Dollar’s decline is slowing a little bit in Asian session but there is no sign of a turnaround. The greenback remains the worst performing one for the week, followed by Yen, on strong risk-on markets. Australian Dollar is the strongest one, followed by other commodity currencies. FOMC meeting overnight prompted little reaction. Traders are awaiting the final vote counts of US Presidential election. Focus will now turn to job data from the US and Canada. Technically, Gold’s firm break of 1933.17 resistance confirmed resumption of the rebound from 1840.39. That’s a solid bullish signal and focus will now be on whether it could overcome 1973.58 resistance decisively.
The euro currency rose over 0.96% intraday after the greenback fell sharply during the day on Thursday. The weakness in the dollar pushed the euro currency way past above the 1.1800 handle. This breaks the sideways range we expected within the 1.1800 and 1.1600. The move above 1.1800 should of course be sustained for further gains. Any near term declines could see the 1.1800 level being tested once again. If this level holds, then the common currency could be looking to target the 1.1900 level next. The bias will change if the EURUSD fails to close with gains above the 1.1800 handle.
Our expectation for GBP to ‘trade within a 1.2900/1.3080’ range was wrong as it rocketed to a high of 1.3155 (low has been 1.2930). Upward momentum is strong and GBP could advance further even though overbought conditions suggest the major resistance at 1.3200 could be just out of reach (there is a minor resistance at 1.3175). Support is at 1.3080 followed by 1.3040. We noted on Wednesday (04 Nov, spot at 1.3030) that the ‘near-term outlook is clouded’ and GBP ‘could trade between the two major levels of 1.2845 and 1.3200’. The sudden and strong liftoff in GBP that sent it a high of 1.3155 yesterday (05 Nov) and the subsequent strong daily closing at 1.3153 (+1.23%) was unexpected. While upward momentum has improved, GBP has to move and stay above the major resistance at 1.3200 before further sustained advance can be expected. At this stage, the prospect for this scenario is not high but it would increase further as long as GBP does not move below 1.3000 (‘strong support’ level) within these few days. Looking ahead, the next resistance above 1.3200 is at 1.3255 followed by 1.3300.
USD/JPY remains on the downside at this point. Down trend from 111.71 has just resumed. Next target is 100% projection of 106.10 to 104.02 from 105.34 at 103.26. Break will target 161.8% projection at 101.97. On the upside, break of 105.34 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.
AUD/USD rises to as high as 0.7289 so far today. The break of 0.7243 resistance suggests that consolidation pattern from 0.7413 has completed at 0.6991. Intraday bias is now on the upside for retesting 0.7413 high. Firm break there will resume larger rise from 0.5506. On the downside, break of 0.7144 minor support will probably extend the consolidation pattern with another fall instead.
The USD/CAD pair regained some positive traction on the last day of the week and recovered a part of the overnight losses to over two-month lows. A combination of supporting assisted the pair to stall its recent leg down, instead attracted some buying near the 1.3030-25 region and snap four consecutive days of the losing streak. As investors await the final result of the nail-biting US presidential election, a modest pullback in the US equity futures benefitted the US dollar's safe-haven status. Although the markets are betting that Democrat candidate Joe Biden will become the next US president, the fact that Republicans will retain control of the Senate dampened hopes for large fiscal stimulus packages. This comes amid the uncertain US political situation, which weighed on investors' sentiment and drove some haven flows towards the greenback.
WTI drops to $38.73, down 0.91% intraday, during early Friday. The black gold surged to the highest since October 27 the previous day, before taking a U-turn from a join of 50-day and 100-day EMAs. However, the $38.00 threshold can offer intermediate support whereas September’s bottom surrounding $36.40 acts as an extra downside filter. On the flip side, a daily closing beyond the $39.50 resistance confluence will be challenged by the $40.00 psychological magnet. If at all the commodity buyers manage to cross $40.00 on the daily closing, a multi-day-old resistance line, at $41.30, will raise bars for the quote’s further upside.
From a technical perspective, gold prices look poised to continue pushing higher after breaking above Descending Triangle resistance and clearing the psychologically imposing 1930 mark. With the MACD indicator bursting back above its neutral midpoint and the RSI climbing above 60 and into bullish territory, the path of least resistance looks to be higher. Therefore, a daily close above the November 5 high (1952.77) would probably ignite a push to test the 127.2% Fibonacci (2070.14), if buyers can hurdle resistance at the August 27 high (1976.65). Conversely, a breach of support at the October high (1933.28) could generate a pullback towards the trend-defining 50-day moving average (1905.74) and 1900 level.
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