US Election ALMOST Over: DXY, AUD/USD, EUR/GBP

If one is looking for volatility to trade, the US Dollar has provided plenty lately

FOREX 3

Although many of the pollsters were wrong, or inaccurate, regarding some of the Presidential state outcomes, it appears that Biden may end of winning after all.  But Trump has already laid the groundwork for contesting the results.  The big question now is: If Biden wins, will the markets care about Trump’s court drama or will it just be a side show?  We don’t know for sure, but we do know price action!

DXY

The US Dollar Index is moving lower.  A Biden victory would mean more stimulus, more supply of US  dollars in the system, and therefore, a lower price. After a break higher out of the descending triangle, price gapped open lower last night as the results began coming in and tested the downward sloping trendline of the triangle. However, price bounced as it appeared Trump may win.  Price has since moved lower, but is still respecting the trendline.  First support is yesterday’s lows and the intersecting downward trendline near 93.00.  Below that is horizontal support near 92.50.  Resistance is at overnight highs near 94.30.

Source: Tradingview, City Index

AUD/USD

AUD/USD is currently trading at a -.85 correlation to the US Dollar Index (DXY).  A correlation coefficient of -1.00 means that the 2 instruments are trading on a 1 for 1 opposite basis.  So, a tick higher in DXY would mean a tick lower in AUD/USD.  Therefore,  Aussie traders may want to watch the DXY to give them for confidence in their decision on entering and exiting positions.  Resistance above is at overnight highs near .7220 and then horizontal resistance near .7250.  Support is at overnight lows near .7050.

Source: Tradingview, City Index

EUR/GBP

If one is searching for a trade that is away from all the drama of the US, that trader can turn attention to back to Brexit!  EUR/GBP is currently up against trendline resistance, horizontal resistance and the previous 61.8% Fibonacci retracement form the lows of September 3rd to the highs of September 11th (previous support acts as resistance), near .9025.  There is some short-term support below near .8990 and the overnight lows just below .8950.  If price drops below, it can quickly accelerate to the September lows near .8860.  Resistance is at .9030, then the downward sloping trendline from triangle on the 240-minute chart near .9075.

Source: Tradingview, City Index

If one is looking for volatility to trade, the US Dollar has provided plenty of it over the last 18 hours.  However, there with an update due today on Brexit negotiations, so there is potential for volatility there as well!


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.