US Dollar Index

The US dollar weakened after the US open on Thursday as the ECB rate cut was digested. The market saw PPI and weekly jobless claims come in as expected. The US dollar index retreated from 102.00 and traded in the middle of the band for the past week. The dollar strengthened slightly as the US August inflation report seemed to effectively rule out a sharp rate cut by the Federal Reserve this month. While the main inflation measure was slightly below expectations and fell to the lowest level since February 2021, the core inflation rate remained stuck at July levels. In addition, the core inflation rate rose 0.3% month-on-month, beating expectations, which was the fastest increase in underlying consumer prices in four months. Today's data is not enough to force the Federal Open Market Committee to cut interest rates by 50 basis points at its meeting next week. However, the Fed will sound dovish in its communication after the September meeting, indicating to the market that the cooling of the US labor market has accelerated, and a sharp rate cut may be needed to support the market cooling.

Technical analysis of the US Dollar Index shows that the 14-day relative strength index (RSI) is currently in negative territory (47.90), and the moving average convergence divergence (MACD) is flat in negative terrain, indicating no bearish threats. But it seems to have stabilized. However, the index regained support around the 20-day simple moving average of 101.42 midweek, which improves the short-term outlook. Buyers have more room to move forward, targeting the 102.00 {market psychological barrier}, and 102.66 {50.0% Fibonacci rebound level from 104.80 to 100.51} area levels. As for the downside, 100.51 {previous low}, and 101.00 {round mark} can be watched.

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

WTI crude oil

US crude oil prices are currently rising as concerns about US crude oil production are factored into prices. Tropical Storm Francine hit Louisiana, shutting down oil production in the region. Crude oil prices rebounded above $68.00 after the release of the August Producer Price Index (PPI) as hopes of a 50 basis point rate cut by the Federal Reserve next week were dashed, while an increase in US inventories triggered more downside. A rate cut of this size or magnitude would be welcome for the battered commodity, which once faced a loss of nearly 10% in September and reached its lowest level since May 4, 2023 on Tuesday. Oil prices fell to $64.75 on Tuesday after the Organization of the Petroleum Exporting Countries (OPEC) released its latest monthly report showing that OPEC was very optimistic about its demand forecast and mentioned that a reduction of only tens of thousands of barrels per day would be enough to limit the supply glut and meet the forecast demand.

Crude oil broke down under pressure after the market saw that the small drop in demand forecast by OPEC did not match the reality. Any upward trend is expected to be short-lived as long as the current supply-demand imbalance remains. There is still a long road to recovery before returning above $70. First, $68.50 (Tuesday high), and $68.48 {9-day moving average}, now acting as resistance after losing support. Once this level is reclaimed, $70.00 will be back on the table, and $71.63 (20-day moving average) is the first level to watch. Eventually, a recovery to $75.27 is still possible. On the downside, $64.75 (Tuesday low), and $64.38 {March and May 2023 lows) will be key levels for short-term declines, and if this level faces a second test and falls, $60.00 (market psychological level) will become the ultimate target.

Today, consider going long on crude oil around 68.20, stop loss: 68.00; target: 69.55; 69.70

Spot gold

Amid a mild pullback in the US dollar, gold maintains a bullish bias, trading at a new high around $2,560. Data from the United States showed that the annual producer inflation rate fell to 1.7% in August from 2.1% in July. Gold broke out of its established range and hit a new all-time high of $2,550 on Thursday after the release of US inflation data in the form of "factory gate" price inflation or the Producer Price Index (PPI). Gold hits a new all-time high after the release of US factory gate inflation data Gold prices soared to a new all-time high after the release of US producer price index and unemployment claims data on Thursday, and the US dollar weakened generally. In August, the US Producer Price Index (PPI) (excluding food and energy) rose 2.4%, which was the same as the 2.4% in July. This result was lower than the expected 2.5%, according to the US Bureau of Labor Statistics (BLS).

