US Dollar Index

The US Dollar Index rose 0.12% last Friday, closing at 101.75. Overall, the index remained largely stable over the past week. As the midterm elections approach and the risk of escalating geopolitical tensions in the Middle East rises—compounded by renewed concerns over inflation—market bets on Federal Reserve interest rate hikes have softened. The market anticipates that the Fed will keep interest rates unchanged this week; traders in federal funds rate futures have trimmed their expectations for a December rate hike, though they still assign an 81% probability to such a move. Heading into the October FOMC meeting, net long positions on the US dollar remain significant. A round of "relief selling" could emerge following the midterm elections, and seasonal year-end factors may further weigh on the dollar against major G10 currencies. Although the market has already priced in a pause in rate hikes, investors remain heavily net-long on the dollar ahead of the FOMC meeting—with net long positions standing at +1 standard deviation above the historical average. While the Fed is highly likely to hold rates steady at the upcoming meeting, data indicates that the Federal Reserve faces the greatest pressure to raise rates among G10 central banks.

The backdrop of a softer dollar has shifted the balance of risks further toward a bearish outlook for the currency. Even so, we anticipate a gradual and orderly decline rather than a sharp depreciation. There is further room for the dollar to fall following the midterm elections. With the probability of a "Blue Wave" rising, the dollar had rallied in the lead-up to the midterms—much like it did in 2018. Broader narratives surrounding the Federal Reserve, oil prices, and interest rates continue to provide some support. On the daily chart, the US Dollar Index is currently hovering near 101.62, close to its 28-day simple moving average of 101.60. A recent high is marked at 102.94, while a support area can be identified near 101.45. The MACD indicator shows a DIFF value of 0.3153, a DEA value of 0.4555, and an MACD bar value of -0.2803, with the range of fluctuation narrowing compared to the previous period. Related indicators suggest that momentum is operating below the zero line, though there are no signs of extreme deviation from historical ranges. On the downside, watch the 101.45 level (last week’s low) and the 101.00 area. On the upside, keep an eye on the 102.50 level and the 102.12 mark (the high from October 19).

For today, one might consider shorting the USD at 102.10, with a stop-loss at 102.20 and targets at 101.75 and 101.65.

AUD/USD

After posting a slight gain in the previous trading session, the AUD/USD pair retreated, trading near 0.7030 during Monday’s Asian session. However, the pair’s downside may be limited, as the Australian dollar could find support following comments from Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter. On Sunday, Hunter indicated that interest rates might need to rise further, citing persistent inflation and the risk that price pressures from abroad could become deeply embedded in the domestic economy. Her remarks reinforce market expectations that the RBA will maintain a hawkish monetary policy stance, following four rate hikes earlier this year. Market focus has now shifted to the September inflation data due later this week—a critical release, given that the August CPI figure remained above the RBA’s target range of 2% to 3%. Furthermore, any escalation in the US-Iran conflict that drives up crude oil prices would likely heighten the RBA’s concerns regarding second-round inflationary effects, increasing the probability of further policy tightening beyond November.
On the daily chart, AUD/USD is currently trading at 0.7020, maintaining a constrained tone as it remains below the 200-day simple moving average (SMA) of 0.7053, while the 50-day SMA sits higher at 0.7073. The positioning of key moving averages above the current price suggests that any rebound may encounter selling pressure. Meanwhile, the Relative Strength Index (RSI) hovers just above 50, and the Average Directional Index (ADX) is near 33—indicating that the trend remains moderate but is beginning to lose momentum. On the upside, immediate resistance lies at the 200-day Simple Moving Average (SMA) of 0.7053, followed by the 50-day SMA at 0.7073, with further resistance near the 0.7100 psychological level. On the downside, initial support is found around the 0.7000 psychological level, with further support at the 20-day SMA of 0.6977. Should selling pressure intensify, deeper support is located at 0.6916 (the low from October 16).
For today, consider going long on the AUD at 0.7008; stop-loss: 0.7000; targets: 0.7060 and 0.7070.

