US Dollar retains US election risk bid

Next 24 hours: Dollar loses steam as Harris regains momentum

Today’s report: US Dollar retains US election risk bid

US election risk is front and center and the US Dollar has been a prime beneficiary, partially on the uncertainty and partially on polls that show Trump gaining ground. The market expects Trump policies of trade tariffs and domestic tax cuts will lead to more broad based US Dollar demand.

Wake-up call

Chart talk: Technical & fundamental highlights

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EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.0998 – 8 October high – Medium
  • R1 1.0874 - 17 October high – Medium
  • S1 1.0761 - 23 October low – Medium
  • S2 1.0666 – 26 June low – Strong

EURUSD – fundamental overview

The Euro tried hard to mount a recovery on a better than expected IFO survey, but couldn't hold onto gains on worry around what would end up being well founded. After the Friday close, Moody's was out downgrading the outlook on France's credit rating to negative due to concerns about the country's debt and deficit. Key standouts on Monday’s calendar come from a Bank of Canada Macklem speech, UK CBI trades data, Canada wholesale sales, Dallas Fed manufacturing, and an ECB Guindos speech.

EURUSD - Technical charts in detail

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 1.3175 – 4 October high – Medium
  • R1 1.3103 – 15 October high – Strong
  • S1 1.2907 – 23 October low – Medium
  • S2 1.2900 – Figure – Medium

GBPUSD – fundamental overview

The Pound hasn't done much in recent sessions, instead more comfortable to consolidate recent declines ahead of Wednesday's highly anticipated UK budget announcement. Key standouts on Monday’s calendar come from a Bank of Canada Macklem speech, UK CBI trades data, Canada wholesale sales, Dallas Fed manufacturing, and an ECB Guindos speech.

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 153.89 – 28 October high – Medium
  • S1 151.45 – 25 October low – Medium
  • S2 149.08 – 21 October low – Medium

USDJPY – fundamental overview

The Yen has extended declines as the week gets going, this on the back of the political uncertainty in the aftermath of the weekend election. The ruling LDP/Komeito has lost its majority and the market will be wanting to know what type of coalition forms to make a decision about the impact this will have on monetary policy. Key standouts on Monday’s calendar come from a Bank of Canada Macklem speech, UK CBI trades data, Canada wholesale sales, Dallas Fed manufacturing, and an ECB Guindos speech.

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 0.6824 – 29 August high – Strong
  • R2 0.6760 – 11 October high – Medium
  • S1 0.6579 – 28 October low– Medium
  • S2 0.6563 – 15 August low – Strong

AUDUSD – fundamental overview

The Australian Dollar has come under added pressure as the new week gets going after Donald Trump gained more ground in the polls over the weekend. A Trump victory is projected to be Dollar bullish on account of expected trade tariffs and domestic tax cuts. Aussie will also be thinking about Wednesday's important round of inflation data. Key standouts on Monday’s calendar come from a Bank of Canada Macklem speech, UK CBI trades data, Canada wholesale sales, Dallas Fed manufacturing, and an ECB Guindos speech.

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 1.3947 – 5 August/2024 high – Strong
  • R1 1.3907 – 28 October high – Medium
  • S1 1.3813 – 24 October low – Medium
  • S2 1.3747 – 17 October low – Strong

USDCAD – fundamental overview

The Canadian Dollar simply can't catch a break. Bank of Canada policy has turned increasingly dovish, all while the price of oil remains under pressure and Canada economic data deteriorates. On Friday, the Canadian Dollar took another hit after retail sales came in much weaker than expected. Key standouts on Monday’s calendar come from a Bank of Canada Macklem speech, UK CBI trades data, Canada wholesale sales, Dallas Fed manufacturing, and an ECB Guindos speech.

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 0.6053 – 23 October high – Medium
  • S1 0.5913 – 6 August low – Medium
  • S2 0.5850 – 5 August/2024 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar already suffering from a downturn in global investor sentiment has taken an added hit on the back of the latest discouraging ANZ Roy Morgan consumer confidence data. The data came in at 91.2 against 95.1 previous. Key standouts on Monday’s calendar come from a Bank of Canada Macklem speech, UK CBI trades data, Canada wholesale sales, Dallas Fed manufacturing, and an ECB Guindos speech.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5093, 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 5900 – Psychological– Medium
  • R1 5891 – 17 October/Record high – Medium
  • S1 5768 – 23 October low – Medium
  • S2 5726 – 2 October 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, US election 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 2800 – Psychological– Strong
  • R1 2759 – 23 October/Record high – 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.

Peformance chart: 30-Day Performance vs. US dollar (%)

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