USD

The US Dollar Index may be on track for its strongest weekly performance in over a decade. It has seen eight consecutive weeks of gains, marking its longest upward trend since it began in January 2005. The robust US economy has led to increasing expectations of higher policy interest rates, attracting more capital into the United States. The Intercontinental Exchange (ICE) US Dollar Index has also been on the rise, poised to set its longest streak of consecutive gains in nine years. The recent strength of the US dollar reflects global economic issues. Economic data indicates that the US economy is accelerating, while Europe and China are experiencing slower growth, leading to expectations of interest rate cuts in developing countries. It is evident that the US economy is showing resilience while global growth is weakening, especially in Europe and China. Interest rate differentials favor the US dollar. The US dollar has become quite overbought, and a correction is now due. Sentiment towards the US dollar has reached extreme levels, so there is unlikely to be further buying pressure in the short term. Short-term traders should exercise caution when holding long US dollar positions.

On the daily chart, the US Dollar Index is trading above the central axis of the "ascending channel" at 104.90. Last week, the index formed a "golden cross" and a "hammer" candlestick pattern on the daily chart, indicating a bullish outlook. If the index can effectively hold above the 104.90 and 105.15 (last week's high) levels, it can continue to challenge 105.70 (upper channel line) and 105.88 (high on March 23). The RSI (Relative Strength Index) is currently near 64 and continues to trend upward, while the MACD (Moving Average Convergence Divergence) indicator, after completing an upward crossover, also appears to support a long-term bullish sentiment. On the other hand, given that the US Dollar Index has seen nine consecutive weeks of gains, a short-term technical pullback cannot be ruled out. In such a scenario, bears may target short-term profit objectives around 104.24 (10-day moving average) or even lower towards 104.05 (lower channel line) and 104.10 (240-day moving average).

Today, it may be considered to go long on the US Dollar Index near 104.80, with a stop loss at 104.60 and target levels at 105.30 and 105.40.

WTI Spot Crude Oil

Last week, the leading countries of OPEC+ confirmed the market's previous concerns by taking measures to tighten the supply further, providing support for crude oil prices. Saudi Arabia and Russia joined forces once again, with Saudi Arabia announcing the extension of its voluntary production cut of 1 million barrels per day until the end of the year, and Russia also extending its 300,000 barrels per day export cut measures until year-end. While OPEC+ nations are making continued efforts to support oil prices from the supply side, other data also indicate that the supply and demand fundamentals are moving in favor of WTI crude oil's rise. In addition to the efforts of Saudi Arabia and Russia to tighten supply, U.S. inventory levels and Chinese import data both suggest that the supply and demand situation is favorable for WTI crude oil prices.

From a technical perspective, the upward momentum for WTI crude oil prices after breaking through the resistance near 84 may not be over yet. However, WTI crude oil prices are not without concerns at the moment, as overall market risk appetite is cooling. With the U.S. dollar hitting near six-month highs and U.S. stock indices under pressure, the VIX fear index has risen by 20% this week. Nevertheless, on the flip side, once market risk sentiment improves, the headwinds may dissipate, allowing oil prices to continue their upward trajectory.

On the daily chart, it appears that WTI crude oil prices are somewhat constrained by the level around 88.30 (ascending wedge), but considering that the upward move after breaking the long-term resistance at 83.50 may have more room to run, the outlook remains bullish. If things go as expected, the initial upside target is around 89.36 (123.6% Fibonacci retracement from 84.51 to 63.93), and beyond that, further targets may be seen around last year's October and November highs in the 93-94 range. However, given the lack of a clear correction and the proximity to key time points, investors should be cautious of profit-taking by the bulls that could trigger a new round of daily-level adjustments.

In summary, in the event of a pullback, there may be initial support around 84.51 (April high) and 82.78 (14-day moving average). Furthermore, even in the case of a significant pullback, as long as the price holds above 80.00, the bullish sentiment is likely to persist.

Today, it may be considered to go long on crude oil near 86.30, with a stop loss at 85.90 and target levels at 87.50 and 87.70.

XAUUSD

If inflation pressures continue to remain uncomfortably high, there is still room for interest rate expectations to rise as we enter the fall, which could be negative for gold. Market expectations suggest that the overall CPI (Consumer Price Index) annual rate for the United States in August may rise from the previous 3.2% to 3.8%, while the core CPI annual rate may slow down from the previous 4.7% to 4.5%. For policymakers, this might be seen as a positive but relatively limited sign of improvement. Overall, if the actual CPI results exceed expectations by a significant margin, gold prices may face greater downward pressure, as higher inflation could impact the Federal Reserve's monetary policy path and the US dollar.

Last week, gold continued to maintain a significant negative correlation with the US dollar and US Treasury yields, which may not pose much of a challenge to the recent strength of the US dollar.