GBP/USD

The British pound is trading below $1.34, hovering near its highest level in a month. Investors are weighing a mixed bag of economic data while awaiting the upcoming budget announcement and the Bank of England’s policy meeting on November 5. Preliminary Purchasing Managers' Index (PMI) data shows that activity in the UK private sector has accelerated to its fastest pace since February, with both the manufacturing and service sectors outperforming expectations. Conversely, retail sales for September fell more sharply than anticipated, and consumer confidence saw its largest monthly decline since the onset of the pandemic—reflecting persistent cost-of-living pressures and market concerns regarding the conflict in the Middle East. Inflation data released earlier this week came in stronger than expected, prompting the market to increase bets on further monetary tightening; the market has now priced in at least three 25-basis-point rate hikes through April 2027, with the first potential hike as early as November 5. Investors are currently awaiting the budget announcement, where Chancellor John Healey is expected to emphasize fiscal discipline. On the daily chart, GBP/USD is currently holding near the 40-day simple moving average (SMA) at 1.3352, suggesting that the recent rebound could extend further. However, as long as the pair remains below this 40-day SMA—which acts as resistance—the overall bias remains bearish. The 14-period Relative Strength Index (RSI) is approaching 56, indicating improving momentum and a gradual shift toward buying interest; nevertheless, the proximity of the 200-day SMA above suggests limited upside potential, barring a more decisive breakout. On the downside, initial support lies near the 40-day SMA at 1.3352, followed by the 1.3300 psychological level; buying interest may re-emerge should any pullback deepen. To the upside, the 40-day SMA at 1.3352 serves as immediate resistance. A daily close above this level would alleviate current bearish pressure and pave the way for a more sustained rebound toward 1.3498 (the high from September 16) and the 1.3500 mark.

For today, one might consider going long on GBP/USD at 1.3330, with a stop-loss at 1.3320 and targets at 1.3370 and 1.3380.

USD/JPY

The USD/JPY pair rose at the start of the new week but subsequently attracted fresh selling, stalling the modest rebound seen on Friday from near the 156.00 level—a point that also marks the lowest level since September 18. The spot price appears vulnerable below the 157.00 mark; however, bears may refrain from aggressive positioning ahead of key central bank events and data releases scheduled for this week. The U.S. Federal Reserve is set to announce its policy decision on Wednesday, at the conclusion of a two-day meeting. However, market focus will be on the accompanying interest rate statement and the remarks made by Federal Reserve official Kevin Warsh during the post-meeting press conference. Furthermore, key U.S. macroeconomic data—specifically the preliminary third-quarter GDP and the Personal Consumption Expenditures (PCE) price index, both due on Thursday—will influence market expectations regarding the Fed’s future policy path and drive the movement of the U.S. dollar. Subsequently, attention will shift to the critical Bank of Japan (BoJ) policy update on Friday, which will further shape the short-term trajectory of the USD/JPY currency pair.

Late last week, the USD/JPY pair experienced a sharp decline, approaching the one-month low of 156.00, as the exchange rate faced repeated resistance from the top of the daily Ichimoku cloud and the 200-day moving average. This latest leg lower has weakened the daily chart structure; the price has penetrated deeper into the thick daily cloud and fallen below the daily baseline (157.16), putting pressure on the next major support level at 156.68 (the 38.2% Fibonacci retracement of the 152.88–159.03 upward move). The 14-day RSI has shifted into negative territory (41), exacerbating the bearish short-term outlook. A daily close below 157.50 (the lower bound of the current range) would be the minimum requirement to sustain fresh bearish positioning. Moreover, a break and daily close below the 156.68 Fibonacci support level would confirm a bearish signal, opening the door for further declines—potentially testing the recent low of 156.08 and the bottom of the daily Ichimoku cloud (155.65). Conversely, a recovery and close back within the existing range would suggest that the downward break was a "false breakout," keeping the price within its long-term sideways pattern.

Only a sustained breakout above the 200-day moving average (158.54) and the upper Bollinger Band (158.94) would alter the current landscape.

Consider shorting the USD at 157.70 today; stop-loss: 157.85; targets: 157.00, 156.90.

EUR/USD

During the early Asian trading session on Monday, EUR/USD recovered some lost ground, climbing back toward 1.1220. However, the pair’s upside potential may be limited due to concerns surrounding unrest and political risk in France. German IFO data is scheduled for release later on Monday. According to CNBC, protests across France—fueled by a worsening cost of living and growing inequality—turned violent for the second consecutive weekend. The French Interior Ministry reported that approximately 410,000 people participated in the protests across several major cities, including Paris. Growing unrest in France, combined with the country’s deteriorating budgetary situation, could exert selling pressure on the common currency in the near term. The European Central Bank (ECB) is expected to keep its benchmark interest rate steady at 2.5% during its October policy meeting this Thursday, though a rate hike before the end of the year has already been largely priced in.

On the daily chart, EUR/USD maintains a short-term bearish bias, as the spot price remains capped below the 30-day simple moving average (SMA) at 1.1298 and the 1.1300 psychological level. The price is also trading below the middle line of the Bollinger Bands (1.1227), which reinforces overhead pressure, while the lower band marks the recent low. The Relative Strength Index (RSI) sits at 40.67—remaining below the 50 mark—indicating weak upward momentum. Unless the pair can reclaim the area around the Bollinger Band midline (1.1227), the outlook favors further downward movement. On the upside, initial resistance is found at the 30-day simple moving average (SMA) of 1.1298 and the 1.1300 psychological level. Further up, the 40-day SMA at 1.1375 serves as a more significant, trend-defining resistance level. On the downside, the lower Bollinger Band at 1.1138 provides the first major support; a decisive break below this level would open the door for the current bearish phase on the daily timeframe to extend toward the 1.1100 psychological level.

