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EUR/USD Tests a Key Support and Eyes on the US presidential Debate

EUR/USD Tests a Key Support and Eyes on the US presidential Debate

The US Congress could be on track to approve the relief package, what moves the indices, FX, and commodities markets today?

Equities

Asian stock markets rose on Monday however, eyes are focused on the US presidential debate the Coronavirus updates. The Covid-19 sharp rise worldwide and the restrictive measures taken in the UK and elsewhere in Europe weighed significantly on the global economic recovery hopes.

The house speaker Nancy Pelosi was optimistic about agreeing on the relief package. Democrats were asking for a $3.4 trillion deal, while Republicans offered only $1.3 trillion. Both sides could meet halfway and agree on a $2.2 trillion package.

Stock Market

Change %

S&P 500

+1.0%

Dow Jones

+0.8%

NASDQ

+1.6%

Japan 225

+0.5%

DAX 30

-0.8%

FTSE 100

+0.4%

CAC 40

-0.2%


Currencies

The US dollar rose against a basket of currencies and hit an over nine-week high at 94.78. The main reason behind this rally was the risk-off sentiment in the market driven by the surge of Coronavirus cases, as such some traders seemed to close their short positions on the US dollar. The US Dollar index may continue its rally towards 95.50.

On the other hand, the EUR/USD outlook remains negative while below 1.1713. A daily close below 1.1621 could send the pair even lower towards 1.1459.

GBP/USD remained last week under pressure due to a strong US dollar and the uncertainty of achieving a free trade deal. The EU/UK will resume negotiations this week. The technical outlook of Cable remains negative while below 1.2773.

Commodities

The oil price remained under pressure due to lower demand’s expectations and higher supply with Libya rejoins market exporters and putting oil on track to end the month in the red for the first time in six months. Brent oil provided last week a bearish signal after closing below $42.50, therefore the technical outlook remains neutral and a close below $39.60 changes the outlook to negative. On the Other hand, the US Crude could fall towards $38.37 while the technical outlook changes to negative if closes below $36.32.

Gold lost 4.5% of its value last week and closed below $1,861 changing the technical outlook to negative, the precious metal could fall towards $1,796.

Looking Ahead

Markets will tune in the ECB president Lagarde’s speech on Monday at 9:45 PM (GMT) and Fed member Mester’s speech at 2:00 PM.


This information/research prepared by Mahmoud Alkudsi does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.