The dollar so far has shown remarkable resistance to allowing corrections of its recent strength, an unusual condition for this time of the year. The 4th quarter normally means weakness for the Greenback, together with seasonally rising oil prices. There are two factors now initiating the contrary of this development: The expectation that next year the fiscal and monetary policy will be restrictive after the massive expansion of this year, and the weak oil price in face of a worldwide economic growth slowdown. Since the major pairs are either in narrow trading ranges or sitting on good long-term support right now, like the EUR / USD and GBP / USD, which are, in addition, oversold in this European morning, we would expect another attempt of the USD to a downward correction. It might be short-lived again, completing the picture of a longer-term sideways movement.

As said above, we reckon with some upmoves in the EUR / USD and GBP pairs for today. But today is Election Day, with the U.S. only marginally joining us during the remaining trading hours. We therefore limit our projections to narrower trading ranges, with not much change expected before the voting process in the U.S. is completed.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
Moving out of oversold territory, the pair advanced this European morning to current prices of 1.2700. We do not see this upmove continuing for long today and expect it to find resistance at the 1.2780 level, where renewed weakness might set in, though not breaking the 1.2580 support line in today’s trading.

GBP / USD
The recovery move in cable in early European trading so far has been reluctant, meeting resistance about now and currently trading at 1.5885. There is most probably not much upside potential beyond this level, with trading entering a sideways trading channel between 1.5950 and 1.5650 on the downside.

USD / CHF
Having made a new high at 1.1801 against the Swiss franc, the dollar retreated in the European morning and is currently priced at 1.1689. Some countermove might set in soon, but not breaking the resistance level at 1.1740 on the upside. We see rather a test of the 1.1650 level on the downside for today.

USD / JPY
After just forming a narrow trading range in Asian trading, the activity in the USD / JPY nearly came to a standstill in early European trading. Currently priced at 99.35, the pair will most probably stay in this low activity trading range for today, limited between 99.50 on the upside and 98.40 on the downside.