US Dollar Index

During Monday's Asian trading session, the US dollar index rebounded slightly to around 98.60, ending its fourth consecutive day of decline. The prolonged US government shutdown, speculation of a Federal Reserve rate cut, and renewed trade tensions weighed on market sentiment, and investors remained cautious. Overall, last week's volatility in the foreign exchange market highlighted the dominant role of geopolitical risks in currency movements. The resurgence of the international trade war has transformed the US dollar from a safe haven to a source of pressure, surging demand for safe-haven assets. Therefore, looking ahead to this week, the meeting between Trump and Chinese President Xi Jinping will be crucial. If tensions ease further, the US dollar may rebound; conversely, expectations of a rate cut at the Federal Reserve's meeting at the end of October may continue to weigh on the dollar. Investors should closely monitor the progress of the US government shutdown and global economic data to prepare for potential market volatility.

The US dollar index has fallen below its short-term 9-day (98.83) and 7-day (98.75) simple moving averages, indicating continued bearish momentum. The index recently broke below the key support level of the aforementioned short-term moving average, which has now turned into resistance. Currently, the US dollar index is hovering above the psychological level of 98.00, coinciding with the previous support zone that emerged in late September. The 14-hour Relative Strength Index (RSI) is slightly above 50, indicating a slightly stable market with a bull-bear struggle, suggesting the possibility of a short-term rebound. However, if the index reclaims the 98.75-98.83 area, it could test 99.00 and 99.56 (a recent two-month high). Furthermore, given that the overall trend remains bearish after breaking below the short-term simple moving average, the index could first pull back to the 98.00 (round number) level and the 97.46 (October 1 low) before bulls attempt another upward move.

Consider shorting the US Dollar Index at 98.72 today. Stop-loss: 98.85, target: 98.25, 98.15.

WTI Spot Crude Oil

US crude oil is trading around $56.95 per barrel. Last Friday, it hit a low of $56.15, its lowest level since early May, following the International Energy Agency (IEA) forecast of a growing supply glut and the agreement by US President Trump and Russian President Vladimir Putin to meet again to discuss Ukraine. Last week's decline was partly due to escalating trade tensions, which heightened concerns about an economic slowdown and declining energy demand. The IEA's outlook for a supply surplus through 2026 has capped crude oil prices. The U.S. Energy Information Administration (EIA) reported Thursday that U.S. crude oil inventories rose by 3.5 million barrels to 423.8 million barrels last week, compared with analysts' expectations of a 288,000-barrel increase in a Reuters poll. The data also showed that U.S. crude oil production rose to 13.636 million barrels per day, a record high. From a supply and demand perspective, while the near-term spread remains relatively strong, the long-term structure is showing signs of weakness, indicating that the market's expectations for a tight supply-demand balance are insufficient. A further increase in inventory levels will continue to suppress bullish momentum.

Crude oil prices are driven by sentiment and events in the short term, by structure and inventory in the medium term, and by supply and demand trends in the long term. The biggest contradiction at this stage is that sentiment supports short-term prices, but supply and demand constraints suppress the potential for price movement. On the daily chart, WTI remains consolidating above $56.15, a low since early May. The short-term moving average has flattened, indicating limited upward momentum. The shortening of the MACD momentum bar and the easing of short-term bullish momentum suggest the market is in a convergence phase before choosing a direction. If oil prices successfully break through the resistance levels above $58.00 (round-number mark) and $58.65 (9-day moving average), technically upward momentum could be restored, opening the door for a potential move towards the $60 range. Conversely, a break below $56.15 support would intensify the risk of a correction, potentially targeting $54.78 (a near 4-year low).

Consider going long on crude oil at $56.78 today. Stop-loss: $56.60. Targets: $58.20, $58.50.

