EURUSD bears maintain control ahead of key EU and US data

Strong US data, along with hawkish Fed signals and market uncertainty, support a four-week uptrend in the US Dollar Index (DXY). Positive results from September’s Durable Goods Orders and the University of Michigan's Consumer Sentiment Index bolster expectations for slower Fed rate cuts. Additionally, weekend developments in China, political shifts in Japan, and geopolitical news from the Middle East create volatility, impacting the Japanese Yen (JPY) and Crude Oil prices.

Major currencies bow down to the King Dollar

The US Dollar's strength, supported by positive data, has overshadowed weak signals from the Eurozone, UK, and Japan, pushing down EURUSD and GBPUSD while boosting USDJPY.

Despite a positive German Ifo Sentiment Index, EURUSD has declined for four consecutive weeks amid a dovish outlook for the ECB, despite President Lagarde's comments on disinflation.

GBPUSD also faces pressure as the Bank of England counters market speculation about faster rate cuts amid a risky UK budget and mixed data.

Meanwhile, USDJPY opened the week with an upside gap after Japan's ruling party lost its majority, raising concerns about the Bank of Japan's ability to raise rates and support wages, further weighing on the Yen.

Antipodeans bear the burden of risk-off mood, China news

Like other major currencies, the Australian, New Zealand, and Canadian Dollars faced selling pressure as a strong US Dollar contrasted with concerns over China’s economic growth despite significant stimulus efforts. The People's Bank of China (PBoC) initiated an outright reverse repo operation over the weekend, and Vice Finance Minister Liao Min announced that further stimulus details would be revealed after the National People’s Congress session on November 4-8. Notably, China’s industrial profits for September saw their largest decline of the year.

Additionally, worries about sluggish growth in Australia, New Zealand, and Canada, coupled with expectations of faster rate cuts from the Bank of Canada (BoC), weighed on AUDUSD and NZDUSD while boosting USDCAD.

Crude Oil gaps down, Gold stays firmer

Israel’s targeted strikes on Iran, coupled with concerns over compromised Iranian air defenses, led to a gap-down opening for WTI crude oil prices. Additionally, fears of reduced energy demand from China and increased OPEC+ output further pressured crude oil.

In contrast, gold maintains its status as a safe haven, remaining firm near all-time highs despite the strong US Dollar. The precious metal's gains are also fueled by festive demand from India, one of the largest gold consumers globally.

Cryptocurrencies pare previous gains

Bitcoin (BTCUSD) and Ethereum (ETHUSD) recorded weekly losses despite crypto traders remain optimistic about the potential impact of the US Presidential Election on the industry. This downturn may be related to discussions about the FBI's investigation into Tether and the US Treasury Department's consideration of sanctions against it.

Latest moves of key assets

• WTI Crude oil drops more than 4.0% on a day to $68.50 by the press time as bears keep the reins at the lowest level in a month.
• Gold remains mildly offered near $2,740 at the latest, pausing a two-day uptrend after refreshing the record high last week.
• The USD Index prints minor gains near 104.50 after refreshing a three-month high earlier in the day.
• Wall Street closed with mild losses but the Asia-Pacific shares drifted lower. Further, European and British equities trade mixed during the initial trading hour.
• BTCUSD and ETHUSD both post mild intraday losses near $67,800 and $2,450 as we write.

A busy week ahead…

Looking ahead, key data releases from the US, Eurozone, and Australia will capture the attention of momentum traders. Notable among these are the initial readings of EU and US Q3 GDP, the US Core PCE Price Index, Nonfarm Payrolls (NFP), and Australia's inflation data.

With ongoing risk aversion and a hawkish stance from the Fed contrasting with dovish expectations from other major central banks, the US Dollar is likely to stay strong. This could put pressure on major currencies and Antipodeans unless upcoming data challenges the Fed's readiness for slower rate cuts.

Predictions for Key Assets

• Recovery Expected: USDCAD, USDJPY, US Dollar, Silver
• Further Downside Likely: AUDUSD, NZDUSD, GBPUSD
• Mostly Sideways Expectations: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Slow & Gradual Fall Expected: DAX, FTSE 100, EURUSD, Crude Oil

May the trading luck be with you!