FX Commentary – US Dollar In Tight Range As Investors Await Election Outcome.

Market Talk

  • The dollar hunkered down to trade in a tight range against most currencies on Thursday morning as investors awaited final vote counts in a nail-biting U.S. election that has seen Democrat Joe Biden edge ever so closer to the White House.
  • Financial markets, however, were braced for days or even weeks of uncertainty as Republican incumbent President Donald Trump has opened a multi-pronged attack on vote counts in several states by pursuing lawsuits and a recount. That could hamper the dollar in the short run, traders say.
  • Expectations that a Biden win will take a slightly softer tone on trade policy are likely to weaken the US dollar against the currencies of countries that often faced the threat of tariffs during Trump’s administration, analysts said.
  • Sterling fell against the dollar and the euro after a Telegraph newspaper reported that the Bank of England, which announces a policy decision later on Thursday, is considering negative interest rates. That left the pound flat at $1.2966, compared with an overnight peak of $1.3139.
  • Gold’s rally stalled as bets that the Democrats will be unable to take control of the U.S. Senate in the razor-edge American election dashed hopes for a larger U.S. coronavirus stimulus.   

Chart Focus AUD/USD
Key Points
1. Trading Buy on AUD/USD recommendation

2. Buy AUD/USD at 0.7160. Stop at 0.7130 and target at 0.7220.

3. A better COVID-19 situation and as the US election edges towards a winner, the US dollar is likely to lose ground.

4. Price is supported at the 20EMA in a bullish trend and MACD indicator is also hinting of more price upsides ahead.

Fundamental Comments

1. A COVID-19 situation in Australia compared to the U.S. is likely to favour the Aussie dollar

2. As U.S. Presidential election edge closer to a winner, the US dollar is likely to lose ground as a safe haven hedge.

Technical Comments

1. Price is supported at the rising 20EMA in a bullish trend.

2. MACD is bullish and the fast line is turning up from the zero line.

Key Levels


Technical Overview

USD/JPY – Price failed to hold above 105.00 and has declined to 104.15. Stochastic has come down to near the oversold zone but MACD has turned bearish. 20EMA is bearish and pointing down with a steep slope which is a hint of a strong bearish price trend. If price fails to move below 104.10, we are likely to stay in a sideways range and price is likely to make another attempt at 104.90.

Support 104.20103.90103.60
Resistance 104.50104.80105.05

EUR/USD – Price broke above 1.1680 yesterday and is now at 1.1740. We think the rally can continue towards the previous high of 1.1790. Stochastic is moving higher towards the overbought zone and MACD has turned bullish and is also moving higher. 20EMA is also bullish and is pointing higher with a steep slope, hinting of a strong bullish trend. We favour a move to 1.1790.

Support 1.17101.16751.1640
Resistance 1.17601.17951.1830

GBP/USD – Price failed to take advantage of a weaker US dollar on worries of negative rates. However, MACD is still in the bullish zone and Stochastic is close to the oversold extreme. 20EMA is flat and the downtrend from last night may not extend much lower form current level. If price can hold above 1.2875, we may see another rally to test the previous high of 1.3070.

Support 1.29401.29001.2860
Resistance 1.29751.30251.3060

XAU/USD – Our view remains the same as yesterday. We see price supported above $1882 and a continuation of this rally to $1931 in the next few days. Price is currently at $1906 and a break above $1916 will point towards $1931. MACD is bullish and Stochastic has a bullish crossover and is moving higher. 20EMA is also moving higher. These indicators are hinting of a bullish price trend ahead.

Support 1902.301889.051882.30
Resistance 1911.201924.201931.20

USD/CAD – We had a buy call on this pair yesterday but our view was wrong. We suffered a 45 pips loss as a result. Price has declined near to the previous low of 1.3095 and MACD has warning with a divergence of a possible low. Stochastic is also near to the oversold zone but 20EMA is still bearish and with a steep slope. If price is unable to move above 1.3190, we may see another decline for today.

Support 1.31201.30901.3045
Resistance 1.31651.32001.3235

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