The Yen's Decline Sparks Speculation of Intervention

Upcoming: Nonfarm Payroll Webinar

6 October Friday at 3pm (GMT+3) |  Register here: https://bit.ly/3tldNZy

Commodities like gold and crude oil are widely traded due to their volatility and correlation with global assets and news. Join this webinar to understand the events that affect the price movement of the two most-traded commodities; as well as learn about the kind of trading strategies that can be applied to trading gold and crude oil.

 The financial landscape remains turbulent as global markets react to a host of impactful factors. The Japanese yen's sudden dip after hitting the pivotal 150 level has spurred speculation about potential intervention by Japanese authorities. Meanwhile, the greenback has been on a relentless ascent, buoyed by robust economic data and growing expectations of Federal Reserve interest rate hikes. This trajectory has pushed US Treasury yields to their highest levels since 2007, prompting a dip in the US equity market, particularly within the tech sector. Amidst this volatility, oil prices defied a strengthening dollar due to a bullish inventory report.

______________________________________________________________________________________________________________________________________________

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

Source: CME Fedwatch Tool

0 bps (72.0%) VS 25 bps (28%)  _______________________________________________________________________________________________________________________________________________

Market Movement

DOLLAR_INDX

The US dollar continued to strengthen against the backdrop of bullish economic data. Notably, the US Bureau of Labor Statistics reported a substantial increase in job openings, with JOLTs job openings rising from 8.920 million to 9.610 million, surpassing market expectations. This robust economic outlook raised the odds of the Federal Reserve increasing interest rates this year, resulting in 10-year and 30-year Treasury yields reaching their highest levels since 2007.

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 74, suggesting the index might enter overbought territory. 

Resistance level: 107.20, 108.95

Support level: 105.45, 103.25

XAU/USD

Gold prices continued to hover around support levels as investors awaited more US economic data, particularly the Nonfarm Payrolls and Unemployment Rate reports later in the week. However, the long-term trend for the gold market remained negative, weighed down by the strengthening US Dollar and surging US Treasury yields.

Gold prices are trading lower following the prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 20, suggesting the commodity might enter oversold territory. 

Resistance level: 1840.00, 1890.00

Support level: 1790.00, 1715.00

EUR/USD

The euro has persistently faced headwinds, extending its losses as the resurgent US Dollar exerts continued pressure on the EUR/USD pair. In the day ahead, investor focus remains locked on the European Producer Price Index (PPI) and Retail Sales figures for August, scheduled for release later today. Market analysts anticipate a steepening contraction in the EU PPI for August, from -7.6% to -11.6%. Concurrently, Retail Sales for the same period are also expected to decline, from -1% to -1.2%, further underscoring the economic challenges faced by the Eurozone.

EUR/USD is trading lower while currently testing the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 29, suggesting the pair might enter oversold territory. 

Resistance level: 1.0610, 1.0795

Support level: 1.0445, 1.0205

USD/JPY

The Japanese yen experienced a significant surge, breaching the crucial 150 level, prompting market speculations about possible intervention by Japanese policymakers to support the currency. This abrupt move saw the US dollar breaking above 150 for the first time since October 2022, only to tumble to a low of 147.30 as the yen strengthened.

USD/JPY is trading lower while currently near the support level. MACD has illustrated increasing bearish momentum, while RSI is at 43, suggesting the pair might extend its losses after breakout since the RSI stays below the midline. 

Resistance level: 150.25, 151.45

Support level: 148.50, 146.25

AUD/USD

The Australian dollar maintained a consolidative stance following the Reserve Bank of Australia's (RBA) monetary policy decisions. The RBA opted to keep interest rates steady at 4.10% during its policy meeting. This decision, in contrast to potential interest rate hikes by other central banks like the Fed, could exert downward pressure on the Aussie dollar in the foreseeable future.

AUD/USD is trading lower while currently testing the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 31, suggesting the pair might enter oversold territory. 

Resistance level: 0.6395, 0.6510

Support level: 0.6285, 0.6205

Dow Jones

The US equity market edged lower as Treasury yields hit multi-year highs. The tech sector, which had shown signs of recovery the previous day, faced pressure, led by declines in Microsoft Corporation and Meta Platform Inc. Rising Treasury yields typically diminish the appeal of high-growth stocks, exerting downward pressure on tech shares.

The Dow is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 27, suggesting the index might enter oversold territory. 

Resistance level: 34425.00, 34355.00 

Support level: 32745.00, 31645.00

BTC/USD

Global financial markets have been increasingly gripped by risk-averse sentiment, driven by the dual forces of rising US Treasury yields and the strengthening US Dollar. This environment has triggered a broad-based selloff in high-risk assets, encompassing both the US equity market and the cryptocurrency space. Bitcoin, in particular, experienced a downturn as it retraced from a resistance level. 

BTC/USD is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 47, suggesting BTC/USD might extend its losses after breakout below the support level since the RSI stays below the midline. 

Resistance level: 28315.00, 28985.00

Support level: 27200.00, 25990.00

CL OIL

Despite the backdrop of a strengthening US dollar, oil prices rebounded, buoyed by a positive oil inventory report. The American Petroleum Institute (API) reported a substantial decline of -4.210 million barrels in US API Weekly Crude Oil Stock, surpassing market expectations.

Oil prices are trading higher following the prior rebound from the support level. However, MACD has illustrated increasing bearish momentum, while RSI is at 54, suggesting the commodity might experience technical correction since the RSI retreated sharply from overbought territory. 

Resistance level: 91.50, 94.35

Support level: 87.75, 85.35