Financial Market Research and Analysis

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Sharp U-turn in sentiment, USD gains
The US dollar rebounded as harshly as it dived on the back of the underpriced Trump victory.

The EURUSD tanked from 1.1299 to 1.0907 on Nov 9th, as Federal Reserve (Fed) hawks assessed up to 82% chances for a December interest rate hike in the US. Intra-day resistances are seen at 1.1000 (minor 23.6% retracement in Nov 9th sell-off), before 1.1045/1.1057 (200-hour moving average / major 38.2% retrace), max 1.1125 (100-day moving average). The negative trend could encourage a further sell-off to 1.0855, before a renewed attempt to 1.0800.

The U-turn in risk sentiment sent the USDJPY from 101.18 (Nov 9th low) to 105.94 in Tokyo. Higher US yields, combined to a rise in dovish Bank of Japan (BoJ) expectations should keep the US dollar in demand against the yen above 105.25 (200-day moving average), 104.82 (minor 23.6% retracement on Nov 9th to Nov 10th rally) and 104.13 (major 38.2% retrace / 200-hour moving average). A rise to 106.75/107.50 could be considered.

The GBPUSD remained rangebound despite wild volatility in the US dollar across the G10 crosses. Cable failed to break above 1.2556 (Nov 4th peak). A breakout is needed to assess a fresh short-term directional view. The next resistances are eyed at 1.2555, 1.2575 (50-day moving average), max 1.2622 (Oct 7th pre-flash crash high). The key support stands at 1.2375 (major 38.2% retrace on Oct 25th to Nov 4th recovery), if broken, should signal a short-term bearish reversal and a further sell-off to 1.2355 (200-hour moving average), before 1.2319 (Fib 50% level).

The AUDUSD rebounded from 0.7580 as the rapid recovery in risk appetite across the markets encouraged carry traders to return back to building long positions in AUD. Still, the conviction remains low. Offers are eyed at 0.7700 (optionality) and 0.7725 (minor 23.6% retracement on Oct 28th to Nov 8th rise). Risk seekers could eye dip-buying opportunities approaching 0.7615/0.7600 (100, 200-day moving average).

Gold investors are confused on the hectic mood changes. Until the risk appetite is stable, we shall see the precious metal hovering around $1283 (200-day moving average). Yet with the rising US yields, offers are seen at 1297 (50-day moving average) and 1317 (100-day moving average), for a potential slide to 1268 (Nov 9th low), before 1250 (major 38.2% retracement on Dec’15 to Jul 16th rise).

The WTI surged above $45/barrel, as investors returned to basic materials and commodities after the US election euphoria. The appreciation in the US dollar, combined to low conviction regarding a potential OPEC deal at next week’s meeting is expected to keep the sellers alert for a slide to $44.40 (200-day moving average). The key resistances is eyed at $46.80 (major 38.2% retracement on Oct 19th to Nov 9th decline), if surpassed, could suggest a shot-term bullish reversal.

CFD trading is high risk and may not be suitable for everyone.