USD

The US dollar bulls are steering the ship at 105.34, rising in a rare synchronization with gold. This week, US CPI, PPI, and retail sales data all support the Federal Reserve's decision to pause rate hikes at the crucial FOMC meeting next week. The bets on high interest rates for an extended period are becoming increasingly prominent, with the market pricing in a 97% probability of a pause next week. The US dollar index has risen for the ninth consecutive week, closing above 105.00 over the weekend at 105.33, marking six-month and ten-month highs. This sustained growth is underpinned by strong performance in the US economy. Economic data released last week provided evidence of an inflation rebound, despite a slowdown in core interest rates. Additionally, the dovish decision by the European Central Bank is helping boost demand for the US dollar. This week, the FOMC is brewing a hawkish vs. dovish showdown, with the market expecting no significant changes from the Federal Reserve due to the recognition that they might raise rates further if inflation doesn't slow down. The current economic conditions indicate that the Federal Reserve has the capacity to adapt to another round of rate hikes, but an unexpected dovish shift could trigger a significant US dollar adjustment and an increase in commodity prices.

Last week, the US dollar index not only broke through the critical psychological level of 105 but also closed at 105.33 over the weekend, marking the second attempt this year to target 105 and setting six-month and ten-month highs. Currently, the price is attempting to test resistance levels at 105.35 (double top from February 22nd and 23rd) and 105.70 (upper channel line). Furthermore, the weekly candlestick chart of the US dollar index and the RSI technical indicator formed a "hidden bullish divergence" pattern twice, from May 2021 to July 2023, and from January 2022 to July 2023, still supporting the US dollar. Once it effectively breaks through 105.88 (this year's March high), further gains could target 107.03 (50% Fibonacci retracement level from 114.50 to 99.57) and even higher levels. However, it's essential to remain vigilant. If the US dollar index falls back below 105.00 and 104.90 (the middle axis of the upward channel) or if there's a need for a correction, a technical pullback may occur. In such a scenario, short-term targets for the bears could be set at around 104.57 (260-day moving average) and 104.45 (support trendline extending from the July low of 99.57) or even lower to 103.93 (240-day moving average).

Today, it might be considered to go long on the US dollar index near 105.10, with a stop loss at 104.90 and targets at 105.50 and 105.55.

WTI Spot Crude Oil

Due to an intensified supply-demand imbalance and the latest industrial output report from China, WTI crude oil prices rose for the third consecutive week last week, reaching a 10-month high of $90.52. WTI crude oil continues to demonstrate its bullish nature, seemingly ignoring short-term bearish factors such as an unexpected increase in EIA inventories. On the contrary, the oil market reacted sensitively to China's reserve requirement reduction measures, leading to a rapid strengthening of oil prices, which have now continued to rise and breached the $90.00 mark.

The latest data shows that China's crude oil imports have surged by 30% compared to the previous year, marking the third-highest level on record. Therefore, China's recent stimulus measures are seen as likely to boost crude oil demand. Additionally, the current oil price bull market is also driven by supply-side factors. Saudi Arabia and Russia announced additional production cuts in July and further extended these cuts until the end of the year in early September, which has become a core factor driving oil price increases. In the first half of the year, oil bulls underestimated the global economic recovery. As we enter the second half of the year, improving demand in some economies provides stronger reasons for the bullish trend in crude oil.

From a technical perspective, the focus is on whether WTI crude oil prices can break through the $90.00 mark and continue to rise or experience a correction after the overbought indicators have been addressed. Last week, WTI crude oil saw a substantial increase of 4.26%, and so far this month, it has climbed over 7%. It breached the $90.00 mark on Monday, reaching an intraday high of $90.52, the highest level in over ten months since November of last year. If it can maintain stability above $90.00, the next potential upside targets include the upper channel line at $91.50 and $93. However, considering that the RSI indicator is at its most severely overbought level since March 2022 (78.00), if WTI oil fails to break through the $90.00 mark and falls back, caution should be exercised as a pullback may occur. In such a scenario, key support levels to watch below include $88.00 (lower channel line) and $86.15 (14-day moving average). Of course, since WTI crude oil prices have broken through the long-term resistance level of $84.50, the upward targets may not stop at $90.00. Therefore, even in the event of a correction, the bullish outlook is unlikely to change, and a return to an upward trend is highly probable after a sufficient correction.

