Daily updates on foreign exchange news

Novox 10.27 Reference of Fx market

XAUUSD Resistance Level:1908 Support Level:1892

Coronavirus cases around the US and world are dramatically spiking and bringing to light the much-dreaded premonition of a second wave hitting the globe in Autumn. With Congress locked in a bipartisan stalemate, lack of progress in fiscal stimulus negotiations has undermined confidence in economic stabilization and soured risk appetite.

Over the past few days, equity markets have plunged while demand for the haven-linked US Dollar surged. In the process, the allure of anti-fiat hedges like gold fell as future inflation expectations dwindled. Looking ahead, the prospect of reimposed lockdown measures and more severe restrictions could be another election wildcard that investors have to contend with.

Gold prices may be on the verge of breaking a multi-week uptrend as swelling risk aversion from a spike in Covid-19 cases puts a premium on the US Dollar. This has come at the expense of the comparatively less-liquid precious metal which previously rose amid signs of economic stabilization and optimistic expectations of inflation. 

EURUSD Resistance Level:1.18300 Support Level:1.1800

EUR/GBP price action towards the end of last week is indicative of how domestic political volatility in the UK can derail what appeared to be a clear technical pattern. The pair was being guided lower by steep, descending resistance before breaking out on October 20, aggressively retreating the following day, and two days later blasting through it again.

Looking ahead, if the downtrend is indeed invalidated, the next area EUR/GBP will likely have to clear is a shelf at 0.9190. Clearing that layer could open the door to the March swing-high at 0.9258. Having said that, capitulation at 0.9190 could indicate a lack of underlying confidence in the pair’s short-term outlook. It is likely that its retreat would coincide with a lack of progress in Brexit negotiations.

XTIUSD Resistance Level:39.3 Support Level:38.3

Soundbites shaping fiscal stimulus expectations are likely to remain in focus through the end of the trading week. Flash US PMI surveys headline the data docket, with forecasts pointing to a slight pickup in the overall pace of economic activity growth in October compared with the prior month.

A brighter view of the near-term business cycle might keep crude oil prices supported in the near term. A lasting rally seems unlikely however as weak demand continues to weigh. In fact, an EIA implied demand gauge published this week slumped toward Covid outbreak lows registered in April.