EUR/USD: just waiting before exploding

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1038

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The dollar is modestly higher across the board, with US Presidential election underway and exit polls showing a slightly Clinton lead. Majors trade within Monday's ranges, while stocks consolidate around their previous closes, as a wait-and-see mode prevails. The EUR/USD pair advanced up to 1.1066 intraday, but is now near the low set this week at 1.1027, with a slightly bearish tone intraday, as in the 1 hour chart, indicators head lower within bearish territory, whilst the price hovers around a flat 20 SMA. In the 4 hours chart, the price is below its 20 and 200 SMAs, while the technical indicators turned lower, but remain above yesterday's lows, reflecting the ongoing consolidation. Nevertheless, the market is not about technical today, but about US election. Wild moves on partial results will be the name of the game during the US afternoon and the upcoming Asian session, until a more clear picture is unveiled, around 5.00 GMT. Expect large moves, no matter who wins, but bigger ones, triggered by panic, on a Trump victory.

Support levels: 1.1010 1.0950 1.0910

Resistance levels: 1.1090 1.1120 1.1160

GBP/USD Current price: 1.2388

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The GBP/USD pair stands not far from 1.2380, a weekly low posted during the European morning, weighed by dollar's modest demand and poor data coming from the UK, as data released this Tuesday showed that the first quarterly estimate for the Index of Production, covering data post-EU referendum, presented a decrease of 0.5%. Also, Industrial Production in September fell by 0.4%, well below market's expectations, leaving the annual reading up 0.3% against expectations of 0.8%. Manufacturing Production in the same month, however, came in better than expected, surging 0.2% MoM and 0.6% YoY. Later today, the release of the NIESR GDP estimate could offer a clearer picture on the UK's health, and while the market may ignore it in the short term, the figure will weigh on Pound once the US election's result is out. Technically, the pair presents a neutral-to-bearish stance, given that in the 1 hour chart, the price is moving back and forth around a horizontal 20 SMA, while indicators head nowhere around their mid-lines. In the 4 hours chart, however, the pair presents a clear bearish stance, with a break below 1.2330 required to confirm a steeper decline.

Support levels: 1.2380 1.2330 1.2270

Resistance levels: 1.2440 1.2490 1.2530

USD/JPY Current price: 104.77

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Nearing 105.00 on hopes of a Clinton victory. The USD/JPY pair extends its advance to fresh weekly highs, hovering around 104.80; as the market waits for the outcome of the US Presidential election. The pair is quite sensitive to US news and data, which means that it will probably be among the biggest movers during the upcoming Asian session. The short term picture is bullish, given that the price continues moving away from its moving averages, while indicators in the hourly chart, rest within positive territory. In the 4 hours chart, the upward momentum is clearer, although not much action is expected until the first results are out. A break through 105.50, October high, could see the pair advancing up to 106.60, the 38.2% retracement of the 2011/2015 rally, a major long term resistance which should hold, in spite of dollar's gains on a Clinton victory. The key support on the other hand, is the 102.60/80 region, as a break below it could see the pair trading back around 100.00 during the upcoming days.

Support levels: 104.50 104.10 103.70

Resistance levels: 105.00 105.50 106.00

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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