US Dollar Index

Last week, the US Dollar Index rebounded to 104.00 after opening on Wall Street, after plunging to 103.68 on the back of a lower-than-expected US nonfarm payrolls report. The impact on the dollar was mild as the market factored in the strike and hurricanes Helen and Milton in the final reading. The US Dollar Index recovered some of its earlier losses before the weekend, with buyers returning after four consecutive days of declines. Mild risk aversion added support to the safe-haven dollar. Since October, the US Dollar Index has continued to rise on the back of economic data and the disturbance of the US election and remained volatile around 104 last week. At present, expectations of a soft landing for the US economy continue to heat up, forming a good support for the US Dollar Index. In terms of monetary policy, the market's current pricing of interest rate cuts for the remaining two meetings this year is close to the Fed's September dot plot, and the adjustment of the expected rate cut range is limited. In the case of recent economic data remaining resilient, the Fed officials' speeches also hinted that the pace of interest rate cuts will slow down. Another important factor affecting the trend of the US dollar index in the near future is the US election. As the election enters the final sprint, the gap between the two parties' current poll support rates continues to narrow. From the perspective of the differences in the two parties' policy propositions, Trump's propositions are more likely to push up inflation, which is relatively favorable to the US dollar.

From the daily chart, the US dollar index against a basket of currencies remains near the three-month high of 104, but the recent rise has stagnated. At this stage, the US dollar index is moving above the level of the "Bollinger Band" center axis (103.65), but the broader bullish trend seems to be losing momentum, and technical indicators show signs of a potential trend shift. The relative strength index (RSI) showed a bearish divergence, and the US dollar index trend was limited to last week's high of 103.63, and 104.80 (the upper track of the Bollinger Band). These negative signals keep the support zones of 103.68 (Friday's low), and 103.65 (Bollinger Band middle axis) in play. Here, the next targets will be 103.00 (round number), and 102.98 (38.2% Fibonacci retracement of 100.16 to 104.63). Since the 14-day (103.98) and 200-day (103.84) formed a "golden cross" to the bullish pattern before the weekend, on the upside, the index has short-term resistance at the October peak of 104.63, and 104.80 (upper Bollinger Band). The next level will point to 105.00 (market psychological level).

Today, consider going long on the US dollar index around 104.20, stop loss: 104.05, target: 104.50, 104.60

WTI crude oil

Last week, there were reports that Iran may be preparing to attack Israel from Iraq in the coming days, which led to a slight increase in oil prices, but as the market suspected that the war would disrupt supply, crude oil prices still ended the week with a 3.39% drop. At the beginning of last week, it fell to a near one-month low of around $66.57, and then rebounded in the second half of the week. There are reports that Iran may plan to launch a retaliatory strike against Israel from Iraq in the near future, and the rising geopolitical tensions have boosted crude oil prices. In addition, Reuters quoted Axios as saying that two anonymous Israeli sources revealed that Israeli intelligence believes that Iran intends to launch an attack from Iraq, which may involve a large number of drones and ballistic missiles, and the time may be before the US presidential election on November 5. In addition, the market is worried about weak oil demand and increased supply, and the "OPEC+" alliance composed of the Organization of Petroleum Exporting Countries and its allies including Russia may postpone its December production increase plan by at least one month. The production increase plan was postponed from October. The US presidential election and the meeting of the Standing Committee of the National People's Congress of China in the next few days will add variables to oil prices. He believes that if Harris or Trump is elected, they will bring different foreign policy directions. In particular, there are obvious differences between the two candidates in the Middle East and their positions on major oil-producing countries, so the results may affect the US policy towards oil-producing countries.

