Market Overview

The US dollar index continued its rebound on Monday, climbing 0.27% to close at 99.53, fueled primarily by fading expectations of a Federal Reserve interest rate cut in December. US Treasury yields remained stable, with the 10-year benchmark yield steady at 4.143% and the 2-year sensitive to Fed policy rate closing at 3.619%. Meanwhile, spot gold plummeted nearly 2%, dropping below the psychologically important $4,000 level, reflecting investor caution amid a firmer dollar.

Oil markets showed mixed reactions. The resumption of oil exports from Russia's Novorossiysk port after a two-day halt weighed on prices, with WTI crude slipping below $60 per barrel. However, geopolitical risks related to ongoing Ukrainian drone attacks on Russian infrastructure continue to inject uncertainty and volatility into the market.

Macro Drivers

• Federal Reserve Outlook: Hawkish Fed officials and reduced probability of a December rate cut (now near 40-46%) pressured gold and supported the dollar.

• Geopolitical Tensions: Ukrainian drone strikes on Russian energy assets maintain risk premiums in oil prices despite partial supply resumption.

• US Economic Data Resumption: The backlog of US economic reports following the government shutdown, including the key September Nonfarm Payrolls, will likely steer market sentiment in coming sessions.

• Currency Market Dynamics: Yen weakness propelled USD/JPY towards multi-month highs, while Canadian dollar showed vulnerability after mixed inflation data.

Market Highlights

• USD/JPY: Testing resistance at 155.10 amid sustained bullish momentum. RSI and MACD indicators suggest further upside potential if support at 154.20 holds.

• CAD/JPY: Bullish momentum persists, testing key resistance at 111.25. A breakout above 112.00 could open fresh gains.

• USOIL: Bears defend resistance at $61.00 as crude trades below key EMAs, signaling potential continuation of a bearish trend.

• Gold (XAU/USD): After a sharp sell-off, gold consolidates below $4,100, pressured by a stronger dollar and cooling Fed easing expectations.

Technical Analysis

USD/JPY:
The pair trades above all major EMAs (20, 50, 100, 200), signaling strong long-term bullish trend. MACD and RSI confirm growing buying momentum. A break above 155.10 could target 156.50, while failure to hold 154.20 might lead to a pullback towards 153.00.

CAD/JPY:
Sustained buying pressure keeps prices riding the upper Bollinger Band. Momentum indicators are bullish but RSI remains below overbought territory, implying room for further upside. Key resistance levels to watch: 111.25 and 112.00.

USOIL:
Crude remains under pressure, stuck below 50, 100, and 200 EMAs. Momentum indicators point to a slowing bearish trend without clear reversal signals. Key resistance at $61.00-$61.75 and support near $56.90 and $53.70.

Gold (XAU/USD):
Gold consolidates in a volatile range between $4,000 and $4,100, pressured by the US dollar and diminishing expectations for Fed easing. Technical resistance lies near $4,090-$4,100 with support at $4,011 and lower near $3,932.

Economic News Summary

• US Data: The release of delayed economic data such as the September Nonfarm Payrolls and FOMC minutes will be critical in shaping market direction.

• Japan: Q3 GDP contracted 0.4% q/q, keeping pressure on the yen amid mixed policy signals from the Bank of Japan.

• Canada: Mixed inflation data complicate BoC’s rate-cut outlook, with core inflation sticky near 3%.

• Oil Supply: Novorossiysk port resumed exports easing immediate supply concerns, but geopolitical risks persist.

Market Outlook

The US dollar is likely to maintain strength near current levels as Fed hawkishness continues to dampen rate cut expectations. Gold faces resistance near $4,100 but remains supported by geopolitical risks and central bank buying. Oil markets will remain volatile, influenced by geopolitical developments and US inventory data.

Trading Recommendations

• USD Index: Sell near 99.50 with stop-loss at 99.70, targeting 99.05-98.80.

• EUR/USD: Buy near 1.1600, stop-loss 1.1570, target 1.1650-1.1675.

• USD/JPY: Buy on dips above 154.20, stop-loss 153.00, target 156.50.

• Gold: Consider short positions near $4,190 with tight stops, targeting $4,011-$3,930 support zone.

• USOIL: Maintain bearish bias below $61.00 resistance, stop-loss above $61.75, target $56.90 and $53.70.