking unlikely, the focus is once again on OPEC+. Recent weak Chinese economic data has raised concerns about the economic outlook for the world's largest crude oil importer. Looking ahead, traders will be closely watching the U.S. non-farm payrolls data for August on Friday.

WTI spot crude oil prices have fallen about 7% so far this week. However, traders should not be surprised by this move, given the recent series of headlines and data that indicate an imbalance between excess supply (and more supply coming online) and weak economic data (even some recession signals). There may be more downturns before a rebound occurs. From an upside perspective, the first key resistance levels are $72.10 {August 5 low}, and $72.08 {67.79 to 87.84 78.6% Fibonacci retracement}, if possible, followed by $74.91 {10-day moving average}, and $75.44 {61.8% Fibonacci retracement}. On the downside, long-term support is around $70 per barrel. A break of this support would result in a drop to a low of $69.18 (this year's low). From here, the big figure of $68.00 is a level to watch.

Consider going long on crude oil near 69.75 today, stop loss: 69.60; target: 70.90; 71.00

Spot gold

Gold prices continued their rebound in the second half of Thursday, trading slightly below $2,520. The benchmark 10-year Treasury yield remained in the red below 3.8% after the release of mixed data from the United States, supporting gold prices. Traders turned their focus to the US non-farm payrolls and wage inflation data released on Friday, which will be extremely important in helping the market judge the extent of the Federal Reserve's interest rate cut this month. Gold prices rebounded from the key short-term daily support level of $2,485 after a brief decline as the market's expectations of a 50 basis point rate cut by the Federal Reserve (Fed) at its policy meeting on September 17-18 grew, and the US dollar came under bearish pressure. Therefore, the US non-farm payrolls data to be released on Friday will be extremely important in helping the market judge the extent of the Federal Reserve's interest rate cut this month. These data could have a significant impact on the overall performance of the US dollar, and thus the gold price trend in the near term.

The short-term technical outlook for gold prices also remains in favor of buyers as the 21-day simple moving average (now at $2,491) continues to provide support. The 14-day relative strength index (RSI), a technical indicator, has moved above the 60 level, adding credibility to the bullish potential of gold prices. On the upside, a daily close to reclaim the $2,500 and $2,507.50 {this week's high} levels will be crucial for gold prices to resume their upward trend. The next relevant overhead hurdle is located at the all-time high of $2,531.70, above which the psychological price of $2,550 will be tested. If the corrective downside regains momentum, gold prices need a daily close below the 21-day moving average of $2,491, which will challenge this week's low of $2,472. Further downside, sellers need to break the symmetrical triangle resistance-turned-support at $2,460. A new round of decline will start from below this support level and will start a new round of decline.

Consider going long on gold before 2,513.00 today, stop loss: 2,510.00; target: 2,530.00; 2,535.00

AUD/USD

AUD/USD has managed to rebound from recent lows and break above 0.6700 due to further decline in USD and general improvement in risk-related complex sentiment. AUD/USD weakened around 0.6720 in early Asian trading on Thursday. AUD/USD fluctuated against the backdrop of concerns about China's economy and a weaker USD. Traders will get more clues from the speech of Reserve Bank of Australia Governor Bullock. The lower-than-expected US JOLTs job openings indicate a further cooling of the US labor market, sparking expectations that the Fed may cut interest rates by 50 basis points in September. This in turn may drag down USD/AUD. Traders will be keeping a close eye on the US non-farm payrolls (NFP) data for August due on Friday. The market noted that if the non-farm payrolls data on Friday is weak, the market may start to consolidate. On the Australian dollar side, the Australian Bureau of Statistics reported on Wednesday that Australia's gross domestic product (GDP) grew by only 0.2% from April to June, and grew by 1% for the whole of last year.

The daily chart shows that the Australian dollar was trading above 0.6720 against the US dollar on Thursday. The AUD/USD pair is below the 9-day moving average (0.6760), indicating a short-term pause in the overall upward momentum. In addition, the 14-day relative strength index (RSI) of the technical indicator is still above the 50 level (latest at 54.90), indicating that asset prices tend to be bullish. On the downside, AUD/USD may test the retracement level near 0.6675, and further declines may target near 0.6642 {38.2% Fibonacci retracement of 0.6347 0.6824}, with the next level pointing to support at 0.6600 {market psychological level}. On the resistance side, AUD/USD may first encounter an immediate obstacle at the 14-day moving average near 0.6754, followed by the seven-month high of 0.6798. If it breaks through 0.6798, it will test 0.6800 (market psychological level).

Consider going long on AUD before 0.6725 today, stop loss: 0.6710; target: 0.6775; 0.6780.

GBP/USD

On Thursday, GBP/USD continued to trade above 1.3170. The dollar weakened against rivals on the weak ADP employment data. GBP/USD traded around 1.3150 in Asian trading on Thursday, with a positive bias despite a lack of strong follow-through buying and still being blocked by the weekly high hit the previous day. The pound continues to be supported by expectations that the Bank of England's rate cut cycle may be slower than that of the eurozone or the United States. A survey by the British Retail Consortium showed that sterling consumption grew 1.0% year-on-year in August, the strongest growth since March. This, coupled with the weak US dollar, has been a key factor in the strength of GBP/USD. Bets on a deeper rate cut at the Federal Reserve's policy meeting have pushed US Treasury yields to more than a year low. This has therefore put US dollar bulls on the defensive and provided some support to the GBP/USD pair. Nevertheless, cautious market sentiment has helped limit the downside for the safe-haven GBP/USD. Traders also seem reluctant to make aggressive directional bets ahead of the release of key US monthly employment data, commonly known as the "non-farm payrolls" on Friday. This, in turn, has limited the upside for GBP/USD.

