Dollar Steadies: Investors Await PCE Report for Market Direction

The US Dollar experienced a relatively flat day, marked by robust GDP growth at 4.90%, while Initial Jobless Claims worse-than-market expectations at 210K. Gold markets adopted a cautious stance, with anticipation building ahead of the PCE Index release. The Euro declined following the European Central Bank's decision to maintain interest rates, a reflection of concerns regarding slowing economic progress in the Eurozone. Crude oil prices retreated as tensions eased in the Middle East, though the market remains clouded by the prevailing negative global economic outlook. In the US, the tech sector faced pressures, driven by uncertainties surrounding advertising growth and the performance of major companies like Meta Platforms and Google. Japanese yen experienced heightened volatility upon breaching the 150 level, prompting attention to potential currency intervention.

-------------------------------------------------------------------------------------------------------------------------------------------------------------

Current rate hike bets on 1st November Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (98.0%) VS 25 bps (2%)   

-------------------------------------------------------------------------------------------------------------------------------------------------------------

Market Movements

DOLLAR_INDX

The US Dollar saw a relatively flat day, influenced by a mix of economic data. With GDP surging to 4.90%, surpassing expectations and signalling robust economic growth, the greenback maintained its strength. However, the negative aspect was the US Initial Jobless Claims, which slightly exceeded market expectations at 210K.

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 58, suggesting the index might enter overbought territory. 

Resistance level: 106.70, 107.15

Support level: 105.60, 104.80

XAU/USD

Gold markets adopted a wait-and-see stance as mixed economic data left investors in a contemplative mood. Anticipation is high ahead of the inflation report, with the potential for significant market volatility following its release. Investors are approaching this event with a safety-first mindset, prepared for various outcomes.

Gold prices are trading higher following the prior breakout above the resistance level.  However, MACD has illustrated diminishing bullish momentum, while RSI is at 70, suggesting the commodity might enter overbought territory. 

Resistance level: 2025.00, 2080.00

Support level: 1980.00, 1895.00

EUR/USD

The Euro took a hit following the European Central Bank's decision to leave interest rates unchanged for the first time in over a year. The move is attributed to concerns of economic contraction in the Eurozone, potentially slowing down inflation. This follows last month's rate hikes, with the European Central Bank maintaining its rates at 4%.

EUR/USD is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 40, suggesting the pair might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 1.0675, 1.0795

Support level: 1.0530, 1.0450

GBP/USD

Despite hitting a one-month low, the Pound Sterling made efforts to rebound, driven by dip-buying and technical correction. However, the overall economic outlook in the UK remains pessimistic, with poor manufacturing data and concerns about stagflation risk due to high inflation.

GBP/USD is trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 48, suggesting the pair might extend its gains since the RSI rebounded sharply from oversold territory. 

Resistance level: 1.2300, 1.2565

Support level: 1.2060, 1.1830

Nasdaq

The US equity market faced downward pressure, particularly in the tech sector, driven by worries about diminishing advertising growth. Meta Platforms (Facebook) suffered a more than 3% drop after signalling weaker advertising demand. This, along with concerns about Google's performance, added to uncertainties surrounding the tech outlook in the United States. The market also had to contend with slightly rising US Treasury yields because of several better-than-expected.

Nasdaq is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum. However, RSI is at 29, suggesting the index might enter oversold territory. 

Resistance level: 14610.00, 15780.00

Support level: 13855.00, 13115.00

USD/JPY

Japanese yen experienced heightened volatility as it broke the key psychological level of 150. The market now closely watches for potential currency intervention by the Bank of Japan. Amid rising inflation and currency depreciation, there is anticipation that the Bank of Japan may maintain its hawkish stance.

USD/JPY is trading higher following the prior breakout above the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 55, suggesting the pair might experience technical correction since the RSI retreated sharply from overbought territory. 

Resistance level: 151.45, 152.00

Support level: 149.95,  148.40

AUD/USD

The Australian dollar rebounded from yearly lows due to technical correction. Market attention is turning to the possibility of another interest rate hike by the Reserve Bank of Australia in November, as Governor Michele Bullock noted that the Consumer Price Index remained higher than expected but within the anticipated range.

AUD/USD is trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 53, suggesting the pair might extend its gains since the RSI stays above the midline. 

Resistance level: 0.6395, 0.6510

Support level: 0.6300, 0.6205

CL OIL

Crude oil prices retreated on the back of signs of easing conflicts in Middle Eastern countries, as global leaders intensified their efforts to prevent future escalations. However, the oil market remains clouded with uncertainty due to negative economic outlooks in the Eurozone and the UK. As a result, investors are keeping a watchful eye on economic prospects and geopolitical tensions for trading cues.

Oil prices are trading lower while currently testing the support level. MACD has illustrated increasing bullish momentum, while RSI is at 41, suggesting the commodity might experience technical correction and edge higher since the RSI rebounded sharply from oversold territory. 

Resistance level: 89.35, 94.00

Support level: 82.50, 78.15