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• USDJPY hits fresh highs as Trump wins battleground states
• Resistance of 153.80-154.00 still in play

USDJPY soared to a new three-month high of 154.36 as Donald Trump won Pennsylvania, Georgia, and North Carolina. Technically, the pair found solid support near its 20-day exponential moving average (EMA), keeping its upward trend in safe place.

That said, the day is not over yet, and the 153.40-154.00 barrier is still under examination. The short-term bias is skewed to the upside according to the technical indicators, though with the RSI moving closer to its 70 overbought level, we can't rule out a pullback unless the price successfully closes above 154.00. In this case the price could rocket towards the 157.00 number, which coincides with the 78.6% Fibonacci retracement of the previous downleg and the upper band of the bullish channel. The 158.50-159.40 area could be the next challenge before the door opens for the 1990 top of 160.40.

Should the bears retake control, traders may focus on the 152.00 number, where the lower boundary of the bullish channel is positioned. The 20-day EMA at 151.35 will be closely watched too along with the 50% Fibonacci of 150.75, a break of which could confirm a downside reversal. If the 200- and 50-day EMAs at 149.75 give way as well, then the sell-off could intensify toward the 38.2% Fibonacci of 148.11. Even lower, the pair may face stability near 146.20.

In a nutshell, the latest advance in USDJPY improved the upside potential, though for the rally to hold, the bulls should successfully breach the wall around 154.00.

Eurozone PMI Services for October was finalized at 51.6, up from September’s 51.4. PMI Composite also moved to 50.0 from 49.6, indicating stagnation rather than expansion across the region. The services sector continues to play a vital role in keeping Eurozone’s economy afloat, yet concerns of a Q4 contraction remain.

Spain topped the Eurozone with PMI Composite of 55.2, while Ireland followed at 52.. Italy’s index reached 51.0, a four-month high. Meanwhile, Germany's reading improved to 48.6, still in contraction but at a three-month high. France recorded an eight-month low of 48.1.

Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, remarked, “The modest expansion of the services sector has been crucial in keeping the currency union out of recession.” He highlighted that declining inflation and higher wages are likely bolstering consumer spending, which sustains demand in services. However, de la Rubia pointed out that their GDP Nowcast for Q4 indicates a “slight contraction” in overall Eurozone output.

De la Rubia also noted that structural issues, such as labor shortages which exert upward wage pressures, continue to keep inflation elevated. "The ECB will find it "difficult, if not impossible", to achieve the 2% inflation target in a sustainable manner in this environment," he added.

Full Eurozone PMI services final release here.

• US 30 index extends upside move above SMAs
• Stochastics and RSI turn up

The US 30 cash index is rallying more than 2% today during Trump’s victory in the US elections, sending the market towards the previous all-time high of 43,575.

The technical oscillators are mirroring the latest strong bullish momentum, with the stochastic posting a positive crossover within its %K and %D lines before the north-run, while the RSI is pointing upwards above the neutral threshold of 50.

Rising further, the bulls could take the market until the record peak of 43,575 before challenging the next round number of 44,000.

On the other hand, if there is a potential pullback to the downside, first support could come from the 20-day simple moving average (SMA) at 42,765, ahead of the 50-day SMA at 42,260. Slightly lower, the 41,800 barrier, which is the previous trough, may pause downside movement.

In summary, the US 30 index has demonstrated a strong bullish trend over long- and medium-term timeframes, and another record high could signal further increases.

The peak set on 14 March around $73,750 is no longer Bitcoin's all-time high. As the BTC/USD chart reveals, today the price surged past $75,300 per coin.

This increase aligns with early results suggesting a lead for the Republican presidential candidate. Donald Trump previously promised support for the cryptocurrency sector during his campaign.

Today's BTC/USD technical analysis shows that Bitcoin is currently within a long-term upward channel (shown in blue). Key developments include:

→ In September, a reversal from the channel’s lower boundary set a new bullish direction.

