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Market review 06 November 2020

06 November 2020

U.S Politics and Nonfarm Payrolls and Brexit Keep the Dollar and the Pound in Focus

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar.

Key stats include German industrial production figures for September and 3rd quarter nonfarm payrolls from France.

Following better than expected survey-based data from Germany for October, the markets will be looking for a pickup in industrial production.

Away from the economic calendar, Brexit, COVID-19, and U.S politics will remain key drivers.

At the time of writing, the EUR was down by 0.02% to $1.1824.

For the Pound

It’s a quiet day ahead on the economic calendar. October house price figures are due out later today that will likely have a muted impact on the Pound.

Expect updates on Brexit and U.S politics to be the key drivers, as Englan goes back into lockdown.

At the time of writing, the Pound was down by 0.11% to $1.3133.

For the USD

It’s a busy day ahead for the U.S Dollar. Key stats include October’s nonfarm payrolls and the unemployment rate.

Wage growth, also due out, will likely have a muted impact on the day.

Away from the economic calendar, U.S politics will continue to influence.

At the time of writing, the Dollar Spot Index was up by 0.12% to 92.632.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Next Decision: Chase Higher or Play for Dip?

The minor range is 12249.00 to 10942.25. Its retracement zone at 11749.75 to 11595.50 is support. Trading on the strong side of this area has put the index in a bullish position.

Short-Term Outlook

Given the current upside momentum, we’re looking for the rally to challenge the pair of main tops at 12249.00 and 12444.75. We could see profit-taking come in on the first test of this area, which would be considered normal.

At some point investors are going to want to chase this market higher. In this case they will be looking to buy a pullback into a value area, so keep an eye on the 50% to 61.8% retracement areas for support and the next buying opportunity.

Holding above the Fibonacci level at 11749.75 will be the first sign of strength.

Trading between 11749.75 and 11595.50 will indicate investor indecision.

A break under 11595.50 will indicate the selling is getting stronger. This should lead to test of at least 50% of the entire rally from 10942.25.

We have a bias to the upside because of the momentum. We’ll buy strength with tight stops, and buy any weakness into a retracement zone value area.

EUR/USD now looks to 1.1915 – UOB

24-hour view: “Our view for EUR to strengthen yesterday was correct but our expectation that ‘1.1855 is not expected to come into the picture’ was not as EUR rose to a high of 1.1859. The surge in momentum appears to be overdone but with no sign of weakness just yet, EUR could continue to advance. That said, October’s peak at 1.1880 is a solid resistance and while EUR could break this level, it is unlikely able to maintain a foothold above it. Next resistance is at 1.1915. Support is at 1.1785 but only a break of 1.1760 would indicate the current upward pressure has eased.”

Next 1-3 weeks: “Two days ago (04 Nov, spot at 1.1670), we highlighted that ‘further EUR strength is not ruled out but it is too soon to expect a move towards last month’s top at 1.1880’. We added, ‘1.1855 is already quite a strong level’. The rapid pace (and ease) by which EUR cracked 1.1850 yesterday (05 Nov) came as a surprise. Note that EUR closed higher by a whopping +0.90% (1.1827). Further gains are not ruled out but it appears too early to call the current advance as the start of the move towards the year-to-date high at 1.2011. Only a daily closing above 1.1915 would indicate that EUR is ready for 1.2011. Meanwhile, the outlook for EUR is positive as long as it does not move below 1.1710 (‘strong support’ level). On a shorter-term note, 1.1760 is already a strong support level.”

USD/CHF Price Analysis: Wobbles inside falling wedge on 1H

Having marked a downtick below October 21 bottom to test the September-start low, USD/CHF wavers near 0.9038, down 0.07% intraday, while heading into Friday’s European open.

In doing so, the Swiss pair keeps the two-day-long falling wedge chart formation on the hourly (1H) chart amid the oversold RSI conditions.

As a result, USD/CHF buyers look to confirm the bullish chart play with a sustained break above 0.9055 immediate resistance, which in turn can probe a 200-hour EMA level of 0.9115.

It should, however, be noted that a sustained rise past-0.9115 will not hesitate to challenge the monthly peak surrounding 0.9210.

On the contrary, the formation’s support line around 0.9020 and the 0.9000 threshold can keep pleasing the USD/CHF bears if managed to ignore the RSI conditions.

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