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Markets are continuing to look through the political uncertainty across the pond as measures of volatility collapse while investors find solace in trusty growth stocks that will outperform. The odds for a Trump second term have narrowed as Joe Biden won Wisconsin and Michigan overnight, two key swing states which puts him within six electoral votes of the Oval Office.
All the major US stock markets closed firmly in positive territory with the tech-heavy Nasdaq leading the way, after gaining as much as 3.5% and futures continuing to point up. Asian markets are similarly upbeat with the Nikkei climbing 1.3% and taking the benchmark above 24,000 for the first time since January.
Investors have returned to the top performing parts of the market – namely the Tech megacaps – as the prospect of lower stimulus spending and US growth draws ever closer. Results out of Nevada later today could prove the tipping point for the election result, with the state due to report by noon time in New York.
As we said yesterday, the reflation trade – a big Democratic win driving a bumper stimulus package to fuel growth, and potentially inflation – is being unwound with bond selling driving yields aggressively lower.
The US 10-year yield has dropped over 20 basis points over the last 24 hours, a huge move, as markets look towards a Biden victory but divided Congress. There will be no tax hikes, no infrastructure spending and no green energy spending as the Democrat’s domestic policy becomes a lame duck.
Dollar sinking, FOMC tonight
King Dollar sits at the bottom of the major currency pile this week with traders re-pricing a Biden presidency and pushing EUR/USD to 1.1740. Markets will focus on the Fed meeting later today and its assessment on the economy, given the new corona wave and for any guidance on future action, especially with regard to bond buying.
EUR/USD whipsawed around yesterday but any dollar gains were soon blocked, and the pair returned within its established range. The 1.1612 level proved to be strong support and the 50-day Moving Average looms above around 1.1775 as first resistance, coinciding with yesterday’s high.
Euro/US Dollar Exchange Rate
Today’s Forex Rates
EUR/USD FX Polls
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 1.16.
The projected upper bound is: 1.19.
The projected lower bound is: 1.16.
The projected closing price is: 1.18.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 73.8703. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.88. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 56 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -9. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.005 at 1.177. Volume was 51% below average (consolidating) and Bollinger Bands were 17% narrower than normal.
Open High Low Close Volume 1.172 1.177 1.171 1.177 49,954
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 1.17 1.18 1.13 Volatility: 7 7 10 Volume: 101,770 101,583 107,087
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX EUR= is currently 3.9% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of EUR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 3 periods.