Major US indices opened mixed

NASDAQ trades above and below unchanged

The major US indices are opening with mixed results. The NASDAQ is above and below the unchange levels. The Dow is leading the way to the downside with the S&P also lower.

A snapshot of the current market shows

  • S&P index -15.48 points or -0.43% at 3557.52

  • NASDAQ index +25 points or 0.22% at 11812

  • Dow -140 points or -0.46% at 29261.10

In other markets:

  • Spot gold is trading up $10.50 or 0.56% $1876.

  • Spot silver is down $0.01 or -0.07% at $24.26

  • WTI crude oil futures are up $0.34 or 0.82% $41.79 before the DOE inventory data later today

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GBPUSD down for the 2nd consecutive day

Moves below the the 100 hour moving average

The GBPUSD has moved down for the 2nd consecutive day. The pair reached the highest level since September 3 yesterday, only to break below a upward sloping trendline and run toward the rising 100 hour moving average.   Early support buyers came in against that moving average level, but in the Asian session the moving average was broken and the price has remained below that level since that time.

Moves below the the 100 hour moving average_

The low for the day did find support buyers near the 38.2% retracement of the move up from the November low. That comes in at 1.31351. The low for the day reach 1.31313 before moving back higher.  The traders are now looking toward a topside channel trendline at 1.3186 followed by the flattening 100 hour moving average 1.31984. Sellers should lean against those levels. However a move back above the 100 hour moving average would likely trigger stops.

If resistance holds, getting below the 30.2% retracement and then the swing lows for the week between 1.3117-1.31217, and the 200 hour moving average at 1.31031 (green line in the chart above), would be high as the next key targets.

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EURUSD trades between 100 hour MA above and 200 hour MA/50% below

Technical levels define the extremes (for now)

The EURUSD traded at a low of 1.1759 in the late Asian/early European session.  That low was able to extend below the 200 hour MA (green line) but stalled just below the 50% retracement at 1.17606.  Buyers entered, and the price moved back to the upside.  

Technical levels define the extremes (for now)

The London morning session high reached 1.18226. That was just short of the 100 hour MA  (currently at 1.18245).  

The current price is trading at 1.1796 between those levels. 

The extremes - as defined by the technicals - have been defined.  For now, those extremes have held support and resistance. At some point there will be a break. 

Drilling to the 5 minutes chart, the pair corrected toward the rising 100 bar MA and the 50% and found support buyers on the first look. That gives the buyers a bit of an edge in the early going.  If the price moves below that area, the bias intraday would tilt more to the downside.  The buyers are more in control now. 

The EURUSD on the 5 minute chart

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EURUSD lower but runs into 200 hour MA/50% retracement

The 100 hour MA stalled the rally in the Asian session

The EURUSD is using the 100/200 hour MAs as resistance and support today. In the Asian session, the price moved up to test the 100 hour MA. When buyers could not lift the price above that level, the sellers leaned. The buyers turned to sellers and the price fell.  

The 100 hour MA stalled the rally in the Asian session

The fall took the price down to test the 200 hour MA at 1.1756 (the low reached 1.17532).  Also near the MA is the 50% retracement. Both those technical tools when they line up tend to give traders a cause for pause. So far they have but the corrective move has also been modest.  The level should be a barometer for buyers and sellers now. 

If the price is to bounce, getting above the low from yesterday at 1.1779 is step one. After that the 1.17846 to 1.17904 level will be the next target followed by 1.1800 area.   

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EUR/USD falls to fresh lows on the day as sellers try to seize near-term control

EUR/USD falls to test its 200-hour moving average, can sellers break through?

EUR/USD H1 11-11

The pair has been on a steady decline in trading this week, since meeting resistance from 1.1900 as we see sellers slowly take out one key near-term level after another.

The latest push lower now sees price action fall below the 50.0 retracement level @ 1.1762 and the 200-hour MA (blue line) @ 1.1761 to a session low of 1.1756.

Keep below that and sellers will establish a more bearish near-term bias. That will open up a potential drop towards 1.1700 next. But stay above, and the bias remains more neutral.

In the bigger picture, the pair continues to sit within a broader range of 1.1600 and 1.1900 as it awaits a fresh catalyst for a push to break outside of that since late August.

For today though, the downside pressure in EUR/GBP isn't quite helping as we see the pair test its September lows around 0.8866-74 currently.

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Pound slips as Brexit deal "deadline" continues to shift ahead of transition period end

GBP/USD eases to a session low of 1.3240 after a tiny whipsaw from highs close to the 1.3300 level

GBP/USD H1 11-11

The 60 pips drop isn't really much of a game-changer from a technical perspective but it does help out sellers a little with EUR/GBP also managing to stave off a push below its September lows @ 0.8866-74 for the time being at least.

The news that led to the drop was that Brexit negotiators will fail to agree anything in talks this week, thus missing the mid-November "deadline" to finalise a deal.

That said, the source from the report says that a new "real deadline" is now established as being at the end of next week. Again, there is a sense of urgency to get things done within the next week so that any deal can be ratified before being implemented.

As much as the pound may be jittery over how talks are going ahead of the end of the transition period i.e. 31 December, I reckon if there is any semblance of a deal or compromise before the actual "deadline" itself, we could see that being extended again.

I mean, we've been heading down the same path from a 30 June "deadline" to a mid-October "deadline" and then a mid-November "deadline" and now this.

As such, I would argue that the timeline shift from mid-November to late November doesn't change things all too much. But it at least tells us that negotiations in London this week are still going nowhere for the most part.

