EURUSD is fast approaching the ascending trendline that has been navigating the market since the bounce on the 1.1611 ground as the Ichimoku cloud on the four-hour chart blocked the way to the upside and the 200-period simple moving average (SMA) failed to catch the fall. With the price trading below its SMAs, the RSI decelerating towards its 30 oversold level, and the MACD strengthening its negative momentum below its signal and zero lines, the short-term bias is seen skewed more to the downside than to the upside. Still, whether the decline could get new legs may depend on the trendline. If it fails to add floor this time, the sell-off may speed up towards the 1.1700 barrier, while lower, some consolidation may commence within the 1.1665-1.1650 zone before all attention shifts to the 1.1611 bottom. In the positive scenario where the trendline holds firm, the bulls may attempt to crawl above the 1.1785 border and into the cloud. If those efforts prove successful, the 50-period SMA could halt the bullish action from reaching the resistance region around 1.1835.
The GBP/USD pair witnessed some heavy selling during the early European session and slipped below the key 1.3000 psychological mark, refreshing weekly lows in the last hour. The pair continued with its struggle to gain any meaningful traction and was being capped by a combination of factors. The impasse on the matter of the future access of EU fishing fleets to UK waters has dampened prospects for an immediate breakthrough in Brexit talks. This, in turn, took its toll on the British pound. On the other hand, the US dollar drove some aggressive haven flows amid growing market worries about an alarming pace of growth in news coronavirus cases in the US and Europe. Investors seem worried that renewed lockdown measures to curb the second wave of COVID-19 infections could prove detrimental for the already fragile global economy. On the upside, an initial resistance is near the 1.3080 level. The first major resistance is near 1.3100, above which GBP/USD might rise towards the 1.3175 and 1.3200 levels.
USD/JPY’s fall from 106.10 resumes by taking out 104.34. Intraday bias is back on the downside for 104.00 low. Break will resume larger decline from 111.71, towards 101.18 key support. On the upside, break of 105.05 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.
EUR/JPY’s break of 123.01 support suggests that corrective decline from 127.07 is resuming. Intraday bias is back on the downside for 38.2% retracement of 114.42 to 127.07 at 122.23. Firm break there will confirm this case and target 61.8% retracement at 119.25, which is close to 119.31 key support. On the upside, break of 125.08 resistance is needed to confirm completion of the correction. Otherwise, risk will stay on the downside in case of recovery.
AUD/USD shaved-off early advance to near the 0.7160 region and fell back to the 100-daily moving average (DMA) support at 0.7110. Upbeat Australian Q3 CPI data fails to offer any respite to the AUD bulls. The latest leg down caused the pair to pierce through the 21-DMA cushion, placed at 0.7138. Sellers need an entry below the 100-DMA barrier, which continues to support the prices for last four trading sessions. On the flip side, the aussie could retest the 21-DMA support-turned-resistance if the bulls fight back control. The next critical resistance is seen at the horizontal 50-DMA at 0.7193. The 14-day Relative Strength Index (RSI) trades flat on the midline, suggesting a lack of clear directional bias in the near-term.
USD/CAD has been testing a big area of support that dates back to the Great Financial Crisis, with the level not that obvious at times given it runs through a lot of price action over the years. But nevertheless the 13000 line has been big, with it acting as support now three times going back to last year. There is a trend-line (lower parallel tied to a top-side trend-line extending over the 2017/20 highs) that is also in confluence with the 13000 level. This makes for a good floor that if maintained at the very least keeps the outlook neutral, but if broken could lead to a sizable leg lower as strong support isn’t to be found for some distance below. It is possible that USD/CAD is trying to carve a higher-low from the September 1 low, but some more work is needed to turn the near-term favorable for taking long-side bets. With a little more strength above 13259 and a demonstration that price wants to hold, then we could look to the September high at 13418 as the next level of resistance. This would indeed be a big test.
The 50 day EMA is very flat, just as the 200 day EMA is above there. In other words, this is a market that simply has nowhere to be. With that being said, the market is going to continue to go back and forth overall, as we are simply unaware of where to go next. It is obvious that we have massive amount of support and resistance right around this area, with the $36.25 level underneath being massive support. To the upside, the $43.50 level is massive resistance. In other words, the market is essentially trying to figure out who has more momentum at the moment.
Gold prices consolidated at above US$ 1,900 this week amid souring market sentiment due to a resurgence in coronavirus cases around the globe. The absence of geopolitical catalysts and a relatively muted US Dollar index have led gold prices to consolidate within a tight range between US$ 1,900 – 1,910. Some traders may prefer to sit on the sidelines until the political skies are cleared after the US election, which is only one week from now. Although Democratic presidential candidate Joe Biden appears to have a comfortable lead in national polls, the potential tail risk of a Trump-win scenario can’t be neglected. This renders the risk-averse US Dollar susceptible to a strong haven bid should the election outcome derails from the poll forecasts. A strengthening US Dollar is likely to weigh on precious metal prices, especially when ‘risk off’ sentiment is prevailing.
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