Today, it may be considered to go long on crude oil near $90.00, with a stop loss at $89.70 and targets at $91.15 and $91.30.

XAUUSD

Before the weekend, there was a sudden reversal in gold prices, surging to $1,930.50, forming a "double top" pattern with the week's starting price of $1,930.60. Technical analysis suggests that a larger breakthrough may occur next week, which would be a stronger bullish sign. The bullish reversal on Friday of the previous week and the subsequent price movement indicate a strong intraday momentum, suggesting that a pullback may have already completed, further confirming the anticipation of further upward movement.

The key price level to break through at this point is the high of $1,931, which is a minor swing high. A close above this price level in the days ahead will confirm the strength and increase the chances of continued bullishness. On the weekly chart, there is also a potential bullish pattern in gold, ending the previous week's trading with a bullish hammer candlestick pattern. A breakout above last week's high of $1,930.50-60 would represent a bullish weekly-level breakthrough, and daily closes above that price level would confirm the strength. The setup for the past three weeks has been a bullish adjustment strategy, marking a place where an intraweek downturn triggered a move lower, only to close back within the intraweek range but below the range's high. There are signs now that the recent swing low may have been completed, with initial upside targets including the range from the high on September 1st at $1,953 to the dip around $1,946.

Looking at the daily chart, gold prices were in a downtrend channel last week, briefly falling below the support level of $1,903.50, which is the 38.2% Fibonacci retracement level from the low of $1,614.90 in September 2022 to the high of $2,081.80 in May 2023. The price dropped to as low as $1,901. However, just before the weekend, the market experienced a V-shaped rebound, breaking above the $1,915 level and surging to $1,930.50, forming a "double top" with the high from the beginning of the week. The short-term upward momentum is currently being capped by the levels at $1,930.50-$1,930.60 and $1,931.30 (23.6% Fibonacci retracement level from $2,081.80 to $1,884.90).

Although these levels may serve as obstacles to further gold price increases, a break above $1,930-$1,931 could intensify the bullish pressure, potentially opening the door to $1,953 (this month's high) and $1,953.80 (25-week moving average). The next target could be $1,960.10 (23.6% Fibonacci retracement level from $2,081.80 to $1,884.90). If gold prices continue to face resistance at $1,930-$1,931 and fall back below the 200-day moving average ($1,922.80) support, it could signal a new downtrend towards the 220-day moving average at $1,908.70 and $1,901 (last week's low).

Today, it may be considered to go long on gold around $1,919, with a stop loss at $1,915 and targets at $1,932 and $1,935.

AUDUSD

Following a lackluster performance in the early part of last week, the Australian dollar saw a revival in the latter half amid improving risk appetite. The AUD/USD pair is currently forming a potential double bottom pattern. Double bottom patterns often indicate exhaustion of selling pressure before a sustained upward trend begins. The latest data released by the Australian Bureau of Statistics in late September (September 14) showed that Australia's unemployment rate for August remained steady at 3.7%, in line with expectations, and continues to stay at historic lows. After the data was released, the AUD/USD exchange rate briefly rose before consolidating and is currently trending higher.

The Australian job market still shows signs of cooling overall, reducing the urgency for the Reserve Bank of Australia to further tighten its policies. The market continues to expect the central bank to opt for a pause in rate hikes next month. In general, although Australian and U.S. interest rate paths are largely in sync through the end of the year, robust economic data from the United States has provided more support to the U.S. dollar. In contrast, the Australian economic outlook has been deteriorating since last year, primarily due to weakening demand from its largest export destination, China.

