US Dollar Index

The US dollar continues to rise ahead of the US trading session on Monday. Comments from Fed's Waller and a mixed non-farm payrolls print are enough to push the US dollar higher for now. The US dollar index broke above 101.50 and seems to be heading towards 101.90 for a test. The US dollar has faded its bullish performance in late August and resumed its decline over the past week. Nevertheless, while the US dollar index managed to regain some balance early last week and hit a multi-day top near the key 102.00 mark, bearish sentiment eventually prevailed, dragging it back to well below 101.00 in the second half of last week. The renewed expectations that the Fed may start to reduce the Fed Funds Target Range (FFTR) at its September 18 meeting, coupled with some renewed threats to the US economic outlook, have led to negative price action for the US dollar. However, the potential size of the rate cut remains uncertain and depends mainly on the upcoming economic data, especially the inflation data this week. The most important event in the US this week is undoubtedly the release of the CPI inflation data.

The possibility of continued downside pressure on the US Dollar Index has increased after decisively breaking below the important 34-day simple moving average (currently at 102.45), and the 102.00 {market psychological barrier} area. If the bearish momentum continues, the US Dollar Index may first fall to the "triple bottom" support area formed by the lows of 100.60 (28/12/2023); 100.51 (27/8); and 100.56 (last Friday), and then fall to the psychologically important 100.00 level. Bullish attempts should be made at 101.52 {23.6% Fibonacci rebound from 104.80 to 100.51}, breaking through to the September top of 101.92 on September 3, and the key 34-day simple moving average (currently at 102.45), as well as around the 102.00 {market psychological barrier} level.

Consider shorting the US dollar index around 101.78 today, stop loss: 101.95, target: 101.40, 101.35

WTI crude oil

Crude oil prices rebounded slightly after falling below $67 on Friday after the US employment data was lower than expected. The market expects global demand to deteriorate further, while the Federal Reserve is not expected to cut interest rates significantly. In early Asian trading on Monday (September 9), international oil prices rebounded slightly, and US crude oil is currently trading around $67.80 per barrel. Oil prices closed down nearly 2% on Friday after data showed weaker-than-expected U.S. jobs data for August overshadowed support from OPEC+ producers delaying supply increases. U.S. government data showed job gains in August were lower than expected, but the unemployment rate fell to 4.2%, suggesting an orderly slowdown in the labor market and that the Federal Reserve may not need to cut interest rates sharply this month. The slightly weak jobs report suggested the U.S. economy is slipping, and concerns about demand from the Asian giant also continued to weigh on oil prices. Last week, WTI crude hit its lowest point since April 2023 despite a drop in U.S. oil inventories and OPEC+'s decision to delay plans to increase oil production.

Oil prices plunged 7.55% to $66.72 a barrel, the lowest since April last year, on Friday after weaker-than-expected U.S. jobs data for August overshadowed support from OPEC+ producers delaying supply increases. In addition, concerns about Chinese demand also continued to weigh on oil prices. As seen in the technical chart, the 14-day relative strength index (RSI) momentum indicator of the technical indicator confirms this argument (the latest report is 34.50). The indicator has not yet touched or tested the oversold area, giving investors a wrong impression that the rebound has begun. The oil price not only fell below the two bottoms in August, but also lost the 70 mark, indicating that the oil price still has extended downward pressure. The subsequent support is expected to be $66.72 (last week's low), and $66.20 (the lower track of the downward channel). Further reference is the low of $63.64 in May 2023. On the positive side, the current resistance level is estimated at $70.00 (market psychological level), and the more important is $71.50. If it breaks, it will see $73.66 {20-day moving average}, and $73.69 {the central axis of the daily chart downward channel}.

Consider going long on crude oil around 68.00 today, stop loss: 67.80; target: 68.90; 69.20

Spot gold

Gold rebounded above $2,500 on Monday after falling below $2,490 earlier in the day. However, rising U.S. Treasury yields and renewed strength in the U.S. dollar appear to have limited the upside for gold prices. Gold prices traded just below the $2,500 threshold in early European trading on Monday, consolidating the rebound from late Friday. Gold prices remained range-bound as traders await U.S. Consumer Price Index (CPI) data later this week to confirm the extent of the Federal Reserve's interest rate cut next week. Currently, the market is finding support from a broad risk-off environment. Lower-than-expected Chinese inflation data sparked demand concerns in the world's largest consumer, fueling speculation that Chinese authorities may launch more stimulus measures to boost economic prospects, supporting non-yielding gold prices. From a broader perspective, increasing bets on a sharp rate cut by the Federal Reserve this month help maintain the bullish outlook for gold prices. However, further recovery in gold prices may be limited as rising US Treasury yields on the back of a rebound in US stocks provide support for the rebound in the US dollar. The range-bound fluctuations in gold prices may continue until Wednesday, when US inflation data will be released. The data may increase volatility in the US dollar, which in turn affects gold prices.

