see more in Forex and commodity markets

Source: Elev8 broker,
CFTC COT

The highest 14-week
RSI readings appear in USDMXN, sugar, European coal, European natural gas
(TTF), and UK natural gas (NBP). A high 14-week RSI in these five markets
points to sustained multi-month upward momentum. The common thread is the Iran
war’s cascading energy shock, compounded by El Niño weather disruption. These
moves are linked.

USDMXN is rising
because the dollar draws safe-haven demand while Mexico’s central bank turns
more dovish. Sugar is rising on a global El Niño-driven supply shortfall.
European coal, TTF and NBP are all rising on the same energy crisis, which
includes Middle East refining losses, Norwegian supply outages, and approaching
winter demand.

For USDMXN, a high RSI
means sustained peso weakness against the dollar. Multiple forces combine here.
The Bank of Mexico held rates at 6.50% in September but removed the language
signalling a prolonged pause. At the same time, the protocols released on 8
October showed that three of five board members stated that future interest
rate cuts could be considered if the inflation outlook improves.

International
investors are beginning to lose interest in Mexican assets, and Elev8 broker’s
analysts flag 18.50 as a resistance level that could be reached soon if
nervousness persists. The International Monetary Fund (IMF) recently stated that greater efforts are needed to put Mexico’s debt on a
declining trajectory. It projects growth of just 1.5% in 2026 and 1.8% in 2027,
with public debt rising to 55% of Gross Domestic Product (GDP). Finally, broad
dollar strength near 18-month highs, driven by safe-asset demand spurred by the
Middle East conflict and relatively hawkish Federal Reserve (Fed) policy,
compounds peso weakness.

Raw sugar touched a
19-month high of 21.24 cents per pound on 7 October, gaining 1.6% for the week.
Extreme climate events are hitting yields hard across the world, causing
waterlogged cane in Brazil, drought-hit beet in Europe, and stalled planting in
western India.

European coal benefits
from the broader energy crisis. Middle East refining destruction has taken
roughly 2.3 million barrels per day (Mbbl/d) of refining capacity offline,
driving record fuel prices globally. The International Energy Agency suggested
that member countries assess whether additional diesel releases are necessary
ahead of governing board meetings. When gas prices rise sharply, European
utilities switch from gas-burning to coal-burning power generation, directly
boosting demand for thermal coal. Plant activity data shows multiple large
European coal plants are returning
online across Germany, Poland, and the Netherlands.

Natural gas prices at
the Dutch TTF and UK NBP hubs are closely correlated and driven higher by
similar factors. In summer, Norwegian gas operator Gassco reported multiple unplanned outages complicating storage build in
Europe. Because Norway is Europe’s single largest pipeline gas supplier, these
unplanned outages tighten TTF and NBP prices. Broader energy drivers include
the Iran war spillover pushing energy commodities higher and the arrival of
October, marking the beginning of the European heating season.

Conversely, the lowest
14- week RSI values appear in EURUSD and iron ore.

EURUSD has posted five
consecutive weekly losses and hit an 18-month low, with analysts describing a
potential ‘falling knife’ situation. The single most damaging factor for the
euro is France, where government borrowing rates and risk premia versus Germany
have risen to levels unseen since the 2011 euro crisis. The French 10-year
yield reached a 24-year high of 4.994%, the budget deficit exceeds 5% of GDP,
and a divisive presidential election next year adds political uncertainty.

A European Central
Bank (ECB) leadership vacuum compounds pressure as board member Isabel Schnabel
departs for the IMF, chief economist Philip Lane leaves by May, and Christine
Lagarde faces persistent resignation rumours. Germany is lobbying to retain the
seat vacated by Schnabel, meaning the presidency battle will likely occur
between Spain and the Netherlands, with neither seen as an interventionist
figure.

Global money market
funds attracted massive inflows as the global bond selloff, European fiscal
concerns, and inflation fears pushed investors toward safety. Meanwhile, the
United States 10-year Treasury yield climbed to a high of 5.365%, supporting
the dollar. Technically, the EURUSD pair trades above structural support, but
the Elev8 broker believes that significant buying may not appear until lower
zones are reached.

Iron ore remains in a
sustained downtrend, extending declines to multi-month lows, weighed down by
weak steel consumption and rising supply expectations. China consumes roughly
70% of global seaborne iron ore, and its protracted property downturn continues
to suppress steel demand from the construction sector. Furthermore, the Iran
war created record freight shipping rates through Strait of Hormuz disruptions,
squeezing miners’ margins. Australian and Brazilian producers continue to ship
at high volumes, while India targets massive steel capacity expansion.

Overextension
analysis

Overextension analysis
measures how far each currency’s exchange rate has moved from its historical
three-year trading range, expressed as a percentage (0% = the lower bound of
the range, 100% = the upper bound of the range). We use a three-year lookback
period to strike an effective balance. The three-year window is long enough to
capture more than half of a typical business cycle (the National Bureau of
Economic Research estimates the average cycle at roughly 60 months) yet short
enough to retain meaningful volatility and generate actionable signals.

Through this lens,
USDCNY, USDSGD, USDPEN, USDINR, and USDTRY appear overextended. Specifically,
the Chinese yuan, Singapore dollar, and Peruvian sol are overvalued, while the
Indian rupee and Turkish lira are undervalued.

USDCNY has slipped
close to its 44-month low, touching 6.692 despite a firm dollar index. The
drivers of exceptional yuan strength include managed appreciation by the
People’s Bank of China (PBoC), which leans toward pro-market conditions and
allows the yuan to strengthen to anchor confidence. China also launched a
fiscal stimulus push to reach its GDP target and support the stock market,
making yuan-denominated assets more attractive. Furthermore, growing
international yuan usage, with brokers pushing for offshore clearing, increases
demand.

USDSGD reflects
monetary policy tightening by the Monetary Authority of Singapore (MAS), driven
by robust growth from the AI boom. Singapore manages inflation by allowing its
currency to appreciate to absorb rising import prices, supported by strong fiscal
fundamentals, as reflected in low government bond yields relative to U.S.
Treasuries.

USDPEN benefits from
record copper prices near $6.50 per pound, boosted further by supply
disruptions such as a mudslide
at Chile’s El Teniente mine. As the world’s second-largest copper producer,
Peru generates massive export receipts that flow into the domestic foreign
exchange market, structurally strengthening the sol. Combined with orthodox
monetary policy from the central bank, the sol remains a top-performing
emerging market currency.

USDINR highlights how
an overwhelming oil import bill renders central bank interventions ineffective.
The rupee trades near record lows despite emergency measures by the Reserve
Bank of India, which opened special dollar windows for state-run oil companies,
slashed derivatives limits, imposed risk reserves, and conducted open market
bond sales to drain liquidity while foreign exchange reserves declined.

USDTRY represents a
unique case of managed depreciation, in which the Turkish lira depreciates by
design. Recent pressures include a capital markets investment fund crisis
affecting hundreds of thousands of savers, heightened central bank
foreign-exchange volatility, and carry-trade dynamics in which investors
maintain long positions to capture high policy interest rates while monitoring
domestic trust in the currency.

Traders’
positioning

Market positioning
reveals clear trends across commodities and currencies. Speculative long
positions concentrate in soybeans, sugar, gasoline, corn, and the Brazilian
real.

• Sugar exhibits a strong bullish momentum
  driven by supply-side cuts in Brazil, India, the European Union, and the
  United States due to irregular rainfall, severe weather deficits, and
  reduced planted areas.
• Soybeans experience support from China,
  lowering its domestic output forecast, and Black Sea sunflower oil supply
  disruptions, despite rising United States production estimates and rapid
  Brazilian planting.
• Gasoline benefits from Middle East
  refining capacity reductions, taking over 2.3 Mbbl/d offline, keeping
  crack spreads high alongside strong Asian import demand.
• Corn finds support from active Asian
  buying and increased Chinese industrial demand for starch production,
  despite higher forecasts for United States production.
• The Brazilian real attracts long positions
  due to high policy interest rates that make it attractive for carry
  trades.

Conversely,
speculative short positions are concentrated in the euro, the British pound,
and natural gas.

• The euro suffers from the French sovereign
  debt crisis, uncertainty over ECB leadership, and policymakers dampening
  rate-hike expectations.
• The British pound faces intense fiscal
  stress marked by a large gap in budget funding, surging gilt yields, and a
  weakening consumer backdrop where inflation acts as a
  consumption-destroying tax on households.
• Natural gas is a unique energy commodity
  lacking a compelling supply-disruption narrative, as liquefied natural gas
  shipments continue to move smoothly through alternative routes, autumn
  weather remains mild, and United States production remains near record
  highs above 105 billion cubic feet per day (bcf/d).

Across both the euro
and the pound, the common thread remains strong: U.S. dollar strength near
18-month highs, propelled by safe-asset demand amid the Middle East conflict,
relatively hawkish Fed expectations, and severe fiscal fragility in Europe and
the United Kingdom.

The Elev8 broker will
continue to examine momentum indicators closely to help traders see more market
opportunities and navigate global volatility with confidence.

Disclaimer: This article does not contain or constitute
investment advice or recommendations and does not consider your investment
objectives, financial situation, or needs. Any actions taken based on this
content are at your sole discretion and risk, Elev8 does not accept any
liability for any resulting losses or consequences.

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