The Dollar Index plunged to September levels following last Friday’s U.S. Nonfarm Payroll report and Unemployment Rate data, indicating a softening labor market and further easing of U.S. inflation.
The Dollar Index plummeted to September levels following last Friday’s U.S. Nonfarm Payroll report and Unemployment Rate data, indicating a softening labor market and further easing of U.S. inflation.
Despite the softer dollar, commodity prices, including gold and oil, failed to rally as tensions in the Middle East eased. All eyes are now on the Reserve Bank of Australia‘s (RBA) upcoming interest rate decision, which is expected to add volatility to the Australian currency.
Dollar Index
The U.S. dollar weakened as the latest employment data painted a gloomy picture. U.S. job growth slowed more than expected, pushing the unemployment rate to a nearly two-year high of 3.90%. The Bureau of Labor Statistics reported that U.S. non-farm payrolls increased by only 150,000 in October, below market expectations of 180,000, and the U.S. unemployment rate came in at 3.90%, above expectations of 3.80%.
The Dollar Index is trading lower and is currently testing support. However, the MACD is showing diminishing bearish momentum, while the RSI is at 25, indicating that the index may enter oversold territory.
Resistance level: 105.95, 106.90.
Support: 105.05, 104.05.
XAU/USD
Gold prices initially jumped after the release of disappointing US employment data. The data, which indicated a slowdown in the U.S. labor market, boosted the appeal of safe-haven gold. However, after reaching the psychological level of $2000, gold underwent a healthy retracement. In addition, easing geopolitical tensions in the Middle East limited the gains in safe-haven gold.
Gold is trading lower following the previous retracement from the resistance level. The MACD is showing increasing bearish momentum, while the RSI is at 48, suggesting that the commodity may extend its losses as the RSI remains below the mid-line.
Resistance level: 2005.00, 2025.00.
Support: 1980.00, 1960.00.
EUR/USD
Despite higher-than-expected unemployment figures, the euro remained resilient and surged above its previous downtrend resistance level with a nearly 1% gain last Friday. Weak U.S. employment data supported the euro’s strength. The disappointing U.S. Non-Farm Payroll and Unemployment figures fueled market discussions that the Fed may be close to cutting interest rates.
The EUR/USD is currently trading within the upward channel that has been formed since October. The RSI is about to enter the overbought territory, while the MACD is pointing up, indicating that the bullish momentum for the pair remains solid.
Resistance level: 1.0775, 1.0866.
Support: 1.0700, 1.0630.
GBP/USD
The Pound surged on the back of robust economic data, outperforming against a weakening Dollar. Strong UK Composite and Services PMI figures supported the currency, with investors eagerly awaiting Thursday’s UK GDP release. The Dollar slumped after disappointing U.S. employment data, which sparked speculation that the Fed may be close to implementing monetary easing measures.
The Cable surged above its downtrend resistance line and traded at its highest level since September, signaling a strong bullish trend. The RSI is floating in the overbought territory while the MACD continues to rise, indicating that the bullish momentum is strong.
Resistance level: 1.2420, 1.2570.
Support: 1.2300, 1.2060.
Dow Jones
U.S. stocks surged on signs of a cooling labor market and a softer services sector, fueling expectations that the Federal Reserve may end its monetary tightening cycle. U.S. two-year Treasury yields fell 15 basis points to 4.84%, leading to robust gains across Wall Street. The S&P 500 had its best week in 2023 thanks to the decline in US Treasury yields.
The Dow is trading higher after breaking above resistance. The MACD is showing increasing bullish momentum, while the RSI is at 68, indicating that the index may extend its gains towards the resistance level, as the RSI remains above its mid-line.
Resistance level: 34560.00, 35465.00.
Support: 33780.00, 32705.00.
USD/JPY
The USD/JPY pair traded back into its liquidity zone below the 150 level as the dollar plummeted last Friday on the back of weak employment data. However, the Japanese Yen continues to be weak as the minutes of the BoJ‘s monetary policy meeting shows that the BoJ board members see no intention for additional tweaks to the YCC and has no rush to get out of the ultra-loose monetary policy; the dovish stance of the BoJ continues to put pressure on the Japanese Yen’s strength.
USD/JPY has retraced from its recent high and is back in its liquidity zone, giving a neutral signal for the pair. The RSI has dropped from the overbought zone, while the MACD has crossed to the upside and has dropped below the zero line, indicating the formation of a bearish momentum.
Resistance level: 150.40, 151.55.
Support: 148.55, 144.54.
AUD/USD
The AUD/USD rose sharply in anticipation of the upcoming RBA interest rate decision, and capitalized on the weakened US dollar to maintain its elevated position. With the RBA emphasizing a data dependent strategy for policy decisions, positive economic indicators in recent months have led investors to speculate on a possible rate hike in November.
The AUD/USD is trading well above its liquidity zone, indicating a strong bullish trend. The RSI is floating in the overbought territory while the MACD continues to rise, indicating that the bullish momentum is still strong.
Resistance level: 0.6620, 0.6710.
Support level: 0.6400, 0.6300.
CL Oil
Diplomatic initiatives by world leaders to resolve the Israel-Hamas conflict have reduced the chances of oil supply disruptions, leading to a decline in oil prices. On the other hand, the bearish economic outlook, fueled by a series of lackluster economic reports from the U.S., U.K., EU, and China, has raised doubts about the sustainability of oil demand, putting further pressure on oil prices.
Oil prices are trading lower and are currently testing the support level. The MACD is showing diminishing bullish momentum, while the RSI is at 43, suggesting that the commodity may extend its losses after the breakout, as the RSI remains below the mid-line.
