Crude prices jumped on Friday but opened sharply lower on Monday, leaving a $6 gap as markets priced in a pause in military activity. While the Bab al-Mandab Strait in the Red Sea remains under threat, flows through the Strait of Hormuz have returned to productive levels, adding pressure to WTI and Brent. The move was reinforced by speculators unwinding positions, while softer global demand expectations added to the bearish tone. The outlook also referenced US political pressure to lower petrol prices ahead of the November midterms, alongside the ongoing risk of renewed US-Iran tensions.
Attention then shifted to US equities, with the S&P 500 and NASDAQ weighed by concerns over AI spending versus revenue, alongside a heavy earnings slate. Apple, Meta, Amazon and Microsoft are due to report on Tuesday and Wednesday, and the US Fed rate decision on Tuesday adds another catalyst, with talk of a possible hike despite a neutral forecast. The commentary pointed to broad USD strength affecting AUDUSD and other major pairs, and said gold’s Monday gap was filled as the dollar firmed, with XAUUSD framed around an oversold stochastic oscillator, trendline tests and a potential double-top neckline. AUDCAD was described as remaining range-bound around established trendlines and support.
Crude Oil Outlook and Trading Recommendations
We need to play the downside on crude oil as Brent and WTI struggle with a massive $6 opening gap down due to easing Middle East tensions and resumed Hormuz shipping. With OPEC+ potentially phasing out voluntary cuts of 2.2 million barrels per day later this year, the supply glut is becoming a reality. We recommend shorting rallies on WTI toward the $75 resistance level, keeping a close eye on the US administration’s push to lower energy costs ahead of the November 2026 midterm elections.
Equities, US Dollar, Gold, and AUDCAD Strategies
The NASDAQ and S&P 500 are facing heavy pressure as we enter a crucial earnings week for mega-cap tech giants. Investors are increasingly skeptical about massive AI capital expenditures, which surged over 40% year-over-year for some firms without delivering immediate matching revenues. We should look for short-term shorting opportunities on NASDAQ rallies, especially if upcoming reports from Microsoft and Meta fail to justify their steep valuations.
The Federal Reserve’s interest rate decision this week is keeping the US Dollar strong, fueled by whispers of a surprise rate hike to tackle sticky inflation. While the consensus expects a hold at the current 4.25% range, any hawkish rhetoric will push the greenback even higher. We suggest buying USD on dips, particularly against the Australian Dollar (AUDUSD), which is highly vulnerable to weakening global commodity demand.
Gold traders should prepare for high volatility as the precious metal grapples with a strong US Dollar and a filled opening gap. We are closely watching the $2,350 support level to see if an oversold stochastic indicator triggers a bounce or if a double-top pattern confirms a deeper correction. We advise holding off on long positions until we see clear rejection at the lower trendline or a decisive breakout.
Finally, the AUDCAD currency pair remains locked in a well-defined range that we can continue to exploit. We want to buy near the lower support boundary and sell near the upper trendline, using tight stop-losses to protect capital. This range-bound strategy is highly reliable right now as both the Australian and Canadian dollars face offsetting pressures from weak global growth forecasts.
