Weekly Market Strategy - October 22, 2024 (Wed)

The ECB's policy rate decision, which was last week's highlight, resulted in a 0.25% rate cut as market expected, causing EUR/USD to plummet sharply. Consequently, the dollar index surged and US long-term interest rates rose sharply, with USD/JPY rising to the 150 yen level for the first time in a while. The high so far is around 150.80 yen. The 0.25% rate cut at November's FOMC is currently considered solid, but it will likely gradually shift to a hold. USD/JPY appears likely to rise a bit more.

Despite the sharp rise in US long-term interest rates, with a FOMC rate cut still expected this year, gold continues to advance and has updated an all-time high at $2,755! Central bank purchases worldwide show no signs of slowing. However, if the rise in US long-term interest rates continues (the author believes it will!), gold's peak is approaching. The upper target is around $2,800. Long is recommended for the longer term, but I don't want to chase it here. There is a high possibility of a pullback from late December into the new year.

WTI crude oil is in sharp decline. With an Israeli attack on Iran seemingly imminent, prices briefly exceeded $70 yesterday, but the upside is heavy. The fundamentals are extremely weak!

In summary: USD/JPY is a short-term buy if there is a pullback to the 147 yen level. A break above 151 yen is a profit-taking and short strategy. However, if it closes above 152 yen, get out. The downside target is 145 yen, so take profits before reaching it. Take profits on gold at $2,800. Oil has a high probability of falling once more, so short at $74. Take profits at $65, stop loss above $84.55.