In 24 hours, it will officially be election day. Polls continue to show Democratic nominee Joe Biden in the lead ahead of incumbent President Donald Trump. Having said that, the latest polls are indicating that the former Vice President is only ahead by roughly 6.8 points, slightly less than the typical 7-point average he’s maintained for several months.
EUR/USD lost downside momentum ahead of 1.1612 support and recovered. Intraday bias is turned neutral for some consolidations. But risk will stay on the downside as long as 1.1880 resistance holds. Break of 1.1612 will resume the corrective decline from 1.2011, for 38.2% retracement of 1.0635 to 1.2011 at 1.1485.
This last week, the GBP declined heavily from well above the 1.3000 support against the US Dollar. GBP/USD is now holding a crucial support near the 1.2850 level and it could correct higher. Looking at the 4-hours chart, the pair followed a strong bearish path from the 1.3175 zone and declined below many key supports. There was also a close below the 1.3000 support, the 100 simple moving average (4-hours), and the 200 simple moving average (4-hours). Finally, the bulls were able to defend the main 1.2850 support zone (a multi-touch zone). A low is formed near 1.2854 and the pair is consolidating losses. On the upside, there is a major hurdle forming near the 1.2950 level. There is also an important bearish trend line forming with resistance near 1.2960 on the same chart. A successful break above the 1.2960 resistance and then a follow up move above the 1.3000 level could open the doors for a fresh increase. Conversely, a failure to clear 1.2960 or 1.3000 might spark another decline in the coming sessions. Fundamentally, the UK Manufacturing PMI for Oct 2020 was released yesterday by both the Chartered Institute of Purchasing & Supply and Market Economics. The market was looking for no change from 53.3 (prelim reading).
USD/JPY fails to keep the previous three days’ update momentum while easing to 104.75, down 0.06% intraday, during Tuesday’s Asian session. Although trading sentiment recovered off-late, market fears ahead of the key US elections probe the bulls. Also challenging the previous run-up could be an absence of Tokyo traders and a lack of major data/events, except for the RBA. All eyes on US elections… Although holiday in Japan joins a light calendar to probe the pair’s latest moves, USD/JPY traders closely watch the 2020 US election polls for immediate direction. The latest forecasts suggest an interesting race between President Donald Trump and his rival Joe Biden.
AUD/USD recovered after hitting 0.6991 and intraday bias is turned neutral first. Near term outlook stays bearish as long as 0.7157 resistance holds. Break of 0.6991 will resume the corrective fall from 0.7413 to 38.2% retracement of 0.5506 to 0.7413 at 0.6685. However, firm break of 0.7157 will argue that the correction has completed and turn bias back to the upside for 0.7243 resistance first.
USD/CAD was approaching, “critical support at 1.3046/56. Ultimately, we’re looking for basing this week with a breach above this formation needed to shift the focus higher again in the US Dollar.” The decline never reached that threshold with USD/CAD turning off the 78.6% retracement at 1.3085 into the close of October trade. The recovery failed last week at confluence resistance at 1.3375/82 and the focus is on this pullback heading into a heavy week of event risk. Support rests at the lower parallel / 61.8% retracement at 1.3199- look for a reaction there IF reached with a close below 1.3156/62 ultimately needed to mark resumption of the broader downtrend. Weekly open resistance at 1.3313 with a breach higher keeping the focus on 1.3450.
The US oil prices failed to cut through a crucial technical hurdle on Tuesday as global oil traders warned of coronavirus-led demand destruction. So far, comments by major oil producers have helped oil sellers defend the former support-turned-resistance of the head-and-shoulders neckline of $37.34. However, that hurdle could be breached if major oil producers support Saudi Arabia's decision to extend the output cut deal. Sources told Energy Intelligence on Monday that the Russian oil companies are open to extending the current OPEC+ output cut deal of 7.7 million barrels per day if the bearish market conditions persist. Besides, looking at the recent decline from $41.90 to $33.64, it appears the market has priced in the impending drop in demand.
Technically it shows that the yellow metal is likely to face an uphill battle to take on the upside, with the immediate barrier seen around $1896, the intersection of the previous day high and SMA10 one-day. The next major hurdle awaits at $1899, which is the convergence of the previous high on four-hour and SMA200 four-hour. To the downside, the bears guard the $1891 cap, where the SMA100 one-day lies. A failure to resist above the latter could call for a test of the next relevant support placed at $1888, the Fibonacci 38.2% one-month. Further south, SMA5 one-day at $1885 could challenge the bears’ commitment, opening floors towards $1883, which is the SMA200 15-minutes support.
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