From a technical perspective, the daily chart shows that it is still in a bullish posture despite the lack of upward momentum. Gold prices have been trading above the bullish 20-day simple moving average {2,508} and are finding buyers near it. At the same time, the 100 and 200 simple moving averages maintain a bullish trend and are far below the current price. Finally, the 14-day relative strength index (RSI) of the technical indicator is above the 65.00 level and remains at a positive level, and the risk is still biased to the upside. At this stage, the gold price remains above $2,550 in the short term and moves out of the unilateral market in the short term. Downward support can focus on $2,531.70 (previous historical high) and $2,530 {market psychological barrier} levels. As for the upside, pay attention to the $2,565 and $2,600 areas.

Consider going long on gold today before 2,555.00, stop loss: 2,550.00; target: 2,575.00; 2,585.00

AUD/USD

On Thursday, AUD/USD extended its bullish stance, rising to a four-day high above the 0.6700 mark, all in response to the dollar's clear quote stance and strong sentiment in risk-related areas. The dollar moved lower after the latest US Producer Price Index report. AUD/USD rebounded to a high near 0.6725 after hitting a daily low of 0.6660. However, the core inflation rate, which excludes volatile items and is considered a true inflation indicator, stagnated at an annual rate of 3.2%. In the monthly data, the core CPI rose from 0.2% to 0.3%, while the CPI was 0.2% on a monthly basis. Earlier in the Asian session, Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunt delivered a hawkish speech, saying that the labor market remains tight relative to full employment, but has entered a better balance since the end of 2022. Hunt said the economy is going through a turning point. The United States will release the University of Michigan Consumer Confidence Index on Friday.

From the daily chart, AUD/USD re-entered the 50-day (0.6668) and 100-day (0.6650) moving averages, avoiding further challenges to the 200-day moving average of 0.6619. If sellers push the pair below the 200-day moving average in the future, further declines are possible. First, they need to fall below 0.6600 (market psychological level), and the next stop will be the August 15 low of 0.6560. Conversely, if buyers step in and push the price above this week’s high of 0.6689, a test near 0.6740 (upper line of the descending channel) is expected. A breakout would pave the way towards the seven-month high of 0.6798 reached on July 11.

Consider going long on AUD before 0.6710 today, stop loss: 0.6700; target: 0.6755; 0.6770.

GBP/USD

GBP/USD remained in positive territory above 1.3100 during the U.S. session on Thursday. Improved risk sentiment and a lower-than-expected annual PPI reading in the U.S. for August weighed on the dollar, helping the pair move higher. The market reacted to the latest U.S. inflation data, and GBP/USD rebounded, trading around 1.3120. Economic data released during the European session seemed to add pressure to the pound. While headline inflation has declined, core inflation, which excludes volatile food and energy prices, remained flat at 3.2% in August, in line with market expectations. However, inflation and core inflation rose 0.2% and 0.3% on a monthly basis, respectively, exceeding market forecasts. The data led traders to reduce the odds of a 50 basis point rate cut by the Federal Reserve, with the market currently pricing in an 85% chance of a 25 basis point cut by the Federal Reserve. What weakened the pound was the weak GDP data released during the European session. That said, leading indicators showed that UK economic activity could rebound, indicating that the Bank of England is unlikely to cut interest rates by more than the currently expected 50 basis points before the end of the year, which could provide some support for the pound.

From the daily chart, GBP/USD fell to 1.3050 at one point, indicating that bearish pressure is increasing, while key technical indicators such as the 14-day relative strength index were around 56, and the moving average convergence divergence (MACD) indicator remained stable in the negative zone. This suggests that bearish sentiment may continue in the short term. But on the other hand, the uptrend remains intact and if GBP/USD clears 1.3050, the first support will be Wednesday's low of 1.3002, and the psychological level of 1.3000 area. In case of further weakness, the pair may fall to the 55-day level of 1.2932. A break above the latter will put the high of 1.2894 on March 8 in the picture. On the contrary, if buyers keep the spot price above 1.3100, it may pave the way for recovery. The first resistance will be 1.3150, followed by a break of the rational level of 1.3200.

