2020 Elections: Uncertainty to weigh on markets

It looks like the US election is heading into the protracted uncertainty scenario. The FX market has remained fairly well-behaved overnight with the G10 complex holding to familiar ranges against the USD. The tightening of the race saw EUR/USD mark a fresh marginal three-month low just above 1.1600, but spot has retraced higher since, economists at TD Securities brief.

EURUSD

EUR/USD rebounded strongly to 1.1771, but was kept well below 1.1880 resistance. Breach of 1.1622 suggests that fall from 1.2011 is resuming. EUR/USD is back on the downside for 38.2% retracement of 1.0635 to 1.2011 at 1.1485. On the upside, however, break of 1.1771 resistance will now be the first sign that correction from 1.2011 has completed. Intraday bias will be turned back to the upside for 1.1880 for confirmation.

GBPUSD

Cable is forecasted to navigate between 1.2845 and 1.3200 in the next weeks, The sudden sharp surge in GBP that sent it to an overnight high of 1.3077 came as a surprise. GBP extended its gains this morning but has since retreated after touching a high of 1.3140. The volatile price actions have resulted in a mixed outlook and GBP could trade in a choppy manner and within a wide range, likely between 1.2920 and 1.3150.” Next 1 to 3 weeks: “Our view for GBP to ‘gravitate towards 1.2845’ was invalidated as GBP rocketed past the ‘strong resistance’ level at 1.3030. The volatile price actions have clouded the near-term outlook and for now, GBP is expected to trade between the two major levels of 1.2845 and 1.3200.”

USDJPY

USD/JPY’s break of 105.05 resistance suggests that fall from 106.10 has completed at 104.02, ahead of 104.00. Intraday bias is turned back to the upside for 106.10 resistance first. On the downside, break of 104.37 will turn bias back to the downside for retesting 104.00 instead.

AUDUSD

AUD/USD is pressuring the ceiling of a Descending Triangle chart pattern in the aftermath of a bearish ‘Death Cross’. The latter formed after the 50-day Simple Moving Average (SMA) crossed under the 20-day one. Early signs of positive RSI divergence is showing that downside momentum is fading. Key support sits below as the 0.7006 – 0.7043 zone. A climb above 0.7244 exposes the August high.

USDCAD

USD/CAD rebounded strong just head of 1.3081 support and intraday bias is turned neutral first. On the upside, break of 1.3389 will likely resume the corrective pattern from 1.2994 with another rise through 1.3418 resistance. On the downside, break of 1.3081 will bring retest of 1.2994 low.

WTI

Last month, there was a sharp decline in crude oil price from well above $40.00 against the US Dollar. The price broke many supports near $35.00 before it found support near $33.50. Looking at the 4-hours chart of XTI/USD, the price started a strong recovery wave from the $33.51 low. There was a break above the $35.00 and $36.00 resistance levels. The price gained pace above the 38.2% Fib retracement level of the recent decline from the $41.63 high to $33.51 low. There was also a break above a major bearish trend line with resistance near $37.70 on the same chart. Finally, the price climbed above the 50% Fib retracement level of the recent decline from the $41.63 high to $33.51 low. The next major resistance is near $38.50, $39.20, the 100 simple moving average (4-hours), and the 200 simple moving average (4-hours). A clear break above $38.50 and $39.20 could set the pace for a strong increase above $40.00. The next major resistance is near the $41.50 level. If there is no upside break above the 100 simple moving average (4-hours) could start a fresh decline. An initial support is near the $37.20 and $37.00 levels. A downside break below the $37.00 level may perhaps lead the price back towards the $35.00 support.

XAUUSD

Gold trims recent losses while portraying one more pullback from the sub-$1,900 area, currently around $1,897, down 0.46% intraday, during the early Wednesday. The yellow metal wobbles as risks react to the US presidential election updates. The latest news suggests that President Donald Trump wins in Utah whereas his Democratic rival Joe Biden takes Arizona to soften the path to the White House. Elsewhere, the NBC forecasts a smooth journey for the blue wave, favoring Democrats’ major victory.