On the technical side, WTI oil prices experienced large fluctuations last week: oil prices fell 6% at the beginning of the week because Israel's strikes against Iran did not affect energy facilities. This dragged down oil prices. But as Iran's possible retaliation surfaced, oil prices rebounded in late last week, partially recovering the losses. Oil prices once returned to the key level of $70.00. But as oil prices returned below the two important pivot levels of $69.91 (9-day moving average) and $70.00 (psychological level) before the weekend, more downside risks may be imminent. The 14-day relative strength index (RSI) indicator of the technical indicator fell back to around 46 before the weekend. On the downside, traders need to first look at $68.08 (last Thursday's low). A break will point to a lower $67.12, which supported the price in May and June 2023. On the upside, $70.00 (market psychological level) is still the first level to be recaptured. Next up is $72.25 (50.0% Fibonacci retracement from $77.93 to $66.75), after which the important technical level of $73.59 (61.8% Fibonacci retracement) and the 89-day moving average (73.78) could be the next big hurdle ahead.

Consider shorting crude oil around $69.30 today, stop loss: 69.50; target: 68.20; 68.00

Spot gold

At the beginning of last week, gold prices hit a new record high of $2,790. Late last week, gold prices fell on the back of a stronger dollar and stronger U.S. Treasury yields, but weak job growth data in the world's largest economy prompted analysts to increase bets on a Fed rate cut, limiting some losses. Spot gold fell 0.30% to $2,736.50 per ounce for the week. Gold prices have risen more than 4% since October, driven by tensions in the Middle East and uncertainty in the U.S. election, and are sought after as a safe-haven asset. Some traders took profits after gold prices hit a record high. Nonfarm payrolls increased by 12,000 jobs last month, the smallest increase since December 2020, affected by hurricane disruptions and strikes by aviation factory workers. The dollar erased earlier losses and rose 0.4%, while the benchmark 10-year U.S. Treasury yield also rebounded from earlier losses, making non-yielding gold less attractive. On the other hand, gold also rebounded on the backdrop of a recovery in security demand after Hezbollah launched rocket attacks in northern Israel, dashing hopes for a ceasefire in the Middle East war. Given such fierce competition and the risks surrounding the U.S. presidential election, demand for gold continues to be weak.

The daily chart shows that gold is trading around the Bollinger Band's central axis of $2,700 and $2,728.20 (14-day moving average). The 14-day relative strength index (RSI) indicator retreated to 59.50 after reaching a high of 73.50 earlier, but it is still at a high level. This shows that after gold corrected its overbought condition, its bullish bias remains intact. The upward trend shows no signs of weakening. If the gold price can still stay above $2,731.60 (October 31 low) and $2,728.20 (14-day moving average), it will easily lead to gold breaking through $2,757.00 (5-day moving average). If it breaks, it will point to the previous high of $2,790, or even $2,800 (round mark), and $2,805.20 (upper Bollinger Band). On the other hand, once profit-taking occurs, it is possible that gold will fall below $2,728.20 - $2,731.60 first, and the downside will test the support of $2,718.70 (38.2% Fibonacci retracement of $2603.50 to $2790). If the above support is also lost, the next level is $2,700 (market psychological level), and the swing high on September 26, which has now turned into a support level of $2,685.

Today, you can consider going long on gold before 2,732.00, stop loss: 2,728.00; target: 2,750.00; 2,755.00

AUD/USD

The mixed data of Australia's third quarter producer price index released last Friday, the Australian dollar rebounded against the US dollar for several consecutive days, but it still performed flat. However, expectations of a hawkish stance from the Reserve Bank of Australia continued to support the Australian dollar, limiting the decline in AUD/USD. Australia's Producer Price Index rose 0.9% month-on-month in the third quarter, beating market expectations of 0.7%. This is the 17th consecutive period of producer inflation. On an annual basis, PPI growth slowed to 3.9% in the third quarter, down from 4.8% in the previous quarter. China's Caixin Manufacturing Purchasing Managers' Index (PMI) rose to 50.3 in October, up from 49.3 in September and beating market expectations of 49.7. As China is Australia's main trading partner, changes in the Chinese economy may have a significant impact on the Australian market. However, the downside of the US dollar will be limited due to the general caution in the market ahead of the upcoming US presidential election.