For today, one might consider going long on the Euro at 1.1160, with a stop-loss at 1.1150 and targets at 1.1210 and 1.1220.

WTI Crude Oil
During early Asian trading on Monday, WTI crude oil retreated, trading near $102.35 per barrel. Despite plans for technical-level trilateral talks between the U.S., Russia, and Ukraine in November—and Russia’s expressed readiness to supply diesel to the U.S.—oil prices remain supported by the situation in the Middle East, with Donald Trump stating that the U.S. could take action against Iran at any time. On October 24 (local time), while casting his vote for the midterm elections in West Palm Beach, Florida, President Trump was asked by reporters whether further attacks on Iran were possible. He declined to disclose specific details but remarked that the U.S. could strike Iran at any moment—or, alternatively, reach an agreement. Trump added that while he could have "taken care of it and left" a year ago using B-2 bombers, he believes Iran would eventually find a way to develop a nuclear weapon; therefore, a permanent agreement must be reached. Geopolitical risks in the Middle East continue to drive oil prices higher. Meanwhile, Iran has warned that any nation allowing its territory or airspace to be used by the U.S. for strikes against Iran will be considered a legitimate military target. On the daily chart, WTI crude oil is consolidating at a high level following a surge of over 4% in the previous trading session. The price is hovering near a cluster of key moving averages; the short-term outlook leans neutral-to-bullish, though momentum is beginning to wane. The RSI (14) has retreated from its recent peak to around 62—remaining in positive territory without reaching overbought levels—suggesting a moderate release of upward momentum. There is still room for fluctuations before the indicator becomes overextended, characterizing a typical "strong consolidation awaiting confirmation" pattern. Key resistance levels to watch are $102.85 (Friday’s closing price) and $103.27 (last week’s high). A decisive daily close above $102.85 would confirm the end of this consolidation phase and pave the way for further gains. On the downside, initial support lies at the $100.00 psychological level, followed by the previous consolidation zone at $99.80 and the $98.50 level. A breach of the $100.00 mark could open the door for a decline toward $98.50 or even $97.20.

For today, consider going long on crude oil at $100.40, with a stop-loss at $100.20 and targets at $101.80 and $102.50.

Spot Gold

During Monday’s Asian session (October 26, Beijing Time), spot gold is trading near $3,999/oz. Last Friday, the price touched a three-month low of $3,975.70/oz, marking its first dip below the $4,000/oz threshold since mid-July. With the midterm elections approaching, geopolitical risks in the Middle East rising, and inflation concerns intensifying, the market is now focused on this week’s Federal Reserve policy decision. The global gold market underwent a significant correction last week. Spot gold fell below the $4,000-per-ounce psychological threshold last Friday (October 23), hitting a three-month low and recording its largest weekly decline in over four months. As of Monday (October 26), the price of gold continues to hover near the $4,000 mark, with market sentiment remaining tense despite the weekend break. The primary factors weighing on gold include the persistent climb in energy prices, a resurgence of inflation concerns, and shifting expectations regarding Federal Reserve policy. Meanwhile, geopolitical uncertainty and an upcoming "super week" for central banks have introduced further variables into the outlook.
Last week, gold’s breach of support within its short-term trading range—followed by a sustained close below the $4,000 level—served as a key catalyst for bearish sentiment. Furthermore, the Relative Strength Index (RSI) stands at 34.34, hovering just above the oversold territory, while the Moving Average Convergence Divergence (MACD) remains in negative territory at -6.51; both indicators suggest that downward pressure persists, despite some earlier signs of stabilization. Nevertheless, the precious metal has shown a degree of resilience below the $4,000 psychological level, warranting caution before betting on further declines. Any attempted rebound is likely to attract fresh selling, potentially stalling near the $4,066–$4,070 zone—a previous low that now acts as resistance following the breakdown of the prior trading range. Beyond this lies the $4,100 psychological level; a successful breakout above this point could trigger a round of short-covering.

This could push the price of gold up to the intermediate resistance level of $4,170, with the potential to advance further toward the $4,200 mark. To support the outlook for a sustained short-term recovery, the price would need to maintain its strength and hold firmly above $3,975 (last week’s low) and the $3,900 round-number level.

For today, consider going long on gold at $4,010, with a stop-loss at $4,005 and targets at $4,040 and $4,050.