Today market outlook

[Zeologic]

XTI/USD experiences volatility driven by a mix of conflicting sentiments

The price action of WTI crude oil on October 20 reflected high volatility near the resistance zone. This volatility resulted in a candle with a small body and long wicks on both the top and bottom—a "doji" formation—with a high of 101.00, a low of 95.08, and a close of 97.83, according to the FXOpen chart.

These price dynamics were influenced by a combination of factors, including geopolitical sentiment, supply policies, macroeconomic conditions, energy demand, and movements in the US dollar.

The escalating conflict in the Middle East has introduced a "risk premium" for oil, with concerns regarding energy infrastructure and shipping lanes in the region serving as the primary drivers. While incidents and rising tensions have kept oil prices elevated, diplomatic discussions between Iran and Pakistan on October 20 helped ease concerns, triggering a price correction.

A significant decline in US inventories provided a boost to prices; however, market participants also began reacting to reports of potential US sanctions relief for certain oil tankers, which helped offset supply-related anxieties.

Weakening energy demand could cap any rally in oil prices, even amid supply disruptions. The IEA recently lowered its oil demand forecast for 2026, while planned production increases by OPEC+ remain a key factor to monitor. Conversely, if supply disruptions persist, any theoretical increase in supply may not be sufficient to drive prices lower.

The US dollar weakened on October 20—a development that typically supports USD-denominated commodities. However, this effect may be outweighed by shifts in supply expectations and the evolution of the conflict. The market is also closely watching US economic data releases and the Federal Reserve’s policy trajectory, as any strengthening or weakening of the US dollar could have a direct impact on XTI/USD. Traders will next focus on the weekly U.S. oil inventory report, developments in the Middle East, and sentiment surrounding the U.S. Dollar Index.

From a technical perspective, XTIUSD is trading well above the 200-period exponential moving average (EMA200). The RSI is at 62—nearing the overbought zone—which could trigger a technical correction. XTIUSD is expected to trade within a range of 95.00–101.50. Immediate support lies near $97.40, with a subsequent target around 94.90. Immediate resistance is near 99.70, with a subsequent target around 101.50. This forecast could be wrong.

[Zeologic]

GBP/JPY shows moderate bullishness, but faces risk of correction

The GBP/JPY cross-pair has recently displayed interesting price dynamics, characterized by a moderate bullish bias while remaining susceptible to a correction. For six consecutive days, the pair has formed bullish candles. Most recently, on October 21, the price recorded a bullish candle with a high of 211.234, a low of 211.234, and a close at 211.839, according to FXOpen charts.

Rising inflation in the UK is providing support for the GBP, while the Bank of Japan (BoJ) is not expected to raise interest rates at its October 30 meeting. However, the potential for the BoJ to tighten policy in December could cap further gains for the pair.

The UK’s September CPI inflation rose to 3.5% year-on-year, up from 3.1% in August and exceeding the 3.4% forecast. Core inflation also climbed to 2.8%. These price pressures have strengthened expectations that the Bank of England (BoE) might hike interest rates to 4.00% on November 5, up from the current level of 3.75%.

The BoJ is expected to keep interest rates steady at 1.25% on October 30, though the market sees a possibility of a hike to 1.50% in December. Should BoJ officials signal a more hawkish stance than anticipated, the JPY could strengthen, putting downward pressure on GBP/JPY.

Despite the narrowing interest rate differential between the BoE and the BoJ (3.75% vs. 1.25%), the GBP/JPY pair maintains an overall bullish trend, as the yield gap remains favorable for long positions in carry trades.

Today’s agenda includes the CBI Industrial Trends Orders report and remarks from BoE Governor Andrew Bailey. Stronger industrial order data or hawkish commentary could bolster the GBP; conversely, any signs of an economic slowdown might limit its upside.

Should global markets shift toward risk aversion, the yen could see increased demand as a defensive asset. Caution is also warranted regarding potential actions by Japanese authorities to curb excessive weakness in the JPY.

Technically, GBPJPY has managed to move above the EMA50, reflecting bullish sentiment, with the RSI indicator at the 60 level. GBPJPY is expected to trade within a reasonable range of approximately 209.500–212.950. The nearest support is around 210.740, with a subsequent target near 209.500. The nearest resistance is around 212.000, with a subsequent target near 212.950. This forecast could be wrong.

[Zeologic]

The Japanese Yen strengthened by approximately 0.75% against the US Dollar on October 22.