From the daily chart, AUD/USD has been trading below the recent key psychological level of 0.6600 last week. The daily chart shows that the bearish bias has not weakened, although the currency pair returned to the top of the "downward channel" axis (0.6530) in the second half of last week, and once touched the upper line of the "downward channel" at 0.6585. Unfortunately, before the weekend, the 9-day (0.6603) and 200-day (0.6628) formed a "death cross" bearish pattern, and the 14-day relative strength index (RSI) of the technical indicator was consistent with the gradual decline in highs and lows, indicating that the bearish sentiment persists. Therefore, in terms of support, AUD/USD may retest the central axis of the "downward channel" at 0.6530. And push the currency pair towards the key psychological level of 0.6500, and 0.6488 (76.4% Fibonacci retracement level of 0.6348 to 0.6942), followed by the lower line of the "downward channel". 0.6450. As for resistance, AUD/USD may challenge 0.6600 (market psychological level), and the 9-day moving average of 0.6603. A break above this level may support the pair and may point to 0.6645 (50.0% Fibonacci retracement level), a break of which will pave the way for the psychological level of 0.6700.

Today, consider going long on AUD before 0.6545, stop loss: 0.6530; target: 0.6590; 0.6610.

GBP/USD

GBP/USD fell to a near 3-month low of 1.2843 in the second half of the month. The sharp decline in the main Wall Street indexes helped the dollar to gain a foothold, preventing the pair from rebounding ahead of the release of key US employment data on Friday. The pound fell following the release of the UK budget. The focus turned to the US non-farm payrolls report to be released later on Friday. In addition, according to CNBC reported that the new British Labour government released its first budget midweek, which included a £40 billion tax increase to plug holes in the public finances and allow for investment in public services. One of the measures expected to generate the most revenue for the UK Treasury is an increase in the amount employers pay in national insurance, a tax on income. The US gross domestic product (GDP) fell in the third quarter, lower than expected. The US ADP employment change in October showed that private companies hired more people than expected. It may raise the prospect of a sharp interest rate cut by the Federal Reserve and put selling pressure on the US dollar.

GBP/USD once rebounded at the bottom of the rising channel trend line. The pair broke through 1.2970 and moved higher, breaking through 1.3000 {market psychological level} and hitting a high of 1.3039. After that, it was restrained by the strong selling pressure area of ​​1.3049 (50.0% Fibonacci retracement of 1.2665 to 1.3434) and gave up to 1.2843 near three-month low. From a technical perspective, GPB/USD broke out of the recent trading range of 1.2907 (last week's near 2-month low) to 1.3049 (50.0% Fibonacci retracement) yesterday at the lower end of 1.2907 as sellers continue to limit the pair's upside. Buyers must break through 1.3049 to have a chance to continue to challenge the peak of 1.3070 on October 18, so there is still hope to test 1.3100 {round mark}. Otherwise, if sellers push the exchange rate down to 1.2843 (yesterday's low), and 1.2800 (market psychological level), and the 200-day moving average of 1.2808.

Today, it is recommended to short GBP before 1.2935, stop loss: 1.2950, ​​target: 1.2880, 1.2870

