US Dollar Index

On Thursday, the US Dollar Index (DXY) fell to approximately 101.25, extending losses from the previous session as the market continued to assess the implications of the Democratic Party’s gains in the US midterm elections. The clarity of the election results eased a source of political uncertainty, fueling a rally in global stock markets—a development that typically dampens demand for the US dollar. Meanwhile, AI-related stocks came under pressure amid concerns that Democratic control could impact future investments in data centers. The election outcome also heightened expectations for political gridlock in Washington and reduced the likelihood of President Trump ordering military strikes against Iran. These developments triggered a sharp decline in oil prices and weakened the safe-haven demand for the US dollar. Investors are now focused on Friday’s critical US employment report; traders currently assign a 79% probability to a Federal Reserve interest rate hike in December.

Following the Democratic Party’s sweep of both the House and Senate, the US dollar retreated but managed to recover from its intraday lows. The core logic is that the "elimination of uncertainty" outweighed the "rise in regulatory risk"—concerns over potential election disputes subsided, risk appetite returned, the S&P 500 rose by about 2%, and crude oil prices plummeted. The US Dollar Index touched its lowest level since September 30 during the overnight session. However, the dollar’s ​​decline was not one-sided; the probability of a December rate hike climbed to 81.2%, and ADP employment figures—showing an increase of 86,000—surpassed expectations, indicating that the political shift has not altered the fundamental pricing of monetary policy. The short-term trajectory will depend on the sustainability of risk appetite, how the Democratic Party’s regulatory stance on AI and data centers takes shape, and how Friday’s non-farm payroll data influences the repricing of rate-hike expectations. The index has now fallen below the middle band of the Bollinger Bands (101.30), signaling a short-term weakening. It is currently testing the 101.00 psychological level and support at 101.01 (the 50-day moving average), followed by the 100.67 level (the 89-day moving average). On the upside, key levels to watch are 101.80 and the 102.00 mark. Consider shorting the USD today at 101.70, with a stop-loss at 101.80 and targets at 101.30 and 101.20.

AUD/USD

The Australian dollar has fallen below the 0.7000 level against the US dollar. A weaker USD and improved global risk appetite have boosted demand for risk-sensitive currencies. Following a Democratic Party victory in the US midterm elections—which has fueled hopes for progress toward ending the US-Iran conflict—global markets have rallied, while oil prices have seen a sharp decline. In Australia, better-than-expected trade data provided further support; the trade surplus expanded significantly to a seven-month high, far exceeding market expectations. Meanwhile, the Reserve Bank of Australia (RBA) recently raised interest rates by 25 basis points to 4.85%—its fifth hike this year—continuing to provide some yield-based support. However, a 6-to-3 split vote and a relatively dovish policy outlook have led the market to anticipate a potential pause in rate hikes in December. Governor Michele Bullock emphasized that while there is uncertainty regarding further policy tightening, persistent inflationary risks mean that additional rate hikes remain a possibility.

On the daily chart, AUD/USD is trading at 0.6930, maintaining a short-term bearish bias as the spot price remains below a cluster of simple moving averages (SMAs) near 0.7056. The price also sits below key breakout levels from previous uptrend lines at 0.7121 and 0.7472. Although the Relative Strength Index (RSI-14) is moving toward the neutral 50 level—suggesting that downward momentum is waning—this does not yet signal a clear bullish shift, and the pair remains on the defensive. On the upside, initial resistance is found near the 0.7056 SMA cluster, followed by the breakout level near 0.7121. On the downside, the pair remains supported near 0.6923—the level where an upward trendline was previously broken. Should selling pressure re-emerge, the area near 0.6900—where a downward resistance trendline was broken—could serve as a deeper structural floor.

Consider going long on the AUD at 0.6920; stop-loss: 0.6910; targets: 0.6960 and 0.6970.

GBP/USD

The British pound extended its recent gains, climbing to $1.3495—its highest level since September 15. Investors sold off the US dollar following a decisive victory for the Democratic Party in the midterm elections, which secured them control of both chambers of Congress. This unexpected political shift weighed on the dollar; meanwhile, concerns over tightening regulatory scrutiny led to declines in artificial intelligence stocks and cryptocurrencies. On the other hand, the pound received further support from market expectations that the Bank of England will resume monetary tightening this Thursday—a move widely anticipated to be the first interest rate hike since 2023. Growing inflationary pressures—exacerbated by the conflict involving Iran—coupled with the resilience of the UK economy, have strengthened the case for higher borrowing costs. However, policymakers are expected to push back against market expectations for multiple additional rate hikes next year.

