USD/JPY extends gains. Nears election night high and 55-dma

What a reversal

USDJPY extends gains

Equities are coming off the boil a tad but USD/JPY isn't. Rising Treasury yields and general optimism is lending a broad bid in the yen crosses. 

This pair is now nearing some key levels, with the election-night spike just ahead at 105.34 and the 55-dma at precisely the same level.

There are some other notable levels extending up through 106.00 but the important thing to note here is the huge bullish candle and the three-candle reversal. Of course, we're still 7 hours from the close so that will be key.



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USDCAD trades at lowest level since October 2018

Oil price rise helping

The USDCAD has pushed sharply lower and in the process has moved below the 2020 (and end of 2019 low) at 1.29508. The price has moved to a low of 1.29274.  The price is trading at the lowest level since October 2018. The October 16, 2018 low reached 1.2915. That is the next target on the daily chart. The price of oil has surged $3.86 or 10.34% to $40.98.  The vaccine news is pushing funds into the risk/commodity pairs including the USDCAD, AUDUSD and the NZDUSD.  

Oil price rise helping



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GBPUSD moves into a swing area on the daily chart

GBPUSD trades to highest level since September 7th

The GBPUSD has chopped down and back up and near the highs, the pair has moved into a swing area on the daily chart between 1.3176-1.32116 (see red circles on the daily chart below).  The current price is at 1.3190. If the pair can stay in the area and move above, that would be more bullish with 1.3266 to 1.32833 as the next target area (see green numbered circles). The price is trading at the highest level since September 7th. 

GBPUSD trades to highest level since September 7th

The daily chart may seem orderly, but the hourly chart below shows a lot of choppy price action.  Friday's trade moved up to test the October 21 high (at 1.3176) but backed off. The initial run higher today, extended up toward the 1.3200 level. The high reached 1.31983 before reversing lower. The run to the downside stalled near the swing high from October 23rd at 1.31217 and the buying restarted.   

The current price is back above the 1.3176 level (at 1.3192 now).  That is close risk.  A lower risk level would be 1.31559 which was a high area on Thursday and Friday before the Non-farm payroll volatility.  That will be another level to think as a barometer for buyers and sellers going forward (stay above more bullish, move below is more bearish).

GBPUSD hourly
Brexit news continues to be a story and can help contribute to volatile price action as the market moves from story to story.  

Other stories include the impact of Covid but that is being helped by the vaccine news today but will be a country by country story and the world can't all get vaccinated at the same time.  



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USD/JPY climbs by over 1% as risk rally sinks the yen

USD/JPY moves back above 104.00 to near 104.50 currently

USD/JPY H1 09-11

The yen is proving to be the biggest loser as the market continues to party from the election and vaccine euphoria in the past half-hour. The dollar itself is weak across the board but USD/JPY has climbed by over 1% during the time.

The pair has broken back above 104.00 from around 103.70 earlier and is now trading closer towards 104.50 upon breaking its key hourly moving averages.

Hence, buyers are now back in near-term control. So much for the potential for an immediate drag towards 102.00 post-election.

The key thing to watch for the pair as risk remains the main narrative is Treasury yields.

10-year yields have shot up by over 11 bps to near 0.93% and that is lifting yen pairs across the board as we look towards North American trading.



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USDJPY gets close to its next target level

Low for the day reached 103.17. March 12, 2020 low at 103.066

The USDJPY is lower on the day and in the process got closer to the March 12, 2020 swing low at 103.066. The low price for the day reach 103.170 so far. The current price is off that low at 103.395. Buyers leaned against the low and in doing so took some minor control. At least they are in the ballgame as long as the price can remain above the 103.066 level.

Yesterday, the price on the daily chart fell below the swing lows going back to July between 103.995 and 104.18. Ultimately, if the buyers are to take back more control, getting above that level on the daily chart would be needed.

Low for the day reached 103.17. March 12, 2020 low at 103.066_
Drilling to the hourly chart below, the price is trading below a topside trend line and above a bottom side trendline. At the low today, I can't say that it scraped along the lower trend line but it got close. The pair is testing a swing area from yesterday's trade and today's corrective high between 103.563 and 103.604. The topside trend line cuts across near the high of that swing area. Get above and there could be some more upside probing in the corrective move higher.

The USDCAD on the hourly chart
Overall, there is some reason to expect a corrective bounce. The USDJPY pair got close to a swing low target.  Early buyers leaned against that target. Having said that, if the buyers are to take more control, they need to start taking back more technical levels on the topside. On the hourly chart, that starts with getting above the 103.563 to 103.604. Failure to do that and the sellers still remain in control. 



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EURUSD trades to the highest level since mid-September

Takes the price above the October high at 1.18802

The EURUSD has moved to a new session high and in the process has moved further away from the October 21 high price of 1.18802. The pair is trading at the highest level since September 15 when the price high reached 1.1900. The September 10 high reached 1.19165. The range between 1.1880 and 1.19165 is the next upside hurdle to get above for the buyers.   Sellers may look to lean with stops above.   

On a move above, the high price from September 1 stalled at 1.20105. Those are the next targets from the daily chart below.

Takes the price above the October high at 1.1880 2

Drilling to the hourly chart, close support would be eyed against the 1.18642 1.18695 area. That corresponds with a swing hi from October 21 and swing highs from October 22 and October 23 (see red numbered circles). In trading today, the price moved above that level came down and tested near it (the low take reached 1.18615) and based against it before moving to the new session highs.

