FX Commentary – US Dollar Is Supported By Looming US Election Uncertainty

Market Talk

  • The dollar was mixed on Monday, supported by investors’ worries about the looming US election and fading hopes for the latest fiscal stimulus package to be passed ahead of the Nov. 3 U.S. presidential elections. Investors remain doubtful an agreement will be reached as Biden victory looks imminent.
  • Fifteen days from US election date, Biden leads Trump by about 10 points in national polls but has a narrow lead in several battleground states with investors focused on what the election outcome means for US stimulus. A victory by Democrat Joe Biden is seen weakening the dollar due to perception of bigger spending.
  • China’s GDP numbers came in slightly below expectation as gross domestic product grew 4.9% in the September quarter from a year earlier, slower than forecast but showed China’s rebound from the COVID-19 pandemic remained on course.
  • While China GDP numbers came in slightly below expectations its Industrial output in September expanded 6.9% from a year earlier, while retail sales grew 3.3%, both well ahead of expectations. Investors viewed the consumption data was a harbinger of better growth in the current quarter.
  • Gold fell and had its first weekly decline in three weeks, as fading chances of a U.S. stimulus agreement before the Nov. 3 presidential election dented the metal’s appeal as an inflation hedge.

Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation
2. Sell AUD/USD at 0.7105. Stop at 0.7145 and target at .07010
3. US election uncertainty and fading hopes of a US stimulus are both likely to keep the US dollar strong.
4. A possible Flag chart pattern and bearish MACD are both hinting of further price declines ahead.

Fundamental Comments
1. Ahead of US election uncertainty, US dollar is likely to stay strong.
2. Fading hopes of US stimulus before Nov 3 is also keeping the US dollar strong

Technical Comments

1. Price could be forming a Flag chart pattern which is hinting of further price declines ahead.
2. MACD is bearish and the fast line could be turning down soon, hinting of a bearish price trend ahead.

Key Levels


Technical Overview

USD/JPY – We have seen a rally to 105.49 again this morning but price was unable to break above this high to move towards out target at 105.80. Stochastic is turning down and declining. MACD is bullish but is also turning down and there could be a possible divergence warning ahead. We do not think price can reached 105.80. Rather we see price capped at 105.50 and a decline to 105.02 to follow in the next couple of days ahead.

Support 105.20104.90104.40
Resistance 105.50105.80106.10

GBP/USD – Price has found support at 1.2860 and could be moving higher to test the high at 1.3030 again later this week. MACD is moving higher from its extreme, which is a hint of price moving higher. Stochastic is near to the oversold zone and is moving higher, which is a hint of more price upsides ahead. However if price were to break below 1.2860, it is likely to move down to 1.2670.

Support 1.29201.28601.2805
Resistance 1.29601.30151.3065

EUR/USD – Our view remains the same as last Friday. We are looking at 1.1610 as long as price is capped below 1.1760. MACD is bearish and the fast line is turning down near to the zero line, which is hinting of more price declines ahead. Stochastic has a bearish crossover and is also hinting of further price declines ahead. 20EMA is also bearish with a steep slope ahead.

Support 1.16901.16451.1610
Resistance 1.17201.17701.1810

XAU/USD – Our view remains the same as last Friday, We are looking at a range of $1912 to $1882 until we see a breakout. Today, we will be watching this range again. MACD is flat and neutral at the moment. It is also a hint of a sideways market at the moment. Stochastic is near to the overbought zone but is still moving higher while 20EMA is flat and neutral at the moment.

Support 1902.101892.601882.20
Resistance 1912.651923.951933.10

USD/SGD – We had a buy call on this pair on Friday. Price has declined lower to 1.3561 and our order was filled but our stop order at 1.3555 is still safe at the moment. Our view remains the same as last Friday. With Stochastic rising and MACD showing bullish divergence on 1-hourly chart, we think price may have found a bottom and should continue to move higher. Keep stop and profit orders unchanged.

Support 1.35501.35101.3480
Resistance 1.35951.36251.3670

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