DXY

On Monday, the U.S. dollar held steady but remained near last week's highs as Middle Eastern tensions lingered. Traders are preparing for the release of the Federal Reserve’s meeting minutes and the U.S. CPI data later this week. The U.S. Dollar Index remained above 102.00, with traders weighing whether it could push towards 103.00. The index saw a fifth consecutive day of gains on Friday, fueled by strong non-farm payroll data. The increase in U.S. jobs and the decline in the unemployment rate dampened expectations for a double rate cut by the Fed in November. Additionally, recent non-farm payroll data has consistently been revised upward. With wages and net job gains significantly exceeding expectations, the rate markets have largely dismissed the likelihood of an accelerated pace of rate cuts, resulting in a relatively moderate trading performance this week. Rate futures speculators now see a 95% chance of a modest 25 basis point rate cut by the Fed on November 7, with only 5% betting on no change to the federal funds rate.

The Dollar Index’s recent strength has broken through key levels, rising to 102.00 and above the 55-day exponential moving average at 102.03, which could serve as a crucial support area. Recent price action suggests a potential short-term rebound from the prior downtrend. The next significant resistance is around 102.62 (the 38.2% Fibonacci retracement from 106.61 to 100.16), followed by 103.00 (a psychological barrier) and 103.15 (the 50.0% Fibonacci retracement from 106.13 to 100.16), with the 200-day moving average at 103.76 likely to be a strong resistance level. If unable to surpass 102.62 (the 38.2% Fibonacci retracement from 106.61 to 100.16) and 102.69 (last week’s high), the Dollar Index may consolidate or pull back towards the 102.00 psychological level, with further support at 101.79 (the 50-day moving average).

Today’s recommendation is to go short on the Dollar Index around 102.58, with a stop loss at 102.70 and targets at 102.25 and 102.20.

AUD/USD

On Monday, AUD/USD fell for the third consecutive day, dropping below the 0.6800 support level amid a modestly strengthening U.S. dollar, as traders looked ahead to the Reserve Bank of Australia (RBA) meeting minutes due early Tuesday. During the Asian session on Monday, AUD/USD recovered some ground, rising slightly above 0.6800, pausing its two-day slide. The stronger-than-expected U.S. Non-Farm Payrolls data boosted the dollar and weighed on AUD/USD, as the robust jobs report eased concerns about labor market weakness, prompting traders to dial back bets on significant Fed rate cuts. Geopolitical tensions in the Middle East pressured risk appetite, maintaining selling pressure on the Aussie. However, with the RBA maintaining a hawkish stance, the downside for AUD/USD may be limited. Looking ahead, traders will seek additional cues from the RBA meeting minutes on Tuesday.

The daily chart shows that, despite breaking below the psychological barrier of 0.6800, AUD/USD still has a chance to stabilize above this level. The 14-day Relative Strength Index (RSI) remains bullish but suggests a dip into bearish territory, indicating mixed short-term momentum. If AUD/USD breaks through the support area composed of 0.6785, 0.6784 (25-day moving average), and the September 6 high of 0.6767, the pair may accelerate its decline. The next demand area would be around the 50-day simple moving average at 0.6719. On the upside, if buyers push AUD/USD above 0.6800 and 0.6801 (the 23.6% Fibonacci retracement from 0.6348 to 0.6942), the initial resistance zone will be around the October 1 low of 0.6856 and the 0.6860 level (9-day moving average). Before retesting the year-to-date high of 0.6942, the pair will first aim to challenge 0.6900.

Today’s recommendation is to go long on AUD around 0.6745, with a stop loss at 0.6730 and targets at 0.6805 and 0.6810.

EUR/USD

EUR/USD remains under pressure with no respite, although the sharp decline seems to have encountered some debate around 1.0950. The pair continues to weaken amid the U.S. dollar’s sustained strength and ongoing geopolitical tensions. At the start of the new week, EUR/USD is consolidating the significant decline from last week, touching its lowest level since mid-August following the release of optimistic U.S. employment data on Friday. Trading around 1.0970, the pair appears poised to continue its recent sharp retreat from the 14-month high near 1.1200. The dollar is approaching a seven-week high as unexpectedly strong U.S. employment data has led traders to further scale back bets on a significant Fed rate cut in November. Additionally, geopolitical risks from ongoing conflicts in the Middle East have put pressure on the Euro, while speculation of another ECB rate cut in October amid easing inflation and slower economic growth continues to weigh on EUR/USD.