Gold prices are currently struggling to find direction and remain in a range near $1920. The market is trading with a slightly stronger US dollar and subdued US bond yields ahead of this week's key inflation data release, the CPI. In this context, the movement of gold is relatively limited. Gold has found support at $1910 and is currently slightly above the 220-day moving average at $1901.60. On the daily chart, last week, the gold price began to break above the resistance line at $1938, but then retreated. Gold closed the week with a bearish "shooting star" pattern, which suggests that it may be challenging for gold to make significant upward moves. Below, attention should be given to $1901.60 (220-day moving average) and $1900.00 (a psychological level). If the upper support zone is breached, the price may move towards $1897 (lower support line of the large triangle) and $1875.

Today, it may be considered to go long on gold around $1915, with a stop loss at $1910 and target levels at $1928 and $1932.

AUDUSD

The Australian Dollar/US Dollar (AUD/USD) pair has stabilized at lower levels after experiencing a significant plunge earlier this week, recording consecutive doji candlesticks. However, it is not yet certain whether this indicates a bottoming signal, and in the short term, attention is focused on the direction of a breakout from the narrow consolidation range.

Last week, the AUD/USD pair saw most of its volatility on Tuesday, with a series of negative factors causing a sharp 1.3% daily decline, hitting near a ten-month low. Firstly, Australia's second-quarter current account surplus came in at AUD 7.7 billion, weaker than the expected AUD 8.0 billion, which initially pressured the AUD/USD. Then, China released its August Caixin Services PMI, which came in at 51.8, lower than the expected 53.6. The deteriorating sentiment in China's financial markets also weighed on the Australian dollar. Another blow came from the Reserve Bank of Australia (RBA) with its latest interest rate decision, where the central bank announced keeping rates unchanged at 4.1%. This was somewhat surprising as there were strong expectations of a rate hike in the market, leading to a further decline in the AUD/USD after the announcement. Although short-term positive data and news may provide support for the AUD/USD, it may be challenging to sustain this support as the strong US dollar continues to exert downward pressure.

On the daily chart, the AUD/USD reached a low of 0.6357 last week, the lowest level since November of the previous year. The AUD/USD pair is clearly in a downtrend, characterized by lower highs and lower lows. Currently, the exchange rate has fallen below 0.6400, and repeated resistance to rebounds suggests the significance of this level in the short-term trend. If the exchange rate stabilizes around 0.6400 and breaks above 0.6480 (last week's high) and 0.6484 (23.6% Fibonacci retracement level of the move from 0.6895 to 0.6357), there is potential for a rebound towards 0.6522 (the upper range of the past four weeks, ranging from 0.6362 to 0.6522). However, being rejected at this level could lead the AUD to resume its decline, with downside targets at 0.6357 and 0.6272 (the low from November 3rd last year). A bottom for the AUD may only be formed when it stops declining against a range of non-US currencies; otherwise, finding a bottom may be elusive.

Today, it may be considered to go long on the AUD near 0.6350, with a stop loss at 0.6330 and target levels at 0.6420 and 0.6435.

GBPUSD
Last week, as crude oil prices rose and after Bailey made cautious statements, the British Pound continued to be sold off. The GBP/USD currency pair dropped to a low of 1.2483, the lowest level since June. Following another set of positive economic data from the United States, the GBP/USD exchange rate continued its downward trend. According to the Institute for Supply Management (ISM), the non-manufacturing sector in the U.S. continued to grow in August, rising from 52.7 in July to 54.5 in August, exceeding the expected median of 52.5. Bank of England Governor Bailey stated to the House of Commons Treasury Committee that the central bank is nearing the point where it could pause the rate hike cycle. These remarks led to a drop in UK bond yields and the British Pound. Additionally, the GBP/USD exchange rate continued its downward trend following another set of positive economic data from the United States, with forward guidance from the Bank of England and a UK house price report putting pressure on the British Pound. U.S. economic data drew attention, with the largest decline in house prices so far this year. From an economic theory perspective, this is a net negative factor for the British Pound. Market expectations for a rate hike by the Bank of England have fallen significantly from 57 basis points to 47 basis points, and this dovish repricing may be a major reason for the continued softness of the British Pound over the past two days. Currently, the market focus for the British Pound is on the possibility of the Bank of England pausing rate hikes, which is unfavorable for the Pound's performance. In addition, the Pound has been in a downtrend since mid-July, and with a lack of positive news for speculation at the moment, there is a greater chance that the Pound will continue to consolidate lower.

The GBP/USD currency pair has been in a downtrend since reaching a high of 1.3143 in mid-July. It has moved to the lower boundary of the descending channel at 1.2370 and has crossed below the 20-day (1.2640) and 100-day (1.2653) moving averages, forming a bearish "death cross" pattern in the latter part of last week. At the same time, the Relative Strength Index (RSI) on the daily chart has reached oversold levels. It's worth noting that the currency pair on the daily chart has moved to the 200-day (1.2424) moving average. The Pound may continue to decline in the coming trading days, with short-term targets pointing to 1.2380 (a support trendline extending from the low of 1.2395 on April 3rd) and 1.2370 (the lower boundary of the descending channel), with a break potentially leading to the 1.2308 level (the low of May 25th). Alternatively, if the exchange rate rebounds above the moving averages, attention should be given to the 1.2500 level, which is the midline of the descending channel. If this level is breached, then the GBP/USD exchange rate may once again challenge the key resistance zone composed of 1.2640 (20-day moving average), 1.2650 (the lower boundary of the descending channel), and 1.2653 (100-day moving average), potentially reversing the current bearish trend and recovering to the upside.