On the daily chart, GBP/USD is trading at 1.3450, maintaining a short-term bullish bias. The spot price remains above the 100-day simple moving average (SMA) of 1.3392, as well as above the 1.3384 level—a previously broken downward resistance trendline that has since been reclaimed. The pair is also trading above the 1.3239 level—a former bearish breakout point that has now shifted into a potential zone of demand. Furthermore, the 14-day Relative Strength Index (RSI) sits at 65.50, indicating solid positive momentum that has yet to reach extreme levels, further reinforcing the constructive outlook. On the downside, immediate support lies at the 200-day simple moving average (SMA) of 1.3422, followed by the breakout point of a previous downtrend line at 1.3384 and the 100-day SMA cluster at 1.3392. Deeper structural demand can be found near 1.3239, a level that previously acted as resistance. On the upside, bulls first face the upper Bollinger Band at 1.3505; a higher hurdle sits near 1.3560 (the September 10 high). A pullback from this level would suggest a pause in the current rally.
For today, consider going long on the GBP at 1.3440, with a stop-loss at 1.3430 and targets at 1.3490 and 1.3500.

USD/JPY

The Japanese yen strengthened on Thursday, pushing the USD/JPY pair below the 158 mark—marking the second consecutive day of gains for the yen. Minutes from the Bank of Japan’s (BOJ) September meeting reinforced market expectations for further monetary policy tightening. One board member noted that there may still be room to accelerate the pace of interest rate hikes, as the central bank assesses developments in the Middle East, the growth in AI-related demand, and the impact of foreign exchange movements. In September, the BOJ raised its policy interest rate to 1.25%—a 31-year high—before keeping rates unchanged in October. The central bank also indicated that underlying inflation has reached its 2% target, paving the way for another rate hike in December. The US dollar also weakened following a Democratic victory in the US midterm elections, providing further support for the yen. The clarity of the election results eased political uncertainty and lowered market expectations regarding the possibility of President Trump resuming military strikes against Iran.

The USD/JPY pair remains subdued, with no clear directional bias. The market structure of lower highs and lower lows remains intact; however, should buyers reclaim the 159.00 level, the pair could test the 100-day simple moving average (SMA) at 159.12, with eyes set on the 160.00 mark. From a momentum perspective, such a move appears distant. While the Relative Strength Index (RSI) retains a bullish bias, it is currently pointing downward. Nevertheless, a break above 160.00—followed by a move past the September 2 high of 160.39—would invalidate the bearish market structure. Conversely, for the bearish trend to continue, sellers must push the pair below 158.00 and break through the 50-day SMA at 157.36. A failure to hold the latter would expose the 157.00 psychological level.

For today, consider shorting USD/JPY at 157.85; stop-loss: 158.00; targets: 157.20, 157.10.

EUR/USD

The Euro extended its gains, climbing above $1.125—its highest level since early October—as investors digested news of accelerating inflation in the Eurozone, while the US Dollar faced pressure following an unexpectedly decisive victory for the Democratic Party in the US midterm elections. The Eurozone’s annual inflation rate for October accelerated to 4.0%—the highest level since September 2023 and well above the European Central Bank’s (ECB) 2% target—driven primarily by surging energy costs. Increasingly hawkish rhetoric from ECB policymakers has also provided support for the Euro. Although the ECB opted to keep interest rates unchanged last week, officials indicated that further hikes might be necessary to curb inflationary pressures and prevent them from spilling over into wages, reinforcing market expectations for a further tightening of monetary policy. Meanwhile, the unexpected outcome of the U.S. elections has placed further pressure on the U.S. dollar. Additionally, artificial intelligence stocks and cryptocurrencies have declined amid concerns over tightening regulatory scrutiny.

On the daily chart, the EUR/USD pair remains under pressure within the broader context; it continues to trade below the 50-day simple moving average (SMA) of 1.1353, and despite a recent rebound, the medium-term outlook remains bearish. The price is approaching the upper Bollinger Band at 1.1265 while holding above the 20-day SMA at 1.1196—a pattern suggesting a short-term correction within an otherwise dominant downward structure. The Relative Strength Index (RSI) stands at 52.46, having recovered from previously oversold territory; this indicates an easing of selling pressure, though it has yet to translate into a convincing bullish trend. On the upside, immediate resistance is found near the upper Bollinger Band at 1.1265, with a more significant hurdle at the 50-day SMA of 1.1353—a level that is likely to cap gains unless decisively reclaimed. On the downside, initial support is provided by the 20-day SMA at 1.1196, followed by the lower Bollinger Band near 1.1128; should the bears regain control, the recent rebound could face a challenge at these levels.

