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The US dollar finds itself at a crossroads during a rather dangerous season, when markets often form trends for the coming months.

The short-term outlook for the DXY is quite alarming. At the end of last week, the trade-weighted basket of developed currencies broke the upward trend that had been gradually forming since July’s lows due to weak labour market indicators and fell to 97.5. The final signal of a shift to a decline will be a renewal of July’s lows at 96.3, which in turn were the lowest since March 2022.

The reasons for this are simple: the labour market is in much worse shape than previously estimated, leading to a rapid reassessment of monetary policy prospects. However, this relatively small step could have important technical significance.

Technically, this opens up the potential for the dollar to fall to its 2021 lows of 90, or to the 88 area, where the 161.8% Fibonacci target from the first half of the year’s decline lies.

This could mark a significant decline for the dollar. The Fed’s dollar index against a trade-weighted basket of developed countries is moving as if in stages, within wide ranges. Over the past three years, this has been a range of 110-120. From 2015 to 2022, it has mostly remained within 100-110, starting in 2014 from the 90 range. A further dip of a couple of per cent from current levels would break the upward trend that began back in 2012.

The situation with the dollar’s dynamics against a basket of emerging market currencies is even more dramatic. Historically, they have lost against the American currency. The latest growth trend began in 2013, but the last two years have seen frequent tests of the support line. Since July, the index has been trading near this line again. A fall below this level would mean a transition to a multi-year downward cycle.

This is doubly true given that it is quite typical for markets to form new trends in August-September, when the financial year ends.

Strictly speaking, it would be premature to bury the dollar until it falls below support levels. From its current position, it could be an ideal entry point with long-term growth prospects.

However, dollar bulls will have to change a lot in the prevailing market narrative that the Fed will be more active in cutting rates. The further we go, the more this will be the case, given the growing share of Trump’s new administration appointees in the Fed, including the change of the central bank’s head in May.

This is by no means a populist move. Given the accumulated national debt and the impossibility of fiscal consolidation, the US government does not have many cards to play. What remains is a scenario of reducing the debt burden and correcting the trade balance through weakening the national currency and tolerating higher inflation — a path that the UK found itself on in 1938.

Gold price rallied to a new all-time high above $3,670. Crude oil is showing bearish signs and might decline below $62.25.

Important Takeaways for Gold and WTI Crude Oil Price Analysis Today

• Gold price started a major increase from $3,500 against the US Dollar.
• A key bullish trend line is forming with support at $3,635 on the hourly chart of gold at FXOpen.
• Crude oil price failed to clear the $65.60 region and started a fresh decline.
• There is a short-term bullish trend line forming with support at $62.25 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price formed a base above $3,500. The price remained in a bullish zone and started a strong increase above $3,550.

There was a decent move above the 50-hour simple moving average and $3,620. The bulls pushed the price above the $3,640 and $3,650 resistance levels. Finally, the price climbed to a new all-time high at $3,674 before there was a pullback.

The price dipped below the 23.6% Fib retracement level of the upward move from the $3,511 swing low to the $3,674 high, and the RSI declined below 50. Initial support on the downside is near $3,635 and the 50-hour simple moving average.

There is also a key bullish trend line forming with support at $3,635. The first major support is near the 50% Fib retracement at $3,592. If there is a downside break below $3,592, the price might decline further. In the stated case, the price might drop toward $3,575. Any more losses might push the price toward $3,510.

Immediate resistance is near $3,655. The next major hurdle for the bulls is $3,675. An upside break above $3,675 could send Gold price toward $3,688. Any more gains may perhaps set the pace for an increase toward $3,700.

WTI Crude Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price struggled to clear $65.60 against the US Dollar. The price started a fresh decline below $64.60.

The bears gained strength and pushed the price below $62.00. Finally, the price tested $61.20 and recently started a recovery wave. There was a move above $62.00, the 50-hour simple moving average, and the 23.6% Fib retracement level of the downward move from the $65.63 swing high to the $61.23 low.

The bears are now active near $63.00. If there is a fresh increase, the price could face a barrier near $63.05. The first major resistance is near the 50% Fib retracement at $63.40. The next stop for the bulls could be near $64.60. Any more gains might send the price toward $65.60.

Conversely, the price might start another decline and test a short-term bullish trend line with support at $62.25 and the 50-hour simple moving average.

The next major support on the WTI crude oil chart is $61.20. If there is a downside break, the price might decline toward $60.50. Any more losses may perhaps open the doors for a move toward $60.00.

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European currency is consolidating and retreating slightly from local highs ahead of the ECB meeting. Friday’s weak US labour market data gave the euro a boost, but at the start of the week the market remained undecided on how to interpret the signals: after an attempt to strengthen, a correction followed, and traders returned to a wait-and-see approach. In the coming sessions, attention will be focused on the ECB’s decisions, updated macroeconomic forecasts, and comments from the ECB President, as well as on US releases that could influence expectations for the Fed (mortgage data and producer price indicators). In this environment of uncertainty, trading remains range-bound: a break above Friday’s highs in the euro would require confirmation from ECB rhetoric and weak US data; in the absence of such signals, the base case remains further consolidation with the risk of a deeper correction towards support levels.