In recent weeks, the Chinese government has announced a series of stimulus measures to alleviate some downside risks, and these measures have gradually started to show positive effects in improving economic prospects. The substantial rebound of the Chinese yuan last week also helped the AUD/USD exchange rate stabilize at lower levels.

Over the past week, the AUD/USD exchange rate experienced narrow fluctuations, oscillating within the range of 0.6376 to 0.6473. The currency pair has formed a "double bottom" around 0.6357-0.6360. The neckline resistance is currently at 0.6522. If the AUD/USD can effectively break through this resistance, it is expected to accelerate buying momentum. This could pave the way for further upside towards 0.6626 (50% Fibonacci retracement level from 0.6895 to 0.6357) and 0.6629 (30-week moving average). At present, the AUD/USD is operating within a "downward channel," and if it falls below 0.6400 (a psychological round number), it may retest the previous "double bottom" lows at 0.6357 and 0.6315 (support trendline stretching from the low point of 0.6563 in February). The next level to watch would be 0.6207 (lower channel boundary).

Today, it may be considered to go long on the Australian dollar around 0.6405, with a stop loss at 0.6380, and targets at 0.6470 and 0.6480.

GBPUSD
Due to relatively weak UK Gross Domestic Product (GDP) data and strong US consumer inflation data, the British pound continued to be under pressure against the US dollar. The currency pair closed at 1.2380, marking a weekly decline of 0.67%. The economic conditions in the UK are less than ideal. Consumer inflation remains above 6%, one of the highest inflation rates among developed nations. Additionally, data released on Wednesday showed an economic contraction in July, with GDP falling by 0.5% following a 0.5% increase the previous month. Therefore, the challenge for the Bank of England is how to deal with this stagflation. The bank's governor, Andrew Bailey, recently stated that there is no need to raise interest rates further. Following the release of strong US consumer inflation data, the GBP/USD pair found some stability. It is currently hovering just below 1.2400 after touching a new low of 1.2378, the lowest since May. The pound had a poor performance last week as expectations for further rate hikes by the Bank of England declined. The currency pair failed to benefit from the correction in the US dollar index.

From a technical perspective, the GBP/USD pair has been in a downtrend since reaching a peak of 1.3134 on July 14th. Its exchange rate closed below the crucial 200-day moving average (1.2430) for the first time since March last week and closed below 1.2400 for the first time since May, at 1.2380. This could be seen as a new bearish trigger. Furthermore, the RSI on the weekly chart remains around the 42 area, far from oversold territory, implying a lower resistance path for the GBP/USD pair. Nevertheless, it's advisable to consider further bearishness only after confirming a break below the 1.2400 level. Subsequently, the GBP/USD pair may accelerate its decline, testing the monthly low from May, around the 1.2310-1.2300 area, and then heading lower to test the next relevant support levels at the 50-week moving average of 1.2279 and the 1.2240 area (lower channel boundary).

On the other hand, if the GBP/USD exchange rate sees a subsequent rally, it may encounter resistance around the 1.2460 area (support line extended from the low point of 1.2308 in May). Successfully breaking through this resistance area could trigger a short-covering rally, pushing the GBP/USD pair up to the psychological level of 1.2500. Although it might fade quickly near the 134-day moving average at 1.2579, the recovery momentum could continue toward the 100-day moving average (currently near 1.2650).

Today, it is advisable to consider shorting the British pound around 1.2405, with a stop loss at 1.2435 and targets at 1.2340 and 1.2330.