Today, it is advisable to go short on the Pound near 1.2500, with a stop loss at 1.2525 and target levels at 1.2430 and 1.2410.

USDJPY

As the recent strength of the US dollar led to a significant depreciation of the Japanese yen, Japan's Vice Finance Minister Manabu Kanda issued an intervention warning on Wednesday, September 6th. Subsequently, the USD/JPY continued to stay below 148. It is widely believed in the market that the Bank of Japan (BOJ) is unlikely to intervene in the forex market unless the USD/JPY approaches last year's October high at 151.94. Strong US economic data provided new support for the US dollar and US Treasury yields, with the US dollar index continuing its upward trend and US Treasury yields remaining high. The yield on Japan's 10-year government bonds is hovering around 0.65%. Overall, the rising yield spread between US and Japanese 10-year government bonds remains a major driver of USD/JPY strength. For the Japanese yen in the near term, as long as there are no changes in monetary policy, the interest rate differential between the US and Japan will continue to stay high, putting downward pressure on the yen. Previously, the level of 145.00 was considered an intervention line, and in September 2022, the Bank of Japan intervened in the forex market at this level. With the Japanese economy accelerating this year and signs of an early rebound in inflation, the BOJ's tolerance for exchange rate fluctuations has increased, and the market estimates that 150.00 has become the new intervention line.

The daily chart shows that USD/JPY has been in a volatile uptrend since around early July when it was near 137, with a recent high just below 148. The bullish trend still appears strong. The trend reversal line is at 143.83 (38.2% Fibonacci retracement from 137.25 to 147.90), and the 10-week moving average is at the 143.61 level, both of which indicate that the upward trend remains intact above them. With the center of gravity shifting higher, key short-term support lies at 145.60 (the midline of the upward channel) and 145.39 (23.6% Fibonacci retracement). After a slight consolidation last Thursday, USD/JPY has gained momentum to continue upward, and it can still hold a bullish position with support at 145.60-39. However, due to resistance around the psychological level of 150.00, the bullish buying interest has weakened. In the future, if the price falls back below 145.60-39 and continues to encounter resistance, its exchange rate may undergo a retracement until it breaks below 143.83-61 to confirm a shift to the downside, targeting 140.00 (a psychological level in the market). In terms of the trading range, the downside has more room, and if the exchange rate strongly breaks through the 150.00 level, the degree of volatility in the trend will be greater. The BOJ's intervention actions still need to be assessed.

Today, it is advisable to go long on the US dollar near 147.40, with a stop loss at 147.00 and target levels at 148.40 and 148.60.

EURUSD

The divergence in economic prospects between the United States and Europe has laid the foundation for further weakness in the Euro/US Dollar (EUR/USD) exchange rate. Before the new guidance provided by the US August Consumer Price Index (CPI) and the European Central Bank (ECB) interest rate decision later this week, the EUR/USD may experience a minor rebound or consolidate sideways in the short term. From a technical perspective, the overall trend of EUR/USD leans towards the downside.

In terms of economic prospects, both manufacturing and services PMI in the Eurozone have entered contraction territory, indicating that economic issues in the Eurozone are becoming more severe. Despite mixed recent data from the United States, the overall picture still shows economic resilience. The difference in economic prospects between the United States and Europe has set the stage for further softening of the EUR/USD. The correlation between EUR/USD and the yield spread between German and US 2-year government bonds, as well as the market's expectations for a rate cut by the Federal Reserve in 2024, has been weakening recently. This may suggest that the recent decline in EUR/USD is more driven by strong US economic data than by monetary policy prospects. The market is waiting for new guidance from the US August CPI on Wednesday and the ECB interest rate decision on Thursday. In the short term, EUR/USD may see a minor rebound or consolidation.

On the daily chart, EUR/USD continues its downtrend. After breaking below the support around 1.0766 and 1.0772, which were the lows of August 25th and September 1st, it has opened the door for a decline towards the low point of mid-March at 1.0516. Over the weekend, EUR/USD closed with a "death cross" and a "shooting star" bearish pattern, indicating the next target at the gate of the January low at 1.0482. Currently, the short-term key support levels are at 1.0650 (a support trendline starting from the low of the year at 1.0482), 1.0610 (38.2% Fibonacci retracement from 0.9535 to 1.1275), and 1.0600 (lower boundary of the daily downward channel). On the upside, the previous support levels at 1.0766/1.0772 may now act as direct resistance, followed by 1.0840 (upper boundary of the downward channel) and 1.0822 (200-day moving average).

Today, it is advisable to go short on the Euro near 1.0725, with a stop loss at 1.0750 and target levels at 1.0630 and 1.0615.

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