EURUSD on the hourly chart.



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EUR/USD keeps higher as the dollar trades more mixed so far on the session

EUR/USD keeps at the highs near 1.1850 at the moment

EUR/USD D1 06-11

The dollar is trading rather mixed in the European morning, keeping a slight advance against the pound, aussie and loonie but trading lower against the euro, franc and kiwi.

EUR/USD is keeping near session highs at 1.1850 currently as buyers are trying to keep a push above the trendline resistance seen @ 1.1838.

But the 21 October high @ 1.1881 offers some added resistance on the way up and those will be the two key levels to watch ahead of the close later today.

The US election is starting to yield a clearer result with Biden now taking the lead in Georgia, but there's still an off chance that Trump could pull it all back; although that is now viewed as an unlikely scenario.

As for the dollar, the flows today could possibly tie back to how risk assets perform later in view of the election result ahead of the weekend.

The market is getting a first dose of that with S&P 500 futures falling to a session low, down by 1% after the news on Biden taking the lead in Georgia.

The pullback could still be viewed as a retracement to the week's gains but as the relief in the past few days fade, could we be staring down a possibility where the market primes itself for buying the rumour and then selling the fact?

If so, the hurt in stocks/risk could keep the dollar somewhat supported and EUR/USD sellers could lean on the key resistance levels above to drive some momentum lower.



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GBP/USD pares slight drop earlier, little changed on the session now

GBP/USD keeps closer to 1.3150 currently

GBP/USD H1 06-11

The dollar is in a state of flux to start the day but overall, the changes across major currency pairs aren't anything major. Cable was consolidating around 1.3120-30 earlier but has now moved a little higher to 1.3150 as the dollar eases slightly.

However, the move isn't amounting to much with resistance still seen closer to the 61.9 retracement level @ 1.3174 with the 21 October high @ 1.3177 also offering an added technical challenge for buyers currently.

To the downside, sellers are struggling to gather any real momentum as the dollar continues to struggle during the week with 1.3100 still holding. Further support is also seen closer to 1.3000 with the key hourly moving averages resting nearby the figure level.

For now, Brexit news is taking a backseat as the market is largely more focused on the dollar side of the equation. The greenback continues to be pushed around by the election/risk focus but so far, stocks are a little more guarded in trading today.

European equities opened with little change but the DAX is now down 0.4% as we see US futures also tip back a little lower, with S&P 500 futures down 0.4% after closing in on flat levels about half an hour ago.

The argument here is that the dollar is being stretched - as we are seeing with EUR/USD as well - but not exactly breaking down completely just yet after the moves yesterday.

The next few sessions will go some way in deciding if buyers have enough momentum to break through the key resistance levels pointed out above, or if the greenback can hang on to keep price action more "competitive" as the election relief fades.



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European equities start the day in a better mood, in search of fifth day of gains

Tech stocks lead the charge, buoyed by the advance in Nasdaq futures

  • Eurostoxx +0.7%

  • Germany DAX +1.0%

  • France CAC 40 +0.8%

  • UK FTSE +0.5%

  • Spain IBEX +0.7%

The mood here largely reflects the optimism seen in Wall Street yesterday, with US futures surging once again today. S&P 500 futures are up 1.4% while Nasdaq futures are up 2.1% as we get the session underway.

After the meltdown in the first-half of last week, European indices are bouncing back rather strongly over the past five sessions:

DAX

The ECB's pledge from last week to do more in December is part and parcel of that but it is tough to ignore the ongoing pessimism surrounding the virus situation in Europe. The big fear is that if tighter restrictions will have to be prolonged into the new year.



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Dollar a touch softer to start the session but there are still question marks abound

The dollar is seen slipping further to start the session

EUR/USD H1 05-11

The greenback rallied strongly when election results started pouring in and we were on course for a tighter race, with Trump standing a realistic chance to win the White House.

Of course, things have changed a lot since then with Biden now inching closer to victory.

But since the surge higher in the dollar, buyers have failed to maintain gains and we are slowly seeing other major currencies claw back the move for the most part.

EUR/USD is now keeping a little higher on the session, trading up to 1.1740 levels upon breaking its 200-hour MA (blue line) earlier. Hence, buyers are now in near-term control of the pair though there is some resistance around 1.1742 for the time being.

AUD/USD has also pared earlier losses moving up from 0.7165 to 0.7185. Meanwhile, USD/CAD is also moving back towards the lows this week seen closer to 1.3000-10.

The dollar's softness comes on the back of a continued rally in the equities space with S&P 500 futures now up by 1.2% and Nasdaq futures rallying by 2.1%.

While equity investors seem more assured of a risk-on move, the bond market is less so with 10-year Treasury yields down 3.5 bps to 0.727% - lowest in nearly 3 weeks.

The stimulus narrative appears to be what is driving the bond market now but there are still plenty of question marks for the market to deal with as well.

  1. Is the push lower in the dollar largely due to the election result nearing its end-game with Biden looking the favourite now?

  2. Is the market underpricing the potential risks of a divided Congress?

  3. Or is the market happy that this is the "good" kind of gridlock in Washington?

  4. What about the odds of the election result being contested and delayed for longer?

  5. How about the focus on the virus and how it is still eating away at the economy?

  6. Or is the central bank printing press enough to overcome all of this?



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