Spot Gold

Gold prices rose over 2% on Monday, trading above $4,381.60 per ounce, a new all-time high, as expectations of further Federal Reserve rate cuts and continued safe-haven demand continued to support gold prices. The US government shutdown continues, and although White House economic advisor Kevin Hassett told CNBC it "may end sometime this week," uncertainty remains. Investors are also closely watching the upcoming China-US negotiations. Finance Minister Scott Bessant and Chinese Vice Premier He Lifeng plan to meet in Malaysia this week, resuming discussions following escalating trade tensions last week. President Trump expressed optimism that a deal could be reached, describing previously threatened high tariffs on Chinese goods as "unsustainable." Gold prices have risen over 60% so far this year.

Gold has risen over 64% year-to-date, a rare feat, reaching a record high of $4,379.38 last Friday after earlier dipping to $4,186. Despite this, the weekly gain remains at 5.69%, marking its ninth consecutive weekly gain. Despite the intraday pullback, gold's broader bullish structure remains intact, suggesting any dips could attract renewed buying interest. On the 8-hour chart, immediate support lies at $4,219 (the early-week low) and $4,200 (a psychologically important level), followed by the 20-period simple moving average at $4,180. On the upside, resistance lies between $4,381.60 (early week high) and $4,400 (1 round-figure mark). A breakout above this range could open up further upside potential, with the next target at $4,500.

Consider going long on gold at $4,345 today, with a stop-loss at $4,340 and targets at $4,380 and $4.390.

AUD/USD

The AUD/USD pair remained strong due to the People's Bank of China's decision to maintain interest rates. The central bank maintained its one-year and five-year loan prime rates (LPR) at 3.00% and 3.50%, respectively. It's important to note that any changes in the Chinese economy could impact the Australian dollar, as China and Australia are close trading partners. The Australian dollar appreciated to around $0.6500 on Monday, extending gains from the previous session. Australian Prime Minister Anthony Albanese plans to meet with US President Trump in Washington, where he will highlight Australia's vast reserves of critical minerals as a key alternative to China's rare earth supply restrictions. The Prime Minister is expected to promote a bilateral agreement on cooperation on critical minerals and reaffirm the US strategic commitment to the Aukus Agreement, under which Australia will receive US support for acquiring nuclear-powered submarines. This is driven by market optimism about a breakthrough in US-Australia trade negotiations.

The Australian dollar was trading around 0.6510 against the US dollar on Monday. Technical analysis on the daily chart shows a persistent bearish bias and a descending channel. The 14-day relative strength index (RSI) remains below 50, further reinforcing the bearish outlook. On the downside, AUD/USD could move towards the 165-day simple moving average of 0.6461, followed by the four-month low of 0.6414 recorded on August 21. Further support lies at 0.6400 (the 200-day simple moving average and the round number mark, respectively). Currently, the pair is testing immediate resistance at 0.6572, the high of October 10. A break above these moving average resistance levels would improve short- and medium-term price momentum, pushing the exchange rate towards the psychological level of 0.6600.

Consider a long position on the Australian dollar at 0.6502 today, with a stop-loss at 0.6490 and targets at 0.6560 and 0.6550.

GBP/USD

After Friday's positive two-way price action, GBP/USD started the new week on a subdued note, holding firmly above the 1.3400 round-figure mark during the Asian session. Furthermore, the complex fundamental backdrop warrants some caution until the recent recovery from the 1.3250-1.3245 area (the lowest level since early August reached last Tuesday) is sustained. With the Federal Reserve projecting further rate cuts this year, the dollar struggles to capitalize on Friday's gains. Furthermore, economic risks posed by the prolonged US government shutdown, global trade frictions, and signs of US economic weakness are keeping dollar bulls on the defensive. This, in turn, is seen as a key factor providing some support for the GBP/USD pair. Furthermore, concerns about the UK's fiscal outlook ahead of the crucial Autumn Budget in November are also acting as headwinds for the British pound and the GBP/USD pair.