Today, it is recommended to go long GBP before 1.3110, stop loss: 1.3100, target: 1.3160, 1.3170

USD/JPY

USD/JPY plunged to around 141.70 as the dollar pulled back after the release of the US PPI report. The US headline and core PPI for August were lower than expected. The Bank of Japan expects interest rates to rise to at least 1%. In Asian trading on Thursday, USD/JPY failed to extend its gains after a small rise to just below 143.00, and now seems to have interrupted the good momentum of rebounding from the near nine-month low hit the previous day. It seems easy to continue the decline established in the past two months. In addition, risk impetus also weighed on the safe-haven yen and boosted USD/JPY. Nevertheless, Bank of Japan board member Naoki Tamura said that the road to ending the loose policy is still long, which reaffirmed expectations that borrowing costs will rise further at the end of this year and helped limit the yen's losses. The yen has become one of the best performing G10 currencies, driven by the narrowing of the US-Japan interest rate differential and the possibility of repricing of the Japanese bond yield curve due to the hawkish Bank of Japan.

USD/JPY is testing support at key lows, falling from the August high of 149.40 to a ten-month low of 140.70 in the middle of this week. A drop of more than 6%. If the pair falls below the 140.70 low again, it may signal a reversal of the long-term uptrend and indicate a significant bearish shift in the technical outlook of the pair. The 14-day relative strength index (RSI) of the technical indicator is currently at 32.50, which is in negative territory, indicating that selling pressure is still intensifying. It is expected that the near-term support below will continue to refer to last week's low of 141.70 {double bottom}, further pointing to 140.25 (December 2023 low), and 140.00 {market psychological barrier} regional levels. The current resistance can first pay attention to 143.80 {high at the beginning of this week}, and the break will point to 144.60 {20-day moving average}, and 145.69 {161.81 to 140.71 23.6% Fibonacci rebound level} regional levels.

Today, we recommend shorting the US dollar before 142.00, stop loss: 142.30; target: 141.00, 140.80

EUR/USD

The EUR/USD pair finally shook off its recent multi-day pullback and managed to rebound to the 1.1070-1.1075 range on a strong recovery in the dollar's downtrend. During the Asian session on Thursday, the EUR/USD pair struggled to gain significant momentum, trading in a narrow range above the 1.1000 psychological mark, a four-week low hit the previous day. The US Consumer Price Index report released on Wednesday showed that consumer prices in the US were easing overall. And it brought the US dollar index, which tracks the US dollar against a basket of currencies, closer to its monthly high. Nevertheless, the market fully priced in the prospect of the Federal Reserve's imminent easing cycle and a 25 basis point rate cut at the end of the Fed's meeting on September 17-18. This, as well as the optimistic market sentiment, curbed further appreciation of the safe-haven dollar. This will continue to provide some support for EUR/USD as it faces key central bank event risk, and bearish traders should proceed with caution.

EUR/USD has a neutral bias, although it remains above 1.1000 before the ECB decision. Technical indicators such as momentum have turned bearish, as shown by the 14-day relative strength index (RSI), although its slope is upward. If EUR/USD rebounds above the September 11 peak of 1.1054, this will push it up to the market psychological level of 1.1100. And further upside challenge 1.1155 {September 6 high}. Conversely, if the pair falls below 1.1000, the first line of defense for bulls will be the 55-day moving average of 1.0948, which also serves as support from the July 17 high. Subsequently, EUR/USD will continue to test the 1.0900 {market psychological barrier} level downwards. If it breaks through the latter, the currency pair may test the 100- and 200-day moving averages at 1.0870, and 1.0860.

Today, it is recommended to go long on the US dollar before 1.1060, stop loss: 1.1045, target: 1.1120, 1.1130.

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