Markets to watch this week

US Dollar Index: Rolling over as US election looms

Since October this year, mounting expectations for a Trump victory has translated to strength in the US dollar, with views that his policies may leave the Federal Reserve (Fed) less room to manoeuvre in its easing process. However, as the US elections near, the long-US dollar trades seem to be getting some cold feet, with some profit-taking in place.

Much will depend on an actual Trump victory this week, or particularly a Red Wave scenario, to validate market expectations and spur further traction in the US dollar. Failure to do so could see some unwinding, at a time where average year-end seasonality for the US dollar also tends to be bearish.

For now, a cloud of caution is cast over the US dollar on the four-hour chart, with the dollar breaking below a near-term upward trendline support, alongside its Ichimoku Cloud zone. Its relative strength index (RSI) has also dipped below its mid-line, suggesting near-term bearish pressures. Further downside may leave the 103.10 level on watch next. On the upside, we may need to see a move back above the 103.64 level to validate buyers retaining control.

Levels:

R2: 104.26
R1: 103.64

S1: 103.10
S2: 102.72

US Dollar Index:

US Tech 100: Trendline resistance still in the way

Despite a slight recovery to end last week, the Nasdaq 100 index remains fragile for now, as the wait for more political clarity out of the US keeps market sentiments on much wait-and-see. Having broken below a near-term upward trendline on the four-hour chart, the index is now back to retest the trendline, with the 20,166 level offering immediate resistance to overcome. On the daily chart, its daily RSI has also dipped below the mid-line for the first time since September this year, which denotes abating upside momentum for now.

Failure to overcome the trendline resistance may call for further unwinding towards the 19,875 level, followed by the 19,288 level. A move above last Thursday’s high may be warranted to denote buyers in stronger control.

Levels:

R2: 20,700
R1: 20,166

S1: 19,875
S2: 19,288

US Tech 100 chart:

Coffee Arabica: Breakdown of channel formation leaves bearish bias

Last week, we mentioned that the rising channel formation for coffee prices is being put to the test, which was subsequently met with a bearish breakdown. Its daily RSI has failed to cross back above its mid-line despite multiple attempts over the past month, which validates strong sellers in place. Recent sell-off also marks a break below its daily Ichimoku Cloud support and its 100-day moving average (MA), which have been supporting prices since October 2023.

Further sell-off may leave the 219.90 level on watch next, in line with the projection target from its channel breakdown. On the upside, the 258.94 level may offer some overhead resistance, where its lower channel trendline and cloud resistance may be in the way.

Levels:

R2: 274.20
R1: 258.94

S1: 243.37
S2: 219.90

Coffee Arabica chart: