The US Dollar accelerated its rally on Wednesday ahead of the US opening bell, driven by heightened uncertainty surrounding the upcoming presidential election and a surge in safe-haven inflows as equities continue their downbeat performance. The Dollar Index (DXY) gained momentum as investors sought refuge amid increasing volatility in risk assets.

Technical picture in DXY currently showing strong upside momentum, reflected in its sharp rise from recent lows. However, technical indicators, including the RSI near overbought territory, suggest that the move is becoming overstretched in the short term. A key target for bulls appears to be around the 106 level, which aligns with the upper bound of the medium-term descending price corridor. Given this, bullish positions may be more appealing following a pullback, especially if the DXY finds support around 104, offering a better risk-reward setup:

Market participants are particularly concerned about the potential re-election of President Trump, which could usher in a continuation or escalation of trade tensions. A Trump victory raises the specter of higher tariffs, significantly impacting exports from key US trading partners such as the Eurozone, Canada, Mexico, China, and Japan. This scenario could disrupt global supply chains and dampen international trade, adding to the appeal of the USD as a safe-haven currency.

US Treasury bonds extended their sell-off, pushing yields higher across the curve. The benchmark 10-year yield added more than 0.15% since the start of the week. This upward movement reflects market pricing of a modest policy easing (25 bp rate cut) at the upcoming FOMC meeting on November 7, with interest rate derivatives indicating a nearly 90% probability of a cut versus a 10% chance of rates remaining unchanged.This cautious outlook on monetary easing is further supported by the IMF raising its US growth forecast for this year to 2.8%, up from the 2.6% projected in July. The combination of accommodative monetary policy and robust economic growth enhances the attractiveness of US assets, contributing to the strength of the USD.

The US Mortgage Bankers Association (MBA) reported a fourth consecutive week of declining mortgage applications, with a 6.7% contraction for the week ending October 18, following a steep 17% drop the prior week. The sustained decrease suggests that higher borrowing costs are dampening demand in the housing market. Elevated mortgage rates, driven by rising Treasury yields, are impacting affordability and could lead to a slowdown in residential investment, a key component of GDP growth.

The British Pound remains below the psychological resistance level of 1.3000 against the USD. The currencyis under pressure as traders await a speech by BoE Chair Andrew Bailey later today. Market participants are keen to glean insights into the BoE's monetary policy trajectory for November and December, especially as traders have priced in another interest rate cut in November.

On the technical side, GBP/USD pair has seen its short-term bullish trend weaken significantly as sellers have successfully pushed the price below the key 1.30 level, signaling a break of the lower bound of the ascending channel. This breach suggests that the upside momentum has been lost, and further downside pressure is likely. The next significant technical target for sellers is around the 1.28 level, where the 200-day SMA provides potential support, marking a critical level for the pair in the medium term:

Crude oil prices halted their two-day surge on Wednesday after the API weekly report indicated a larger-than-expected increase in US stockpiles. The API data revealed a build of 1.64 million barrels, surpassing the forecasted 0.7 million barrels and reversing the previous week's draw of 1.58 million barrels. The surprise build somewhat increased concerns about oversupply in the market, which could offset recent price gains.

Markets are now awaiting the EIA report due later today. The consensus expectation is for a modest build of 0.7 million barrels following a significant drawdown of 2.2 million barrels a week earlier. Should the EIA confirm a larger-than-anticipated increase in inventories, it may signal persistent oversupply issues, potentially leading to a pullback in crude prices toward the $70.00 per barrel mark or lower.