EUR/USD Faces Pressure Below 1.0900 as U.S. Election Looms

 

EUR/USD

Prediction: Decrease  

Fundamental Analysis:

EUR/USD has experienced a sharp decline and is now trading below the 1.0900 mark, with attention shifting toward the U.S. presidential election. In Georgia, a key swing state, exit polls show a slight lead for Trump. After a brief gain on Monday, EUR/USD rose on Tuesday, surpassing 1.0930 and reaching three-week highs, extending its positive momentum. The pair also broke through the key 200-day Simple Moving Average (SMA) near 1.0870, signaling a potential recovery.

Meanwhile, the U.S. Dollar is weakening, causing the U.S. Dollar Index (DXY) to fall to mid-103.00s, approaching three-week lows, as U.S. and German bond yields rise. A 25-basis-point rate cut by the Federal Reserve is anticipated this week, while the European Central Bank (ECB) recently lowered its rate to 3.25%. Market sentiment leans towards a Trump victory, which could further strengthen the Dollar. Speculative net shorts on the euro have increased, surpassing 50K contracts.  

Technical Analysis:

EUR/USD could rise further, potentially reaching a November high of 1.0934, followed by resistance at 1.0940 (100-day SMA) and 1.1008 (55-day SMA). Beyond that, the 2024 high of 1.1214 and the 2023 peak at 1.1275 may come into play. On the downside, support levels are at the October low of 1.0760, followed by 1.0700 and the June low of 1.0666. If EUR/USD breaks above the 200-day SMA, the outlook will improve. The four-hour chart suggests that a rebound may continue, with resistance at 1.0925, followed by 1.0954 and 1.0996. Support lies at the 100-SMA and 55-SMA levels at 1.0846 and 1.0838, respectively, with additional support at 1.0830. The relative strength index (RSI) has moved above 64.

 

 

XAU/USD

Prediction: Increase  

Fundamental Analysis:  

Gold prices have slipped in early Asian trading as the U.S. presidential election nears its resolution. Exit polls from Georgia show Trump with a slight lead over Kamala Harris. Spot Gold gained on Tuesday as traders sold the U.S. Dollar, influenced by positive global equity markets and the election's impending outcome. While the election is happening today, with polls closing at 19:00 EST, final results may take days. Attention will focus on swing states like Georgia, North Carolina, and Pennsylvania.

Meanwhile, the Federal Reserve is expected to announce a 25-basis-point rate cut on Thursday, though the election results may impact this decision. Speculation around a Trump victory could reignite inflation pressures, potentially prompting the Fed to reassess its easing strategy.  

Technical Analysis:  

Gold is consolidating around the $2,740 level ahead of key events. The daily chart shows a lack of directional strength for three consecutive days, but gold remains above all moving averages. The bullish 20-SMA is acting as dynamic support around $2,710, while the 100 and 200 SMAs are rising, though further below.

Technical indicators are still positive but slightly declining, suggesting no strong signal for a drop. On the 4-hour chart, there is some downside risk, with XAU/USD below a bearish 20-SMA and supported by the bullish 100-SMA at $2,724. Technical indicators have dipped below their midlines, indicating that sellers are in control for the moment.

 

 

GBP/USD

Prediction: Decrease  

Fundamental Analysis:  

GBP/USD gained on Tuesday, pushing above the 1.3000 level as markets prepare for a potentially chaotic U.S. presidential election outcome. The pair started the week with a bullish gap but retreated slightly on Monday before moving higher on Tuesday. The U.S. Dollar faced significant selling pressure early Monday, especially with betting sites indicating Kamala Harris might win. However, renewed demand for the Dollar emerged later in the day as Wall Street's bearish sentiment took hold.

On Tuesday, focus will shift to the ISM Services PMI report for October, but investors will mainly monitor exit polls and results from key swing states. Polls show a tight race, with Harris narrowing the gap in several swing states, but Trump still leads in Arizona and North Carolina.  

Technical Analysis:  

The Relative Strength Index (RSI) on the 4-hour chart remains above 50, but GBP/USD has not yet converted the 100-day SMA at 1.2980 into support, signaling buyer hesitation. On the downside, the first support level is at 1.2940, followed by 1.2900. If GBP/USD stabilizes above 1.2980, the next resistance could be at 1.3000, followed by 1.3040.

 

 

USD/JPY

Prediction: Increase  

Fundamental Analysis:  

USD/JPY continues to climb, approaching 154.00 as early election results show Trump may return to office. The U.S. Dollar is recovering broadly, and stock markets are also rising, though upcoming polls could alter the situation. The movement of USD/JPY will depend on market expectations for the U.S. election, with exit polls heavily influencing sentiment. Analysts suggest that a Republican victory could lead to a significant rally in the Dollar, similar to past effects on the Eurozone and China.

The U.S. Dollar is currently weakening, with the Dollar Index at 103.70, as investors await the Federal Reserve's monetary policy announcement on Thursday. The Fed is expected to cut rates by 25 basis points to 4.50%-4.75%. Meanwhile, investors are awaiting the Bank of Japan's meeting minutes, where rates were held at 0.25%.  

Technical Analysis:  

If USD/JPY holds above the 153.00 level, it could rise to the 153.35-153.40 zone, possibly reaching 153.85-153.90, which is a three-month high. Continued buying could push the pair towards the 154.60-154.70 resistance before targeting the psychological level of 155.00. On the downside, support is at 152.30, followed by 152.00 and the Asian session low around 151.30-151.25. A break below 151.00 would shift the outlook to bearish, targeting 150.25 at the 100-day SMA and below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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