Last week closed with a series of pending issues:
- Europe and USA are in the middle of a second COVID-19 wave as new restrictions are on the table.
- The US elections are getting closer and closer, Biden is clearly ahead in the polls so the uncertainty in the result is now a low probability case.
- There was a 48 hours deadline from Democrats to pass the next relief package in order to support economy from COVID-19 Democrats suggest $2.2 trillion while the Trump administration proposes $1.8 trillions. A possible agreement before the elections may potentially explode the markets.
- There’s no serious progress in Brexit negotiations and a no-deal Brexit is more possible.
USD got strong into this environment of uncertainty and the stock markets had rather consolidative movements.
The current week is important due to all the above but moreover, there are important speeches from Lagarde and Powell on Monday, there’s the Interest Rates announcement in China on Tuesday and on Friday there is the next presidential debate in USA while in the same day we have the release of the important PMIs in Germany, Eurozone, UK and USA.
EURUSD (Euro vs US Dollar)
Bearish was the last week for EURUSD which opened at 1.1811 and closed at 1.1688. USD appears strong due to a global uncertainty caused by the second COVID-19 wave. In USA, the presidential elections come closer and the markets count the pros and cons of each nominee as well as the probability of a non-clear result which became lower though. Also, the upcoming new fiscal stimulus package in USA is an important factor as per the exact amount and its release date. EURUSD approaches a lot to the price area of 1.1620 which is the lowest price of the last 3 months and it may continue its downtrend under these levels, so sell positions is our selection for this week. The speeches of Lagarde and Powell will also give an extra tone to the whole picture.
GBPUSD (Great Britain Pound – US Dollar)
It was a bearish week for GBPUSD with open price at 1.3023 and close price at 1.2917. The Brexit negotiations are not in a good shape and Boris Johnson said that US companies should be prepared for an Australia-like relationship with the EU. The EU negotiator Michel Barnier will visit London this week but the sentiment is not positive as both sides offer disappointing statements. Such negative news, combined with a strong USD may lead the pair to even lower levels. The first support for our sell positions exists at 1.2850 and the second one to the multi-weeks low at 1.2675.
USDJPY (US Dollar – Japanese Yen)
Bearish week for USDJPY, which opened at 105.73 and closed at 105.04. The US 10-year treasury bill yield dropped mildly to 0.76% while JPY is strong in periods of uncertainty. The pair keeps on moving in the tight channel between 104.95 and 106.10 so it may stay there for one more week but if it moves, there is a higher probability to drop, so we’ll try sell positions for this week.
EURJPY (Euro – Japanese Yen)
Big drop for EURJPY last week, as the pair started from 124.88 and ended last Friday at 123.50. JPY was quite strengthened; EUR was anemic in the last days so we may see further losses to 122.40 which is the next support and the main target for our sell positions this week. The speeches of Christine Lagarde during the week though, may cause turbulences and changes in the volatility and trend of EURJPY.
EURGBP (Euro – Great Britain Pound)
Consolidations took place for EURGBP las week, since both open and close prices were around the area of 0.9065. Both, EUR and GPB were weak so such a balance appeared, combined with a relatively low volatility. Given that the issues in UK will be bigger in a case of a no deal Brexit and as long as the pair stays above the milestone price of 0.90, we may see bullish reactions to 0.92 so we’d better open buy positions this week.
USDCAD (US Dollar – Canadian Dollar)
Slightly bullish was the last week for USDCAD, by opening at 1.3128 and closing at 1.3188. The US dollar was quite strong and managed to beat the higher oil prices that most of the times strengthen the Canadian dollar too. Given our attention due to the upcoming new stimulus package in USA, there is a case for the pair to return to the price area of 1.34 and this will be our main target for our buy positions this week.
USDCHF (US Dollar – Swiss Franc)
We saw a bullish reaction for USDCHF last week, since it opened at 0.9107 and closed at 0.9148, following the general trend of a strong USD. It takes a solid breakout above 0.92 though in order to have an uptrend while things are still liquid regarding the US elections and the amount and release date of the fiscal stimulus package in USA. In any case, we prefer buy positions.
AUDUSD (Australian Dollar – US Dollar)
Bearish week after two bullish weeks took place for AUDUSD, which opened at 0.7219 and closed at 0.7078. Early this week we saw some important announcements from China such as GDP, Industrial Production and Retail Sales which had a mixed outlook according the expectations. The pair keeps in moving below 0.71 and if the strength of USD carries on, it may be a threat for the important support of 0.70 and a good target for our sell positions in the current week.
Consolidative was the last week for SP500. The Index closed at 3,463 points with marginal losses like 0.40%. The dominating factors for the investors nowadays are the US presidential elections and the upcoming agreement for the new stimulus package for the economy support. There is a 48-hours deadline given from Democrats who suggest a higher amount than the Republicans do and it’s obvious that an agreement before the elections may cause a serious rally in the markets. Of course, in an opposite case there will be negative sentiment and disappointment and we may see significantly lower prices because with a new aid package there are no positive fundamental reasons in the US economy that may favour the bulls. Short positions is our main selection but very soon we’ll turn them to long positions if and when the stimulus package occurs.
Bearish was the last week for DAX30, which ended the week at 12,892 points and losses above 1%. The loss of 13,000 points and the new strong COVID-19 wave in Europe creates a negative sentiment for the Index and we may see even lower prices during the week. On the contrary, a bullish breakout of 13,000 points may bring positive expectations and may attract new buyers. For the moment, we prefer short positions.
Bearishly closed the last week the British Index FTSE100, στις 5,893 points and 1.40% lower. Things in UK are not good either regarding Brexit either the news from COVID-19. There is a multi-month low price close to 5,740 points which seems to be threatened so we’ll hunt it by opening short positions this week.
It was a bearish week for gold which closed at $1,902, having losses around 1.70%. Gold should move higher instead of dropping amongst concerns and uncertainties globally but USD seems that lately is a safer selection for the investors. The US elections, the new stimulus package for supporting the US economy and any news regarding COVID-19 will be the factors that still affect gold now. Technically speaking, below the current levels there are the supports of $1,877 and even lower at $1,851 but since a bullish reaction is possible, we’ll go after the new resistances at $1,939 and $1,983 by opening long positions this week.
Slightly bullish was the last week for oil prices. The black gold (futures prices) closed at $40.73, performing profits of 0.54%. International Energy Administration predicted a decline of inventories for Q4 2020 but in World Energy Outlook 2020 the analysts underlined that the energy markets will remain weak in the next period. Also, OPEC presses its members to control their production by avoiding big supplies in the markets so the price can be controlled too. The price area around $41.50 seems like a strong resistance for the moment so we may see some consolidations or even a downtrend so we’ll open short positions.
It was another bullish week for Bitcoin which closed at $11,520, performing profits close to 1.30%. The conditions are favourable for a further rise which requires though a bullish breakout of $11,735 so there can be an approach of $12,000. Of course, there are many encouraging voices for cryptos lately such as the well-known analyst Max Keiser who predicted prices like $28,000 for Bitcoin but in any case, we think that we should stay restrained because from $20,000 in 2018 the price dropped at $3,000 by the end of the same year (loss of 85%). The trend is definitely bullish but there’s no need for exaggerations and overoptimism. In any case, we’ll open long positions this week too.