USD/JPY

Last week, the U.S. labor market added far fewer jobs than expected in October as weather disruptions and worker strikes weighed on the labor market. Data released by the U.S. Bureau of Labor Statistics on Friday (November 1) showed that the labor market added 12,000 jobs in October, lower than the 100,000 expected by economists. The Bank of Japan kept its ultra-low interest rates unchanged but said risks to the U.S. economy have eased, suggesting that conditions are ripe for another rate hike. Bank of Japan Governor Kazuo Ueda was less dovish than his speech before Thursday's meeting, when he said the central bank "can afford" to take the time to carefully study the impact of risks such as uncertainty in the U.S. economy and financial market turmoil. The dollar fell sharply against the yen last week under pressure after the Bank of Japan's dovish tone was less than expected. Meanwhile, the personal consumption expenditures (PCE) price index, an inflation indicator favored by the Federal Reserve, rose 2.1% year-on-year in September, down from an upwardly revised 2.3% in August. U.S. consumer spending rose slightly more than expected in September. The Federal Reserve is likely to continue to cut U.S. short-term borrowing costs by a quarter percentage point this week. Traders took advantage of the dollar's recent strength to take profits. Next, the market's eyes will be on the outcome of the US presidential election this week, and with the Bank of Japan's slightly hawkish stance, the yen has a basis for recovery in the short term.

From a recent technical perspective, USD/JPY may fall further, but there does not seem to be enough momentum to threaten the main support levels of 150.99 (23.6% Fibonacci retracement of 141.65 to 153.88) and 150.78 (Bollinger Band center axis) in the short term. But in the long run, the dollar's uptrend since the beginning of last month has ended; therefore, any further weakness below the 152.00 round mark and 151.60 (14-day moving average) is likely to find decent support around the 150.99 - 150.78 area. Some follow-through selling could see the pair head towards 150.50 (Oct. 22 low) and 150.00 (psychological level). The latter should now act as a key pivot point and solid support for USD/JPY, which, if decisively breached, would set the stage for further declines in the near term. On the other hand, the $153.70 (an upward trendline stretching from Sept. 30 low of 141.65), and $153.88 (last month high) area now appear to be a short-term hurdle ahead of $154.35 (upper Bollinger Band). Sustained strength above the latter could see the pair revisit the psychological 155.00 level and late July swing high near 155.20.

Today's recommendation is to go long USD before 152.75, stop loss: 152.50; target: 153.60, 153.70

EUR/USD

Ahead of the weekend, EUR/USD extended its weekly recovery after plunging to 103.68 on the back of a weaker-than-expected U.S. nonfarm payrolls report. It marked its fourth consecutive day of gains above 1.09, but the impact on the dollar was mild as the market factored in the strike and hurricanes Helen and Milton in the final reading. The dollar index recovered some early losses before the weekend, with buyers returning after four consecutive days of losses. Mild risk aversion added support to the safe-haven dollar. Its currency retraced back below the key 200-day moving average of 1.0869. Meanwhile, market expectations for a 25 basis point rate cut by the Federal Reserve next month are building, with tricky personal consumption expenditure data for September and solid data on the U.S. labor market so far reinforcing the view. According to the CME Group's FedWatch tool, the quarter point was almost fully priced. On the European front, economic data from some Eurozone economies exceeded expectations, with growth in France and Spain providing a slight boost to the Eurozone. However, continued weakness in the German economy still weighs on the Euro, causing it to further linger in a consolidation range against the US dollar.

From the daily chart, EUR/USD is currently trading around the central level of 1.0870, where the 200-day moving average (1.0869) and the 20-day moving average (1.0867) converge. Technical buying may remain interested once the pair confirms this level as support. In this case, temporary resistance is at 1.0900 (round number level), and 1.0905 (Friday's high) followed by 1.0938 (100-day moving average) and 1.1000 (round number level). On the other hand, the 14-day relative strength index (RSI) of the technical indicator plunged from 46.50 to around 40.80 last week, maintaining a bearish slope, which indicates that the short-term trend of EUR/USD is still weak. At the close of last weekend, EUR/USD formed a "head-breaking" bearish pattern. Therefore, if the currency pair fails to break through 1.0869 (200-day moving average) and 1.0867 (20-day moving average), it may face bearish pressure again and retreat to 1.0800 (market psychological level) and 1.0760 (October 23 low), followed by 1.0700 (round number level).

Today, it is recommended to short the euro before 1.0850, stop loss: 1.0865, target: 1.0790, 1.0880.

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.