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EUR/USD Bulls Shy Away from Key Resistance Level, What Moves Markets?

EUR/USD Bulls Shy Away from Key Resistance Level, What Moves Markets?

Equities rally on US elections poll’s and the Federal Reserve members express concerns. What is the outlook of FX, and commodities markets today?

Equities

On Wednesday global stocks rallied on hopes of a Democratic victory in the US elections could mean more federal spending to boost the economy, as the recent polls have favored the Democratic candidate Joe Biden against President Trump.


The Federal reserve minutes reflected member’s concerns about the delay in passing the new fiscal spending bill and hinted that the central bank may consider increasing its current bond purchasing program. Members have agreed that the US economy’s recovery would be dependent on the coronavirus course, and according to the Fed member Evans, investors still believe that the Fed would not change the interest rate until reaching full employment and inflation seem to overshoot its 2.0% target which may take years.

Stock Market

Change %

S&P 500

+2.0%

Dow Jones

+2.1%

NASDQ

+2.1%

Japan 225

+0.9%

DAX 30

+1.3%

FTSE 100

+0.8 %

CAC 40

+0.9%


Currencies

The greenback slipped on Wednesday by 0.2% yet the bullish uptrend still intact while above the neckline of the inverted head and shoulders pattern located on Thursday at 93.33. Therefore, a daily close above 94.04 could send the US Dollar index towards 95.24.

On the other hand, the EUR/USD rallied on Wednesday however, remained below the 50-day moving average highlighting the bull's weakness. A close below 1.1713 could send the pair towards 1.1621.

The GBP/USD has benefited from the US dollar retreat and tested this week the 1.3000 level for the first time in three weeks. However, the EU/UK negotiations updates next week could weigh heavily on the British pound as the UK may pull out of the talks if there was no clear deal in sight.

Commodities

The oil price rallied on Wednesday as US inventories numbers showed a big drop from 1.78 M to 0.47M. However, the surge in COVID-19 infections in New York (three months high) kept the rally in check. The Brent oil remained around $42.50 yet a failure to close above that level could reverse the price direction towards $39.60 while the US Crude may fall towards $38.37 while below the 50-day moving average.

The Gold price failed to close above $1,921 and pointed lower this week. The precious metal could resume bearish price action if closes below $1,861.

Looking Ahead

The ECB monetary policy meeting accounts will be released at 12:30 PM (GMT) and by 1:30 PM eyes will be on the US initial jobless claims, then the Fed member Barkin will deliver a speech at 7:30 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.