DXY weakness continues

DXY Weakness Continues – The debate over the size of the Federal Reserve’s anticipated interest-rate cut in November is heating up. Traders are increasing their bets in futures linked to the central bank’s trajectory as officials begin to discuss their next steps.

Following weaker-than-expected US consumer confidence data on Tuesday, investors are leaning more towards a second consecutive half-point reduction at the November 7 decision. This has essentially made it a toss-up in the swaps market between another substantial decrease and a more typical quarter-point adjustment.

Swaps traders are currently pricing in approximately three quarters of a point in total cuts over the remaining two Fed decisions this year, with the second one scheduled for December 18. This implies a half-point move at one of the meetings.

DXY near 100.0 support

The US Dollar Index recently closed at its lowest level since July 2023 after breaking below the 100.65 support area. This has intensified the bearish outlook on the daily chart. The next support level is at 100.0, a psychologically significant level, followed by 99.70, which should be closely monitored. A break below the 99.70 support level could lead to further declines.

The technical indicators are still far from oversold territory, indicating that there is still downward pressure. On the upside, the 100.65 support area has now become a strong resistance level, potentially limiting any upward retracement in the future.

Gold posts new record above $2670

Gold reached a new all-time high for the third consecutive day, driven by various factors such as the weakness of the US dollar and escalating tensions in the Middle East. In Asia, Gold spiked to $2670 before settling back to around $2657 at the time of this report, while the technical indicators show that it is heavily overbought.

The current rally may be limited below the high of the Asian session, and revisiting the record high could pave the way for further gains.

EURUSD is retesting the 1.12 peak.

During yesterday’s trading, EURUSD reclaimed multiple resistance areas and recovered from this week’s declines. It posted the highest daily close since the end of August. The technical indicators are bullish on most timeframes and far from being overbought, which keeps the possibility of breaking its prior peak at 1.12 high.

If this break happens, it could pave the way for further gains. The next resistance areas are at 1.1250 followed by 1.1275 for now. On the downside, any retracement is likely to remain limited above 1.1140 for now.

Brent peaked below $75

Oil prices stabilized after experiencing their largest increase in over a week, as traders kept an eye on developments in the Middle East and the potential impact of China’s economic stimulus measures on demand. Brent crude was trading near $75 a barrel after a 1.7% increase on Tuesday, while West Texas Intermediate was above $71.

At the same time, technical indicators have shown improvement over the past two weeks. However, they are not bullish enough to prompt a shift from the current bearish outlook. To change the current outlook to bullish, the price would need to surpass $75.85 with a clear weekly close above the resistance. Otherwise, despite concerns about further escalation in the Middle East, the downside pressure may resume.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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