So, unless the market wants to focus on that - which it has been largely ignoring - then this shouldn't be a major turning point for the pound just yet.

However, it does draw the focus and risks back to the currency and that may temper with gains or lead to some profit-taking activity in the meantime.

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EUR/USD falls to session low as sellers wrestle back some near-term control

EUR/USD falls below 1.1800 to a session low of 1.1780

EUR/USD H1 10-11

The pair is slipping to fresh lows on the session as we see EUR/GBP also move lower to test 0.8900, past its 200-day moving average @ 0.8920. The euro is struggling to find some footing on the session now after holding above its 100-hour MA (red line) earlier.

The drop below that and 1.1800 now sees sellers wrestle back some near-term control with the bias turning more neutral from being more bullish earlier in the session.

The rejection at 1.1900 yesterday keeps the range between 1.1600 and 1.1900 in play, and that is keeping sellers poised after the failure on buyers' part to firmly break/close above the 1.1900 level.

Elsewhere, the dollar is also keeping steadier with USD/CHF rising to a session high of 0.9175 with USD/JPY also erasing earlier losses to 105.45.

AUD/USD is also seen a touch weaker at 0.7270 with USD/CAD keeping a little higher at 1.3035, staying away from the 1.3000 handle still for now.

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EUR/USD keeps a little higher as buyers retain near-term bias after failure to firmly break 1.1900

EUR/USD keeps above its 100-hour moving average in trading today

EUR/USD H1 10-11

The market is keeping more quiet with the dollar a touch weaker on the day so far. But the moves aren't stretching the boundaries as we saw yesterday - except for cable - with EUR/USD having retraced towards 1.1800 overnight after a test of 1.1900.

Sellers defended the topside level before shoving the pair down back towards its 100-hour MA (red line), where buyers are keeping up a defense for now.

Stay above that and the near-term bias remains more bullish. Break below that and preferably below the 1.1800 level, the near-term bias turns more neutral instead.

As things stand, buyers have more work to do in order to crack above the 1.1900 level. Only a firm break/close above that will there be further momentum to potentially test 1.2000.

But amid a tricky virus backdrop across Europe and the ECB set to ease further next month, while also possibly verbally intervening if needed, euro gains may be a little hard to come by unless the dollar is seen weakening materially.

Amid the longer-term view that the dollar is likely to weaken further on the improving risk backdrop over time and prolonged Fed easing, the path of least resistance for EUR/USD should be higher but not without its short-term fluctuations.

The 1.1600 to 1.1900 range is still intact and remains in play for now.

So, until we get past that and 1.2000 (although this may be a more gradual process), buyers will have to be more patient and play the current levels by reading the tea leaves.

In the bigger picture of things:

EUR/USD M1 10-11

The pair is very much contesting with the 100-month MA (red line), seen @ 1.1850 currently, so that will be a key technical level to keep an eye out for over the coming weeks.

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Cable climbs to fresh two-month high above 1.3200

GBP/USD pulls ahead to post its highest level since 7 September

GBP/USD D1 10-11

The pound is gaining some ground to start the session, rising to its highest levels in two months against the dollar as cable moves back above 1.3200.

The pair has been knocking on the figure level since trading yesterday but buyers are now making a play to establish further upside momentum in the pair.

Of note, daily price action also sees the pair move above the 61.8 retracement level @ 1.3174 and the 21 October high @ 1.3177.

There is some minor resistance from previous swing highs just above 1.3200 but keep a break above the figure level and buyers have a good platform to go potentially chase gains towards the 1.3400 level next.

That said, there are a couple of risk factors to look out for this week with Brexit being a key one to watch for the pound itself over the next few days.

The latest development is that the Lords rejected the government's clauses on the Internal Market Bill yesterday, so that may keep the peace in negotiations this week.

But the government has insisted that they will retable the same clauses again in the Commons, so that is unlikely to change how things are playing out in the big picture.

As such, it will still boil down to how talks progress in London this week. The same key outstanding issues are hindering any real breakthrough, so let's see if that changes.

Just be mindful that there needs to be some form of deal agreed upon by mid-November at the latest in order to have sufficient time for that to be ratified and implemented ahead of the 31 December transition period deadline.

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Nomura recommends going long AUD/JPY on better risk backdrop, RBA downside factored in

Nomura strategists are recommending investors to go long AUD/JPY

AUD/JPY D1 10-11

The argument behind their view is that US election risks are abating and the risk outlook is improving, with "reduced risk of unpredictable US tariff actions".

That should bode well for Chinese assets, which given historical correlations, should benefit the Australian dollar as well. Adding that RBA easing and QE are fully "in the price".

The firm also says that the latest developments from yesterday i.e. vaccine story could propel further gains in risk assets and reduces near-term downside risk for USD/JPY.

Further noting that Japan's GPIF has scope to buy more foreign bonds if yen-crosses dip, and this could help to limit the downside in AUD/JPY as well.

Looking at the chart, the pair has broken back above its 100-day MA (red line) in trading yesterday and that sees buyers establish a more bullish bias.

However, there is some familiar resistance just below the 77.00 level around 76.75-87 from the highs seen back in June and July this year. Further resistance is then seen closer towards the year's high @ 78.46.

Nomura is recommending a trade via a two-month bullish call spread - strikes @ 78.25 and 79.75 respectively. Hence, they are seeing potential for the upside to extend towards 79.75 on a break above 78.25 (the highest close this year was @ 78.12).

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