USDJPY

The US dollar against the Japanese yen once again reached recent highs last week, nearing 148.00 yen. This was due to financial institutions continuing to exhibit fragile market sentiment, while the market awaited further guidance. The trading price of the US dollar against the Japanese yen is at levels not seen since early November 2022. The new high since October 2022 suggests that speculators consider the US dollar to yen currency pair to be overbought, but there's room for it to become even more overbought. Short-term considerations should closely monitor the global market's nervousness regarding US inflation data, including the rising energy costs reflected in the current value of Western oil. It's also worth noting that Japan's inflation data earlier this week was slightly below expectations from the Producer Price Index report. A weakening yen may help Japanese export companies, which are still a significant part of the country's economic landscape. Many analysts within Japan may take a positive stance on the better industrial data today. However, even with these improved economic data, the continued uptrend of the US dollar against the Japanese yen remains a primary item on the short-term chart. Expectations are for future volatility in the US dollar to yen currency pair, and the likely direction of that volatility continues to be to the upside.

From the daily chart, it is evident that at the beginning of last week, the US dollar against the Japanese yen opened 80 pips lower following a speech by Bank of Japan Governor Haruhiko Kuroda, reaching a low of 145.89 for the week. However, this decline was short-lived, and the USD/JPY pair rose to its highest level since November 2022, with the currency pair returning to recent highs of 147.95 by the weekend. Currently, on the weekly chart, the USD/JPY pair is oscillating around the upper resistance line of the "ascending wedge" at 148.40 and formed a "hammer" bullish pattern in the closing price over the weekend. Bulls have strong control in the market and are likely to trigger a bullish breakout rapidly, with initial resistance levels focused on 148.00-148.40, and further attention to 148.80 if broken. If the uptrend continues, bulls may target the key psychological level of 150.00, which is also the upper boundary of the uptrend channel that began in early March. Conversely, in a bearish scenario, technical support for the USD/JPY pair is at 146.72 (5-week moving average) and 145.90 (last week's low). If further declines occur, the next potential support area should be around the month's low of 144.44 yen.

Today, it is advisable to consider going long on the US dollar around 147.50, with a stop loss at 147.10 and targets at 148.40 and 148.60.

EURUSD

The euro against the US dollar is currently experiencing its longest consecutive decline since 1997, with a weekly drop of 0.37% to 1.0660. Retail traders continue to bet on the US dollar, and the euro/US dollar is nearing its lowest levels since March, at 1.0632, heading for its 9th consecutive weekly decline. The European Central Bank (ECB) has raised interest rates for the tenth consecutive time, bringing inflation back to target levels. The latest forecasts suggest that the decline in inflation may be more challenging than previously thought. The dovish shift by the ECB suggests that interest rates may have peaked at least in the short term, leading to a decline in the euro to US dollar exchange rate, which has now fallen below the 1.0700 level. From a technical perspective, the recent breakthrough of the important 200-day simple moving average at 1.0827 for the euro/US dollar currency pair is seen as a significant technical signal that has sparked interest from bearish traders. Additionally, oscillators on the daily chart show that the price is still in a deeply negative zone and has not yet entered oversold territory, further validating the negative outlook for the euro/US dollar.

The euro/US dollar has extended its decline below the 200-day moving average. Currently, the price has fallen to the May low of 1.0635 and closed at 1.0660, the lowest since March. Given this, the euro/US dollar is facing a potential key turning point. However, even if there is a rebound from support levels, the exchange rate may not necessarily overturn the horizontal channel's lower support line at 1.0790 on the weekly chart since the beginning of the year, which has now turned into a resistance line. If the short-term fails to break above this lower support line, it could guide the price lower to the May low of 1.0635, forming a "double bottom" bearish pattern with last week's low of 1.0632. Breaking below this double bottom would strengthen the bearish view to 1.0405 (50% Fibonacci retracement level of 0.9535 to 1.1275). Initial support is at the 65-week moving average of 1.0552. In the event of a reversal in the trend, a rebound could target 1.0790. The next level would be a retest of 1.0864 (23.6% Fibonacci retracement level) and the 10-week moving average at 1.0911.

Today, it is recommended to consider going short on the euro around 1.0685, with a stop loss at 1.0705 and targets at 1.0625 and 1.0615.

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