USD/JPY underwent a correction on October 22. The Yen strengthened by about 0.75% against the US Dollar, reaching 156.687, according to FXOpen charts. Sharp correction in USD/JPY was driven by demand for safe-haven assets amid geopolitical and market uncertainty. However, the interest rate differential between the Bank of Japan (BoJ) and the Federal Reserve (the Fed) may continue to support the US Dollar, leaving the future direction uncertain as the market awaits central bank decisions next week.

The Federal Reserve’s decision is scheduled for October 28. Strong US economic data could bolster the US Dollar if it leads the market to anticipate a tighter interest rate policy; conversely, weaker data could put downward pressure on USD/JPY. According to the FedWatch tool, there is a 92.8% probability that the Fed will maintain interest rates at 3.75%–4.00%, with a 7.2% chance of a rate hike to 4.25%.

The DXY, which measures the performance of the US Dollar against six major currencies, saw a correction to 101.651, down from 102.945. Traders are also monitoring US Treasury yields; a decline in yields tends to reduce the appeal of the US Dollar, while a rebound could potentially lead to a recovery in USD/JPY. Currently, the 10-year US Treasury yield is showing limited movement, which is curbing further gains for the US Dollar.

The BoJ meeting is scheduled for October 29–30. The market expects interest rates to remain unchanged at 1.25%, though any signals pointing toward a hike in December could support the Yen. Traders are also keeping an eye on the risk of verbal intervention by the Japanese government. The Yen could strengthen rapidly if Japanese authorities take action to support their currency—a risk that becomes more significant should USD/JPY rise sharply toward 160.000. Key data to monitor during today’s New York session includes the S&P Global Manufacturing PMI, S&P Global Services PMI, S&P Global Composite PMI, and the University of Michigan Consumer Sentiment index. Generally, PMI figures that exceed expectations tend to support the USD, while weaker data could exert further downward pressure on USD/JPY.

From a technical view, USD/JPY is currently below the 200-period Exponential Moving Average (EMA200). However, a horizontal channel indicates sideways movement over the past 200 days. The estimated fair price range for USD/JPY is between 156.400 and 158.200. Immediate support lies near 156.700, with a subsequent target around 156.200. Immediate resistance is near 157.500, with a subsequent target around 158.000. This forecast could be wrong.

[Zeologic]

Gold price closes below the $4,000 psychological level

At the end of the week, the price of gold (XAU/USD) entered a phase of technical correction and consolidation around the $4,000-per-troy-ounce psychological level. Following some moderate downward pressure from its recent peak, XAU/USD closed at approximately $3,994.48 (based on the FXOpen chart) at the end of the week’s final trading session.

The recent rise in US Treasury yields has increased the opportunity cost of holding non-yielding assets like gold. Meanwhile, a strengthening US Dollar (USD) has prompted short-term adjustments among market participants.

The market remains cautious ahead of a decision on the direction of US monetary policy. Hawkish signals—or any delay in interest rate cuts—could continue to weigh on gold, whereas dovish signals might trigger a technical rebound. According to the CME Group’s FedWatch tool, there is a 90.6% probability that the Federal Reserve will maintain interest rates in the 3.75%–4.00% range, a significantly higher likelihood than that of a rate hike at the upcoming meeting in two days.

Despite the correction, gold’s underlying support remains robust, bolstered by consistent accumulation by central banks—particularly within the BRICS+ alliance—as well as sustained demand for physical gold, which continues to serve as a hedge amid geopolitical risks in the Middle East.

Traders focusing on XAU/USD are closely monitoring movements in US Treasury yields and the US Dollar Index (DXY). Given the inverse correlation between gold and US yields, any downward correction or "unwind" in yields could potentially lead to a recovery or a short-covering rebound for XAU/USD.

Today, the market is watching the Dallas Fed Manufacturing Index, though its impact on gold is likely to be more limited compared to the Federal Reserve’s upcoming decision. The most significant event this week is the Fed’s policy decision on October 27–28. While maintaining interest rates at current levels does not automatically dictate a rise or fall in gold prices, the tone of the official statement and the subsequent press conference will be the key drivers of the market's reaction. On Thursday, October 29, the market will focus on US GDP and PCE inflation data. Economic growth and inflation figures that exceed expectations could strengthen the US dollar and put pressure on gold. Conversely, weaker data could support gold, provided that US yields also decline.

Technically, XAUUSD is trading well below the 200-period exponential moving average. The RSI indicator sits at 33, approaching oversold territory. XAUUSD is expected to trade within a range of $3950–$4100. Given that the market is entering a new week following a weekend close below the $4000 level, traders should remain alert to potential price gaps at the market open or spikes in volatility during the start of the London and New York sessions. Immediate support is located near $3970, with a subsequent target around $3950. Immediate resistance is found near $4035, with a subsequent target around $4100. This forecast could be wrong.