GBP/USD buyers found strong support at 1.3248 (October 14 low) and rallied strongly, retesting key psychological resistance near 1.3500. In doing so, the pair recaptured the crucial 20-day simple moving average at 1.3415 last week. Meanwhile, the 14-day relative strength index (RSI) broke above 50. These technical indicators suggest that the GBP/USD rally could continue in the coming week, with 1.3487 (the 50.0% Fibonacci retracement level from 1.3726 to 1.3248) in focus. Further upside, the psychological barrier of 1.3500 will be tested. If broken, the next relevant resistance level lies near 1.3543 (the 61.8% Fibonacci retracement level). Conversely, a sustained break below the 1.3400 support zone would require a test of the 1.3360 area (the 23.6% Fibonacci retracement level). A break below this level could accelerate GBP/USD's decline towards the 1.3300 round-figure mark.

Consider a long position on GBP at 1.3395 today, with a stop-loss at 1.3385 and targets at 1.3450 and 1.3460.

USD/JPY

The yen weakened against the dollar on Monday, trading around 150.80, extending its decline from the previous session, as investors prepared for Tuesday's Japanese leadership election, which will determine the next prime minister. Sentiment was influenced by news that the ruling Liberal Democratic Party and the Japan Innovation Party agreed to form a coalition government, paving the way for Sanae Takaichi to become Japan's first female prime minister. The so-called "high-end trade," driven by expectations of increased fiscal spending and looser monetary policy, spurred buying of Japanese stocks while weighing on domestic bonds and the yen. Investors are also looking ahead to next week's Bank of Japan meeting, where policymakers are widely expected to keep interest rates unchanged. Externally, the safe-haven yen is facing selling as risk appetite improves amid growing signs of easing US-China trade tensions.

From a technical perspective, USD/JPY faces downside support at 149.36 (the 25-day simple moving average) and 149.38 (last week's low), following its rally from this month's high of 153.27. A break below this support could accelerate USD/JPY's decline towards 148.17 (the 76.40% Fibonacci retracement level from 146.60 to 153.27). Subsequent selling would serve as a fresh catalyst for bearish traders, opening the door for a continuation of the correction following the 153.30-153.25 area reached earlier this month (the highest point since February). On the upside, any corrective rally would face initial resistance near 151.20 (the early-week high). 151.70 (the 23.6% Fibonacci retracement of the 146.60 to 153.27 range) will subsequently become key resistance. A break above this level could trigger short-covering, pushing the exchange rate towards the 152.00 round-figure mark.

Consider shorting the US dollar at 150.95 today. Stop loss: 151.10, target: 149.80 150.00

EUR/USD

EUR/USD struggled for the second consecutive day during Monday's Asian trading session, trading around 1.1650. The euro weakened following a Bloomberg report on Saturday that S&P Global Ratings downgraded France's credit rating from AA- to A+, citing "elevated" budget uncertainty despite the government's submission of a draft budget for 2025. The euro has been trading slightly higher over the past few trading days, as investors have expressed relief at the easing of recent political uncertainty in France. Le Corny's reappointment as Prime Minister after his unexpected resignation, along with the fact that Prime Minister Sébastien Le Corny withstood two no-confidence votes last Thursday, eased market concerns about the uncertain political outlook in France and provided additional support for the euro. Meanwhile, expectations of further interest rate cuts from the Federal Reserve significantly limited the dollar's upside.

The daily chart shows that EUR/USD is currently trading within a narrow range, capped above by the bearish 34-day simple moving average (1.1707) and below by the directionless 120-day simple moving average (1.1586). Technical indicators retreated after failing to break through the 1.1700 mark, skewing the risk to the downside, but a renewed downtrend has not been confirmed. Previously, 1.1600 was considered a dividing line between bulls and bears. After holding above 1.1600, EUR/USD continued its upward trend, breaking through the descending resistance line. Currently, the price is under pressure from the 25-day simple moving average (1.1704) and the 34-day simple moving average (1.1707). A break below this level could lead to a short-term recovery to the October 1 high of 1.1780, ultimately targeting the 1.1800 (round number mark) area. Support lies at the psychological level of 1.1600 and the 120-day simple moving average (1.1586).

Consider a long position on the euro at 1.1630 today, with a stop loss of 1.1620 and a target of 1.1680 or 1.1900.

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