In terms of recent trend, despite a mid-week intraday recovery, GBP/USD remains below multi-month highs above 1.3266. The pair has been stubbornly holding onto recent highs after jumping to its highest bid price in 29 months in August. Price action remains firmly bullish above the 20-day moving average of 1.3.042, while the 14-day relative strength index (RSI) is oscillating in the bullish range of 63, indicating that the upward momentum is still valid. If GBP/USD can hold above 1.31, the upward resistance will focus on 1.3198 {Friday's high}, and 1.3200 {market psychological barrier} areas, and a break below will point to 1.3266 {previous high} level. The immediate downside technical target for the bears will be slightly above the July 17 high of 1.3045, and the 20-day moving average of 1.3.042 area. Failure to sustain above this level could trigger a fresh decline to the 1.30 psychological level, which is a key support for bulls.

Today's recommendation is to go long GBP before 1.3160, Stop Loss: 1.3145, Target: 1.3205, 1.3215

USD/JPY

USD/JPY is resuming its medium-term downtrend after a pause in August. The pair has broken below the key 143.45 swing low (August 26 low) - a bearish sign for a reversal of trend. Sellers are now eyeing the key August 5 low of 141.69. The yen remained firm against the dollar during Thursday's Asian session, helped by Japan's second consecutive month of wage growth. In July, Japan's labor cash income rose 3.6% year-on-year, slowing from 4.5% in June but hitting a new high since January 1997 and beating market expectations of 3.1%. The strong performance reinforced market speculation that the Bank of Japan may raise interest rates again before the end of 2024. The dollar recovered its recent losses, driven by higher U.S. Treasury yields. However, the U.S. JOLTS job openings data for July was lower than expected, indicating a further slowdown in the labor market, and the dollar faces challenges. Currently, traders are waiting for the U.S. non-farm payrolls data for August, which is scheduled to be released on Friday. The market pointed out that if the non-farm payrolls data on Friday is weak, the market may start to consolidate.

Daily chart analysis shows that USD/JPY hit a low of around 142.80 on Thursday. The 9-day moving average (144.77) is still below the 21-day (145.68), indicating a continued bearish trend in the market. In addition, the 14-day relative strength index (RSI) of the technical indicator hovered around the 35 level, confirming the continued bearish momentum, but also suggesting that an upward correction may occur in the short term. On the downside, support is seen around the 7-month low of 141.69 recorded on August 5. Other key supports are seen at 140.25, the lowest level since July 2023, and 140.00 {a psychological barrier in the market}. On the resistance side, the pair may first face resistance at the 9-day moving average around 144.77, followed by the 21-day moving average at 145.68. If these moving averages are breached, the bearish sentiment may weaken, helping the pair to advance towards 146.47 {the 23.6% Fibonacci rebound from 161.95 to 141.68}, before retaking above this cycle high at 147.21, and finally the immediate hurdle of the August 19 moving average at 148.05.

Today, it is recommended to short the dollar before 143.60, stop loss: 143.80; target: 142.80, 142.60

EUR/USD

EUR/USD rose for the second consecutive session, breaking above the 1.1100 mark and moving lower ahead of the release of US non-farm payrolls data on Friday. EUR/USD fell to around 1.1070 during the Asian session on Thursday as the dollar strengthened on higher US Treasury yields. However, the dollar weakened after the release of US JOLTS job openings data for July, which came below expectations and indicated a further slowdown in the labor market. Currently, traders are awaiting US non-farm payrolls data scheduled for Friday for more clues on the potential size of the Federal Reserve's expected rate cut this month. In the eurozone, the producer price index rose 0.8% month-on-month in July, the largest increase since December 2022. This was another increase after a 0.6% increase in June and significantly exceeded the market's forecast of 0.3%. The euro may face challenges as the market strongly speculates that the European Central Bank will cut interest rates in September. This will be the second rate cut by the ECB since it began to shift to policy normalization in June.

The daily chart shows that EUR/USD is further upward, which is further confirmed by the 14-day relative strength index {RSI} among technical indicators {latest at 58.70}, once again indicating that momentum supports the bulls, demand continues to appear, and even if the bullish rebound cannot be fully realized, it is necessary to strive to maintain the bidding balance. And it is expected to challenge the 2024 high of 1.1201 (August 26), followed by the 2023 high of 1.1275 (July 18) and the round number of 1.1300. As for the downside, the next downside targets of the currency pair are 1.1000 (round number), and 1.0990 {50.0% Fibonacci retracement level of 1.0777 to 1.1201} area, followed by 1.0938 (50-day moving average).

Today it is recommended to go long on EUR/USD before 1.1095, stop loss: 1.1080, target: 1.1150, 1.1160.

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.