From the daily chart, as far as the gold price enters the new week, the short-term technical outlook continues to remain constructive as long as the gold price remains above the 21-day simple moving average (2498), and the 2,500 {market psychological barrier} area. The 14-day relative strength index (RSI) has also rebounded above the 50 level, adding credibility to the bullish potential of gold prices. A daily close to reclaim the $2,500 mark is crucial for gold prices to strengthen their bullish bias. The next relevant overhead hurdle is located at $2,514.50 {August 22 high}, which looks towards $2,529.50 {last week high}, and the all-time high of $2,531.70, above which the psychological level of $2,550 comes into play. If gold prices face resistance again near the supply zone of $2,529.50 - $2,531.70, a correction would require a daily close below the 21-day moving average of $2,498. A break above the latter would challenge last week's low of $2,472. Further down, sellers need to break $2,463.70 (34-day moving average) to initiate a sustained downtrend.

Consider going long on gold today before 2,503.00, stop loss: 2,500.00; target: 2,515.00; 2,518.00

AUD/USD

AUD/USD fell to around 0.6650 during the North American session on Monday. AUD assets weakened as the US dollar continued to recover, with traders reducing bets on a big rate cut by the Federal Reserve as fears of a US recession faded. The Australian dollar recovered some of its recent losses against the US dollar due to the hawkish sentiment surrounding the Reserve Bank of Australia. Reserve Bank of Australia Governor Michelle Bullock said last week that it was too early to consider a rate cut. The board does not expect to be able to reduce interest rates in the short term. The Australian dollar remained resilient despite weak inflation data released by China on Monday. In August, China's consumer price index (CPI) rose 0.6% year-on-year, higher than 0.5% in July but lower than the market consensus of 0.7%. Given the close trade relationship between Australia and China, any changes in the Chinese economy could have a significant impact on the Australian market.

On the daily chart, the Australian dollar is trading around 0.6670 at the start of the week. The AUD/USD pair remains below the 10-day exponential moving average (0.6746), indicating a short-term bearish trend. Moreover, the 14-day relative strength index (RSI) of the technical indicator has fallen below 50, further confirming the bearish momentum. On the downside, the AUD/USD pair is testing the 0.6645 (100-day moving average), and 0.6641 (0.6347 to 0.6823 38.2% Fibonacci retracement) areas. A break below this level could result in a further decline towards 0.6600 (a psychological barrier in the market). A decisive break below this point could strengthen the bearish bias. In terms of resistance, the AUD/USD pair could face obstacles near the 10-day moving average of 0.6746. A break above this level could pave the way for a retest of the 7-month high of 0.6798, and 0.6800 {market psychological barrier}.

Consider going long AUD before 0.6650 today, Stop Loss: 0.6640; Target: 0.6710; 0.6720.

GBP/USD

GBP/USD remains under bearish pressure, trading at its lowest level in more than two weeks, below 1.3100. The dollar has benefited from rising US Treasury yields, which has not allowed the pair to gain traction despite improved risk sentiment. GBP/USD attracted some dip buying during Monday's Asian session and traded above 1.3100, although a variety of factors could limit further gains. The closely watched US monthly employment details released on Friday showed that the labor market momentum slowed more than expected, adding to investors' concerns about the health of the US economy. This in turn dampened investor appetite for riskier assets, which favoured the safe-haven US dollar and posed a headwind for the GBP/USD pair. Meanwhile, a survey of recruiters showed that the UK labour market cooled significantly last month as job postings fell sharply and wage growth slowed. This supports the case for a rate cut by the Bank of England, which could further deter bulls from making aggressive bets around the pound and cap the GBP/USD pair. Investors now look forward to the UK monthly employment data due on Tuesday.

