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In the Forex market, the US Dollar remains firm ahead of this week’s inflation data. The Dollar Index is near 102.14, not far below last week’s 18-month high. EUR/USD is trading around 1.1209 after falling for five consecutive weeks, with European fiscal concerns continuing to weigh upon the Euro. The longer-term bearish trend remains intact, although the 1.1200 area is again attracting attention as a short-term pivot. Trend traders will still be short of the EUR/USD currency pair.
The Japanese Yen remains weak, with intervention risk in focus. USD/JPY is near 158.20. The pair has struggled to extend its rise as the possibility of action by Japanese authorities discourages aggressive selling of the Yen. A move towards 158.00–160.00 therefore deserves particular caution, even while the broader Dollar trend remains firm.
Markets still strongly expect the Fed to hold rates in October. Futures imply approximately an 18% probability of a hike this month, but about an 85% probability of an increase in December. Last Wednesday’s FOMC minutes showed support for further tightening before year-end without establishing urgency to act in October. The distinction remains important: the Fed is not necessarily finished hiking, but another immediate increase is far from certain.
Wednesday’s forthcoming US CPI data release is this week’s most important scheduled event. September inflation data will help determine whether expectations of an October hike revive. A strong core reading would likely support the Dollar and yields, while a softer result could encourage a further recovery in Gold and risk assets. Until then, I would be very cautious about assuming that the Dollar’s recent bullish trend has ended.
US stock futures are higher after Friday’s rebound. S&P 500 futures have risen approximately 0.3%, while Nasdaq 100 futures are up about 0.4% during early trading. Lower oil prices are helping sentiment, but the forthcoming earnings season will test whether profits justify the high valuations in technology shares. These futures gains should not be confused with confirmed new cash index record closes, although most trend traders will already be in long positions covering both indices.
WTI remains above the important $87.68 support level. US WTI crude futures are near $90.30 after declining during today’s Asian session. The support level remains intact, but the price has not yet established a convincing sustained move above the short-term descending trend line capping the recent descending price channel. I very much regard this as an unresolved technical range rather than a confirmed bullish breakout, and I doubt we will get any clarity on this until after the US mid-term elections conclude on 3rd November. Supply risks remain substantial, but the reversal demonstrates how quickly diplomatic developments can outweigh an apparently bullish geopolitical headline.
Bitcoin has recovered, but Ethereum remains close to pivotal support. Bitcoin is near $83,800, back above the $82,000 level highlighted last week, while Ethereum is around $2,540—approximately its previously identified $2,544 support. Neither has confirmed a fresh bullish breakout above $87,293 or $2,800 respectively. Bitcoin’s recovery is encouraging, but Ethereum still needs stronger follow-through to restore confidence in its former consolidation.
Gold has recovered towards $4,200. The metal gained more than 1% last week and is trading around the $4,200 area this morning, supported by geopolitical uncertainty. A sustained hold above $4,200 would improve the short-term bullish picture, but high yields and the firm Dollar remain obstacles.
Although it is a public holiday in the USA and Japan, NYSE and Nasdaq stock trading remain open for normal hours today.