For today, consider going long on the EUR/USD at 1.1210, with a stop-loss at 1.1200 and targets at 1.1250 and 1.1260.

WTI Crude Oil

On Thursday, crude oil prices rose for the first time in four sessions, climbing back to approximately $90 per barrel following a sharp decline of over 8% in the previous session—a drop that had pushed prices to a near two-month low. Traders are currently assessing whether the Democratic Party’s sweep in the U.S. midterm elections might improve the prospects for a diplomatic resolution to the conflict in Iraq. U.S. Vice President-elect Vance indicated that voter dissatisfaction regarding the ongoing conflict—and the nature of the U.S.-Israel relationship—contributed to the Republican Party's electoral losses. Prior to the election results on Tuesday, President Trump stated that he had no immediate plans to escalate military strikes. Although exports from Gulf oil-producing nations have partially recovered, geopolitical risks to supply remain elevated. Adding to market concerns, Iran’s Islamic Revolutionary Guard Corps (IRGC) reported on Thursday that two oil tankers and a tugboat caught fire in separate incidents; the vessels were allegedly attempting to navigate the Strait of Hormuz via unauthorized routes.

On a daily timeframe, WTI crude oil has retreated significantly from its recent peak. The price is currently testing the 200-day simple moving average (SMA) at $85.95, which aligns with the 50% Fibonacci retracement level of the preceding rally at $85.59—creating a zone of significant confluent support. This area represents a concentration of buying interest; should this defense hold, there remains a possibility for a rebound following the pullback. Conversely, a decisive break below this $85.59–$85.95 support zone would open the door for further downward movement, with the next key support level at the 61.8% Fibonacci retracement ($81.27), followed by a major floor at the psychological level of $80.00. On the upside, initial resistance lies at the 38.2% Fibonacci retracement level of $89.91, followed by the 50-day SMA at $93.75, with strong resistance situated at Wednesday’s high of $96.28.

Consider going long on crude oil today at 89.80; stop-loss: 89.65; targets: 91.50, 92.00.

Spot Gold

During Thursday’s Asian morning session, spot gold continued its strong upward momentum, climbing toward $4,125—a gain of over 3.6% for the day, marking its largest single-day increase since mid-August. With the Democratic Party securing control of both the House and the Senate, the market is pricing in expectations of policy gridlock in Washington. The U.S. Dollar’s ​​decline to a more than one-month low has provided robust support for gold prices. However, the probability of a Federal Reserve interest rate hike in December remains high at 82.7%; this expectation acts as a constraint on further gains, as the market awaits Friday’s U.S. non-farm payroll report for guidance on the future path of interest rates. Driven by these expectations, the U.S. Dollar Index fell sharply on Wednesday, hitting a low not seen in over a month. As gold is denominated in U.S. dollars, this weakness lowered the cost of acquisition for overseas buyers, triggering a significant influx of capital into the precious metals market. Meanwhile, crude oil prices remain elevated, which limits the Federal Reserve's room to pivot toward a more accommodative policy. As a non-interest-bearing asset, gold faces downward pressure when interest rates rise, as the opportunity cost of holding the metal increases.

On the daily chart, spot gold has just undergone a substantial rebound, characterized by a series of large bullish candlesticks. Short-term moving averages have turned sharply upward, reflecting a concentrated release of bullish momentum; however, the RSI has entered the overbought zone, suggesting a potential technical pullback. At the current price of $4,090, gold remains below both the 50-day simple moving average ($4,206) and the 100-day simple moving average ($4,203), indicating that the broader, longer-term bearish trend has not yet been fully reversed. The 14-period RSI is rising toward the overbought territory, signaling a strong recovery from recent lows; nevertheless, structural selling pressure persists, and the price is likely to face significant selling interest following this rebound. The first resistance level above is the 100-day simple moving average at 4,203. The next key medium-term resistance lies at the upper Bollinger Band (4,253), with the 4,300 psychological level serving as a further, stronger barrier. On the downside, the primary support has shifted to the middle Bollinger Band at 4,074, followed by the 4,000 psychological level. A decisive break below 4,000 would slow the current rebound and lead to a retest of lower support levels; as long as this support holds, the price of gold is expected to remain in a broad, range-bound oscillation following its rebound.

For today, consider going long on gold at 4,085, with a stop-loss at 4,080 and targets at 4,130 and 4,140.