The daily chart shows that EUR/USD’s 14-day Relative Strength Index (RSI) is above 37.80, indicating there is more room for a technical decline before oversold conditions are reached. Downside support is near 1.0930 (100-day moving average) and 1.0943 (61.8% Fibonacci retracement from 1.0777 to 1.1213). A break below these levels could push the pair towards 1.0900 (psychological level), likely attracting sellers and sustaining bearish momentum, with further support at 1.0879 (76.4% Fibonacci retracement) and 1.0874 (200-day moving average). On the upside, initial resistance is at 1.1000 (psychological barrier), followed by the 1.1049 (50-day moving average) and 1.1046 (38.2% Fibonacci retracement) levels. Further upside could target 1.1092 (20-day moving average) and 1.1100 (key level).

Today’s recommendation is to go long on EUR around 1.0960, with a stop loss at 1.0945 and targets at 1.1010 and 1.1020.

GBP/USD

GBP/USD remains under bearish pressure, trading below 1.3100 on Monday, erasing early gains. A shift to risk-off sentiment weighed on the pair, though limited downside pressure as the U.S. dollar struggled to extend last week’s gains. In the Asian session, GBP/USD edged slightly above 1.3100, ending a three-day losing streak. However, following Friday’s strong U.S. Non-Farm Payrolls data, which reduced bets on Fed rate cuts, the upside for GBP/USD may be limited. The Non-Farm Payroll report showed that the U.S. economy added 254,000 jobs in September, up from the prior 159,000 and beating expectations. While the Bank of England (BoE) may pursue a more gradual approach to rate cuts, BoE Chief Economist Huw Pill suggested a cautious stance, advocating for incremental rate cuts. The financial markets remain divided on whether the BoE will follow up a November rate cut with another one in December.

USD/JPY

Concerns over intervention have re-emerged, causing USD/JPY to retreat from its near two-month high. The shift in risk sentiment is further benefiting the yen and adding pressure on the pair. Reduced bets on a 50 basis point Fed rate cut next month should limit the major currency pair's losses. During the Asian session on Monday, USD/JPY struggled to maintain moderate upward momentum, pulling back from an August 16 high of 149.15 to around 148.50. While the three-day rally appears to be taking a pause, the overall fundamentals suggest caution for bearish traders. Japan’s Vice Minister of Finance for International Affairs, Junichi Mura, stated that the government would monitor forex movements, including speculative trades, fueling speculation that Japan may intervene in the currency market. This has lent some support to the yen, drawing in sellers around the USD/JPY pair. Additionally, the political uncertainty ahead of the October 27 election may keep yen bulls on the sidelines, while geopolitical factors also provide short-term impetus for the pair.

The daily chart analysis shows USD/JPY recently broke above key levels at 147.50 (upper boundary of the ascending channel), 148.00 (psychological level), and 148.07 (the 38.2% Fibonacci retracement from 161.81 to 139.58), reaching a one-month high of 149.15 early this week. This indicates a strengthening bullish bias. The 14-day Relative Strength Index (RSI) remains above 60, reinforcing the continuation of the bullish trend. On the upside, a break above the early-week high at 149.15 could see the pair testing the August 15 high at 149.39 and the key 150.00 level. If buyers push past 150.00, the next resistance is at the 200-day moving average at 151.10. On the downside, USD/JPY could find support around 148.00 (psychological level) and 148.07 (38.2% Fibonacci retracement), followed by 147.24 (October 3 high) and 146.95 (60-day moving average). A break below these levels could drive the pair toward 145.40, which marks the midline of the daily ascending channel.

Today's recommendation is to go short on USD around 148.35, with a stop loss at 148.55 and targets at 147.50 and 147.30.

XAU/USD

Following the release of the robust U.S. Non-Farm Payrolls report last Friday, spot gold's consolidation phase continued into the first half of Monday. Amid rising Middle Eastern tensions disrupting market sentiment, gold found short-term demand early this week. In the Asian session on Monday, gold prices dipped for the fourth consecutive day, trading below $2,650. The strong U.S. employment data fueled further gains for the dollar, exerting selling pressure on gold. The positive labor market outlook dampened prospects for aggressive Fed rate cuts, boosting the dollar and impacting dollar-denominated gold. Meanwhile, escalating geopolitical tensions in the Middle East could potentially support gold prices as a traditional safe-haven asset. On the anniversary of the October 7 attacks, Israel launched strikes on Hezbollah targets in Lebanon and sites in Gaza. Israel’s Defense Minister announced that all retaliatory options against Iran remain on the table.