From the recent technical perspective, if the bearish momentum persists, GBP/USD could retest the September low of 1.3087 (set on September 3), followed by the 1.3014 {25-day moving average}, and the 1.3000 {market psychological barrier} support area. Beyond these levels, the pair could fall to 1.2966 (34-day moving average). The 14-day relative strength index (RSI) remains around the 58 level, and the upward momentum continues. Therefore, the immediate resistance level for GBP/USD to move upward is 1.3160 ​​{10-day moving average}, then 1.3200 {round number}, and finally the 2024 high of 1.3266 (reached on August 27), and then the weekly top of 1.3298 (March 23, 2023).

Today, it is recommended to go long GBP before 1.3060, stop loss: 1.3045, target: 1.3125, 1.3130

USD/JPY

USD/JPY is testing support at key lows, falling from the bottom in August. If the price falls below these lows, it may indicate a reversal of the long-term uptrend and indicate a significant bearish shift in the technical outlook of the currency pair. In the Asian market on Monday, USD/JPY broke a four-day losing streak and traded around 143.00. The recovery of USD/JPY was partly due to the lower-than-expected GDP data of Japan. However, strong economic growth, rising wages and persistent inflationary pressures continue to support expectations that the Bank of Japan may raise interest rates further, which may limit the downside of the yen. Japan's second-quarter GDP was 2.9% annualized, slightly lower than the previous value of 3.1% and the expected value of 3.2%. However, this data marks the strongest annual rate since the first quarter of 2023. The second quarter GDP was 0.7% quarterly. In addition, the dollar was supported as US economic data last Friday increased uncertainty about the prospect of aggressive interest rate cuts by the Federal Reserve at its September meeting.

Last week, USD/JPY fell for the fourth consecutive trading day. Safe-haven demand and expectations of an imminent rate hike by the Bank of Japan have provided support for the yen in recent trading days, and it has once again refreshed a one-month low of 141.77. The 14-day relative strength index RSI and the stochastic index of technical indicators are trapped in the oversold area, and it is expected that the selling pressure on USD/JPY may be slightly eased in the short term. The currency pair has experienced a four-day decline and may soon see an upward correction. The current resistance can be seen at 144, and the next level is 145.55 {the descending triangle resistance line of the daily chart}, and 145.40 {the 20-day moving average} supply level. As for the downside, USD/JPY is back near the lows of August. Whether it forms a "double bottom" (141.70) or can break further down remains to be seen. A breakout points to the 7-month low of 140.25 recorded on December 28 last year, and the 140.00 {market psychological barrier} area level.

Today, it is recommended to short the US dollar before 143.35, stop loss: 143.55; target: 142.50, 142.40

EUR/USD

The EUR/USD pair is on the defensive at the start of the new trading week, exacerbating Friday's pullback ahead of further dollar gains and the release of US CPI later this week. In Asia on Monday, the EUR/USD pair tried to recover the previous session's losses, trading around 1.1090 at one point. However, the upside for the EUR/USD pair may be limited as the latest Eurozone inflation data reinforces expectations of a rate cut by the European Central Bank at the upcoming policy meeting on Thursday. With headline inflation approaching 2% and long-term inflation forecasts also stable at the same level, the ECB has enough reasons to further ease its monetary policy stance. In addition, last week's mixed Eurozone GDP data also strengthened expectations of a possible rate cut by the ECB. Chicago Fed President Goolsbee said on Friday that Fed officials are beginning to align with the broader market sentiment that the Fed is about to make a policy rate adjustment. The CME FedWatch tool shows that the market fully expects the Fed to cut interest rates by at least 25 basis points at its September meeting.

The daily chart shows that the risk of another downward move for the EUR/USD pair has increased. Last Friday's decline has put the technical indicators 14-day relative strength index (RSI) into bearish mode, they have moved sharply lower from the 75 overbought level to around 55. Meanwhile, the pair is putting pressure on the bullish 20-day moving average of 1.1087. A break below this moving average would indicate sellers are willing to add positions. Finally, the 100-day {1.0840} crossed above the 200-day moving average {1.0858} with a slightly rising slope, and the two converged near 1.0860. The 1.0989 {50.0% Fibonacci retracement of 1.0777 to 1.1201} level provides immediate support after 1.10 {market psychological barrier}. On the contrary, the first resistance level of the currency pair is 1.1155 {last Friday's high}. If it breaks through 1.1155, it will face the key rising levels of 1.1200 {round mark}, and 1.1201 {August 26 high}.

Today, it is recommended to go long on the US dollar before 1.1020, stop loss: 1.1005, target: 1.1060, 1.1070.

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