US FUTURES POINT UPWARDS AFTER THE WORST DAY IN 2 MONTHS
October 27, 2020
Posted by: Analysis Team
Category: FOREX, Technical Analysis
US equities nosedived as traders remained concerned about the rising number of coronavirus cases in the United States and around the world. They were also concerned about the lack of stimulus in the US. In the US, the number of coronavirus cases continued to rise, with hospitalisations rising to the highest level since August. Also, the seven-day average of new infections in the country rose to an all-time high yesterday. The same trend is happening in Europe, where the number of new cases has jumped to the highest level on record. This has forced countries like the UK, Norway, and Spain to re-introduce new measures to prevent the spread. The S&P 500 dropped by close to 3% while the Dow Jones lost more than 500 points. However, indices have added some points in the futures market.
The New Zealand dollar rose slightly during the Asian session as traders reacted to the mixed trade numbers. According to the statistics bureau, the country exported goods worth more than N$4.01 billion in September. That decline was slightly below the previous month’s increase of N$4.4 billion. In the same month, its exports rose from N$4.6 billion to more than N$5.02 billion. As a result, the trade deficit widened from N$282 million to more than N$1.02 billion. These numbers came at a time when the Australian central bank is contemplating pushing interest rates to the negative zone for the first time in years.
The economic calendar will have several important events today. In Europe, we will receive household spending and trade numbers from Sweden and the ECB bank lending survey. These numbers will come as traders reassess their forecasts for the European economy as the number of Covid-19 cases continues rising. In the United States, the Bureau of Statistics will release the September durable goods orders. Analysts expect the data will show that the orders rose by 0.5% in September while the core durable orders rose by 0.4%. The Conference Board will also release its consumer confidence data while the American Petroleum Institute (API) will release its inventories numbers.
The EUR/USD pair rose to an intraday high of 1.1822 during the Asian session. On the four-hour chart, the price managed to move above the 14-day and 28-day exponential moving averages, which is a sign that bulls are prevailing. Also, the pair is approaching the 23.6% Fibonacci retracement level while the Relative Strength Index (RSI) has moved close to the overbought level of 70. Notably, the pair also formed a double bottom pattern, which means that it will likely continue rising today. If it does, the next key level to watch will be 1.1850.
The GBP/USD pair dropped from Friday’s high of 1.3166 to a low of 1.2992. On the hourly chart, the price is above the 25-day moving average. It has also formed a descending channel that is shown in pink and is along the upper line of this channel. The price is also between the 38.2% and 50% Fibonacci retracement level while the RSI has been rising. So, for today, the pair may claw back yesterday’s gains as bears attempt to retest the lower side of the channel.
The AUD/USD price rose to an intraday high of 0.6690 as traders reacted to New Zealand’s trade numbers. On the four-hour chart, the price is forming a bullish pennant pattern that is shown in green. It is also along the 61.8% Fibonacci retracement level while the signal and main lines of the MACD have made a bearish crossover. Therefore, the bullish trend will continue so long as the pair remains above the 15-day and 25-day EMAs.