A case of event risk position squaring

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2018 high at 1.4377. Any setbacks should be well supported ahead of 1.2500.

• R2 1.3103 – 15 October high – Medium
• R1 1.3048 – 6 November high – Strong
• S1 1.2834– 6 November low – Medium
• S2 1.2799 – 15 August low – Strong

GBPUSD – fundamental overview

The Pound has held up relatively well when compared to setbacks in the Euro and Yen post Trump victory. Most of the fallout from the UK budget has been priced and we're also seeing profit taking on GBP shorts ahead of today's BOE and Fed event risk. Key standouts on Thursday’s calendar come from Eurozone industrial production, German trade, German industrial production, Eurozone construction PMIs, Eurozone retail sales, ECB speak, the BOE policy decision, US initial jobless claims, and the Fed policy decision.

USDJPY – technical overview

The market is looking to resume the longer-term uptrend after an intense correction in 2024. A higher low is ideally sought out above 140.00 in favor of a bullish continuation. A weekly close back above 150.00 will hint at the start to longer-term uptrend resumption.

• R2 155.22 – 30 July high – Strong
• R1 154.72 – 7 November high – Medium
• S1 151.28 – 6 November low – Medium
• S2 149.08 – 21 October low – Medium

USDJPY – fundamental overview

Price action is all about the US election results with the Yen selling off hard on the news of a Trump presidency. We have however seen some Yen demand into Thursday on chatter of possible MOF intervention and on positioning ahead of today's Fed decision. Key standouts on Thursday’s calendar come from Eurozone industrial production, German trade, German industrial production, Eurozone construction PMIs, Eurozone retail sales, ECB speak, the BOE policy decision, US initial jobless claims, and the Fed policy decision.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6724 – 21 October high – Strong
• R2 0.6662 – 24 October high – Medium
• S1 0.6512 – 6 November low– Medium
• S2 0.6472 – 6 August low – Strong

AUDUSD – fundamental overview

The Australian Dollar has done an outstanding job recovering amidst a wave of intense Dollar demand on the Trump victory. The price action can be reconciled by the fact that the risk correlated Australian Dollar has seen offsetting positive flow from record high US equities. We're also seeing some US Dollar selling ahead of today's Fed decision. Earlier today, Aussie trade data came out and didn't factor into price action. Key standouts on Thursday’s calendar come from Eurozone industrial production, German trade, German industrial production, Eurozone construction PMIs, Eurozone retail sales, ECB speak, the BOE policy decision, US initial jobless claims, and the Fed policy decision.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area, with a break to open a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.4000 – Psychological – Strong
• R1 1.3959 – 1 November/2024 high – Strong
• S1 1.3817 – 6 November low – Strong
• S2 1.3747 – 17 October low – Medium

USDCAD – fundamental overview

Price action is all about the US election results, with the Canadian Dollar selling off hard on the expectation for a Trump presidency. At the same time, we have seen some renewed demand for the Canadian Dollar into Thursday, mostly on profit taking ahead of the Fed decision. Key standouts on Thursday’s calendar come from Eurozone industrial production, German trade, German industrial production, Eurozone construction PMIs, Eurozone retail sales, ECB speak, the BOE policy decision, US initial jobless claims, and the Fed policy decision.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6120 – 11 October high – Strong
• R1 0.6021 – 6 November high – Medium
• S1 0.5912 – 6 November low – Medium
• S2 0.5850 – 5 August/2024 low – Strong

NZDUSD – fundamental overview

We've seen mostly offsetting flow in the New Zealand Dollar given setbacks from the Dollar bullish implication of a Trump presidency and demand from the surge in US equities to record highs. We're left looking at additional demand into Thursday as the market looks to book profit on US Dollar longs ahead of the Fed decision. Key standouts on Thursday’s calendar come from Eurozone industrial production, German trade, German industrial production, Eurozone construction PMIs, Eurozone retail sales, ECB speak, the BOE policy decision, US initial jobless claims, and the Fed policy decision.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5697, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a continued push to fresh record highs.

• R2 6000 – Psychological– Strong
• R1 5946 – 7 November/Record high – Medium
• S1 5790 – 6 November low – Medium
• S2 5697 – 4 November low – Strong

US SPX 500 – fundamental overview

The US equities market remains exceptionally well supported in 2024 on the back of an ongoing expectation for more rate cuts than less going forward. Investors are feeling better about a soft landing in the US economy and this has also been accompanied by an accommodative adjustment of Fed policy. It will however be important to keep an eye on inflation, bigger picture economic data, and geopolitical risk in the weeks and months ahead.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 3000 area. Setbacks should now be well supported above 2500 on a monthly close basis.

• R2 2791 – 31 October/Record high – Strong
• R1 2709 – 23 October low – Medium
• S1 2602 – 10 October low – Strong
• S2 2547 – 18 September low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.