EUR/USD

The pair has pulled back from recent highs and is holding near short-term support, reflecting caution ahead of the European regulator’s rhetoric. Technical analysis of EUR/USD suggests a possible decline towards 1.1600–1.1630, as a bearish engulfing pattern has formed on the daily timeframe. If the price returns above 1.1740, a retest of Friday’s highs near 1.1800 is possible.

Events that could influence EUR/USD movement:

• Today at 15:00 (GMT+3): Speech by Bundesbank Vice President Buch
• Today at 15:30 (GMT+3): US Producer Price Index (PPI)
• Today at 20:00 (GMT+3): Atlanta Fed GDPNow indicator

EUR/JPY

On Friday, EUR/JPY buyers managed to update July high near 174.00. However, they failed to consolidate above 173.90 and continue the upward momentum. A sharp rebound from the yearly highs allowed euro sellers to seize the initiative and form a bearish doji pattern, which has already been confirmed. If the downward move continues, the EUR/JPY pair might test the 171.70–172.00 area. A bearish scenario might be cancelled if the price firmly consolidates above 173.30.

Events that could influence EUR/JPY movement:

• Tomorrow at 02:50 (GMT+3): Japan Large Manufacturers’ BSI Business Conditions Index
• Tomorrow at 15:15 (GMT+3): ECB interest rate decision
• Tomorrow at 15:45 (GMT+3): ECB press conference

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Daily Pivots: (S1) 198.79; (P) 199.40; (R1) 200.00; More...

Range trading continues in GBP/JPY and intraday bias stays neutral. Further rise is expected as long as 197.93 support holds. Firm break of 200.26 resistance will resume the rally from 184.35 to 100% projection of 180.00 to 199.79 from 184.35 at 204.14. On the downside, however, break of 197.93 support will turn bias to the downside for 195.01 support next.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a correction to rally from 123.94 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. Meanwhile, decisive break of 208.09 will confirm long term up trend resumption.

Daily Pivots: (S1) 171.98; (P) 172.76; (R1) 173.40; More...

Break of 172.47 support suggests rejection by 173.87 resistance. Intraday bias is back on the downside in EUR/JPY. Corrective pattern from 173.87 is possibly extending with the third leg. Deeper fall would be seen to 171.09 support next. Break there will target 169.69.

In the bigger picture, current rally from 154.77 is still tentatively seen as resuming the larger up trend. Firm break of 175.41 (2024 high) will confirm and target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. However, sustained break of 38.2% retracement of 161.06 to 173.87 at 168.97 will delay this bullish case, and probably extend the correction from 175.41 with another fall.

Daily Pivots: (S1) 0.8646; (P) 0.8666; (R1) 0.8676; More...

Intraday bias in EUR/GBP remains neutral and further rise is mildly in favor with 0.8636 minor support intact. On the upside above 0.8711 will bring retest of 0.8752 high. However, break of 0.8636 will extend the pattern from 0.88752 with another falling leg, and target 0.8959 support.

In the bigger picture, the structure from 0.8221 medium term bottom are not impulsive enough to suggest that it's reversing the down trend from 0.9267 (2022 high). But even if it's a correction, further rise could still be seen to 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Nevertheless, sustained trading below 55 W EMA (now at 0.8519) will argue that the pattern has completed and bring retest of 0.8221 low.

Daily Pivots: (S1) 1.7742; (P) 1.7802; (R1) 1.7844; More...

EUR/AUD's fall from 1.8155 continues today and intraday bias stays on the downside. Current development suggest that rise from 1.7245 has completed at 1.8511. Corrective pattern from 1.8554 should then be in its third leg. Further decline should be seen to 61.8% retracement of 1.7245 to 1.8155 at 1.7593. Break will target 1.7245 support. For now, risk will stay on the downside as long as 1.7912 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Such pattern could extend further with another falling leg. But even in that case, downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9321; (P) 0.9331; (R1) 0.9349; More....

Intraday bias in EUR/CHF stays mildly on the downside for the moment. Firm break of 0.9317 would resume the decline from 0.9452. That would also solidify the bearish case that corrective pattern from 0.9218 has completed with three waves up to 0.9452 already. Deeper fall should then be seen to 0.9265 support, and then 0.9204 low. On the upside, above 0.9359 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 0.9394 resistance holds, in case of recovery.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside potential should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

Daily Pivots: (S1) 1.1681; (P) 1.1731; (R1) 1.1757; More...

Intraday bias in EUR/USD is turned neutral first with current retreat. Some consolidations could be seen but further rise is expected with 1.1607 support intact. Above 1.1779 will bring retest of 1.1829 high. Firm break there will resume larger up trend to 1.1916 projection level.

In the bigger picture, rise from 0.9534 (2022 low) long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 1.1604 support holds.

Daily Pivots: (S1) 146.62; (P) 147.10; (R1) 147.90; More...

USD/JPY recovered ahead of 146.20 support and intraday bias is turned neutral first. Risk will stay on the upside as long as 149.12 resistance holds. Firm break of 146.20 will target 100% projection of 150.90 to 146.20 from 149.12 at 144.42. Also, sustained trading below 55 D EMA (now at 147.15) will argue that whole rebound from 139.87 has completed with three waves up to 150.90.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.