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5 November 2024,06:58
Daily Market Analysis
5 November 2024, 06:58
Market Summary
Today’s U.S. presidential election is set to be a pivotal event, with polls indicating a tight race that could delay the final vote count and heighten market volatility. Analysts suggest that a Kamala Harris win could bring stability to the dollar, while a Trump re-election may boost its strength. The Japanese Yen is also in focus, as a Trump victory could lead to a Yen slump, given historical trends in safe-haven flows.
In other central bank news, the Reserve Bank of Australia (RBA) is scheduled to announce its interest rate decision today, with markets expecting no change to the current 13-year high rate. This may lend some support to the struggling Aussie dollar.
In commodities, gold is steady at above $2,730, awaiting clarity from the election. Meanwhile, oil prices ticked higher in response to OPEC+’s decision to extend production curbs. Rising tensions in the Middle East, including Iran’s warning of a “crushing response” to adversaries, also lend support to oil prices amid potential regional instability.
Current rate hike bets on 7th November Fed interest rate decision:
Source: CME Fedwatch Tool
0 bps (4.4%) VS -25 bps (95.6%)
(MT4 System Time)
Source: MQL5
Market Movements
DOLLAR_INDX, H4
The Dollar Index held steady as investors awaited further U.S. election results amid a tight race. The diminishing likelihood of a Republican sweep has been noted, with Harris gaining ground in polls and betting markets. Trump’s policies on tariffs and immigration are expected to raise inflation, potentially boosting long-term Treasury yields and the dollar, though they could weaken other currencies. Nonetheless, with election details still unknown, global traders should closely monitor developments to gauge potential market movements.
The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 47, suggesting the index might experience technical correction since the RSI rebounded sharply from oversold territory.
Resistance level: 104.20, 104.60
Support level: 103.80, 103.05
Gold prices remained steady as investors adopted a wait-and-see approach leading up to the U.S. election. Although the long-term outlook for gold remains supportive, underpinned by potential political uncertainties and tariff concerns, some participants opted for profit-taking after recent record highs. The current caution is likely a reflection of the market’s wait-and-see sentiment. As further clarity on election results unfolds, investors are advised to closely monitor developments for potential market-entry signals in gold.
Gold prices are trading flat while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 41, suggesting the commodity might edge lower since the RSI stays below the midline.
Resistance level: 2755.00, 2775.00
Support level: 2735.00, 2720.00
The British Pound remains under pressure below the key 1.3000 level against the dollar, indicating a bearish outlook. While today’s U.S. election might bring some stability to the pair’s price action, traders should be prepared for potential post-election volatility, especially with the close race adding uncertainty to the markets. Additionally, focus is on the Bank of England’s (BoE) rate decision scheduled for Thursday, where a rate cut is anticipated. This could further weigh on Sterling as the BoE may look to support the U.K. economy amid ongoing challenges.
GBP/USD, despite a technical rebound, failed to trade above its previous high, suggesting a bearish bias for the pair. The RSI remains below the 50 level while the MACD is below the zero line, suggesting that the bearish momentum has overwhelmed the pair.
Resistance level: 1.3040, 1.3125
Support level: 1.2940, 1.2815
The EUR/USD pair has established a higher-high and higher-low pattern, signalling a bullish trend for now. This upward movement is largely supported by a weaker dollar, as the euro lacks strong fundamental drivers to bolster its strength independently. With the U.S. election concluding today, the subsequent vote counting process is expected to add volatility to the pair’s price action. Traders should prepare for potential fluctuations as election results influence the market.
The EUR/USD pair is currently trading in an uptrend trajectory, suggesting a bullish bias for the pair. The RSI is hovering at above the 50 level while the MACD continues to edge higher after crossing above the zero line, suggesting the bullish momentum is gaining.
Resistance level: 1.0950, 1.1020
Support level: 1.0813, 1.0736
The USD/JPY pair is trading with a downward trend, and a break below its previous consolidation range at 151.70 would signal further bearish momentum. The U.S. election results are anticipated to directly influence the Japanese yen and, by extension, the pair’s price movement. Additionally, the Bank of Japan (BoJ) meeting minutes, scheduled for release tomorrow, will shed light on the central bank’s policy outlook. Any insights on future monetary policy from the BoJ could significantly impact the yen and potentially reinforce the bearish trend in USD/JPY.
The USD/JPY pair is currently trading in a downtrend channel, suggesting a bearish bias for the pair. The RSI has dropped below the 50 level while the MACD has crossed below the zero line, suggesting the bearish momentum is gaining.
Resistance level: 152.75, 153.85
Support level: 151.70, 150.50
The U.S. equity market saw slight declines, reflecting a cautious sentiment among investors ahead of the election. As polls show a close race between Donald Trump and Kamala Harris, recent gains in the dollar and Treasury yields suggest some investors are positioning for a Trump victory, anticipating more inflationary policies. Analysts indicate that the election outcome could have considerable implications for market performance, particularly affecting Big Tech stocks. The overall risk-off sentiment underscores investor caution amid anticipated post-election volatility.
Nasdaq is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 42, suggesting the index might extend its losses after breakout since the RSI stays below the midline.
Resistance level: 20575.00, 21075.00
Support level: 19860.00, 19120.00
Bitcoin (BTC) is currently trading within a bearish trajectory ahead of the U.S. election but is holding support above its previous downtrend resistance level, indicating the potential for a technical rebound if it approaches this level. Meanwhile, BTC ETFs have recorded net outflows for two consecutive sessions, which is applying downward pressure on BTC prices. This ETF trend and the broader market’s cautious stance ahead of the election may contribute to heightened volatility for BTC in the near term.
BTC is currently trading with excessive bearish momentum; the RSI edged lower to the oversold zone while the MACD continued to slide below the zero line, indicating that the bearish momentum is gaining.
Resistance level: 70880.00, 73660.00
Support level: 67540.00, 64780.00
Oil prices rebounded following OPEC+ announced an extension of its production cut by 2.2 million barrels per day (bpd) through December, as previously planned increases were delayed due to low demand and falling prices. Initially scheduled for a gradual increase of 180,000 bpd in December, OPEC+ opted to maintain output cuts to stabilize the market amid persistent demand concerns. Despite short-term adjustments, OPEC Secretary General Haitham Al Ghais expressed optimism for both short-term and long-term oil demand, highlighting the organization’s positive outlook for 2024 and beyond.
Oil prices are trading higher following the prior breakout above the previous resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 62, suggesting the commodity might experience technical correction since the RSI retreated sharply from overbought territory.
Resistance level: 72.60, 74.75
Support level: 69.90, 68.45
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