→ In October, the price broke through a red line (marked by an arrow) that acted as the upper limit of a correctional channel within the ongoing long-term uptrend. This resembles the technical pattern known as a “bull flag.”

→ Current bullish momentum is reflected in a sharply ascending channel (shown with black lines).

Should Bitcoin’s new historical peak, along with Trump’s potential cryptocurrency support, attract more buyers, the price may continue its rise.

The target for this current bullish impulse could be a line (shown with a red dotted line) projected parallel to the red channel, based on its height.

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Early results in the U.S. presidential election indicate a lead for the Republican candidate.

A potential Trump victory is seen as favourable for the U.S. dollar, based on Donald Trump's plans to:

→ increase tariffs on key U.S. trading partners;

→ stimulate domestic business and support small-cap companies.

Additionally, the Trump administration may influence the Federal Reserve's rate policies, potentially leading to rate cuts as anticipated earlier.

The forex market has responded with a stronger U.S. dollar, especially against the euro.

On 21 October, an analysis of the EUR/USD chart indicated potential support from:

→ a major trendline (shown in blue);

→ the psychological level of 1.0800.

The price indeed rebounded upwards from this area (shown by an arrow), but recent news has sparked a bearish impulse, bringing EUR/USD below the key trendline today.

It’s possible this bearish momentum could continue, potentially keeping EUR/USD below the 1.0800 level.

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Early in this trading week, the dollar’s rise, likely influenced by Trump’s strong polling figures, has somewhat slowed. Based on technical analysis of major currency pairs, the market appears ready for a correctional pullback. However, the US election results could disrupt current patterns.

EUR/USD

Last week, EUR/USD found support around the 1.0760 level and rose above 1.0900. If buyers can hold the price within the 1.0900–1.0800 range, the upward correction might extend towards 1.1100–1.1000. However, if it dips below October’s low of 1.0760, the pair could decline further to the 1.0680–1.0640 range.

Key events potentially impacting EUR/USD:

• Today at 12:00 (GMT+3:00): Eurozone Services PMI release.
• Today at 17:00 (GMT+3:00): Speech by ECB President Christine Lagarde.
• Today at 18:00 (GMT+3:00): Speech by Deutsche Bundesbank President Joachim Nagel.

GBP/USD

After falling below 1.2900, GBP/USD buyers managed to correct and test the psychological level of 1.3000. The continuation of this uptrend will hinge on the US election results and tomorrow’s Bank of England meeting. Analysts expect a rate cut of 25 basis points, bringing it down from 5.00% to 4.75%. Additionally, a Federal Reserve meeting and Jerome Powell’s press conference are scheduled for tomorrow evening. With a busy news schedule, GBP/USD could either break above 1.3000 or settle below 1.2800.

Key events affecting GBP/USD:

• Tomorrow at 10:00 (GMT+3:00): Halifax House Price Index release in the UK.
• Tomorrow at 15:00 (GMT+3:00): Bank of England rate decision.
• Tomorrow at 21:00 (GMT+3:00): Federal Open Market Committee press conference with Jerome Powell.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Short Term Elliott Wave View on S&P 500 (SPX) suggests rally from 8.5.2024 low is in progress as an impulse. Up from 8.5.2024 low, wave 1 ended at 5651.6 and pullback in wave 2 ended at 5402.6. Index then extended higher in wave 3 towards 5878.4 as 45 minutes chart below shows. Wave 4 pullback unfolded as a Flat Elliott Wave structure. Down from wave 3, wave (a) ended at 5821.17 and rally in wave (b) ended at 5863.04. Wave (c) lower ended at 5762.4 which completed wave ((a)) in higher degree.

Bounce in wave ((b)) unfolded as a zigzag structure. Up from wave ((a)), wave (a) ended at 5817.8 and wave (b) ended at 5784.92. Wave (c) higher ended at 5862.8 which completed wave ((b)) in higher degree. Index resumed lower in wave ((c)). Down from wave ((b)), wave (i) ended at 5802.17 and wave (ii) ended at 5850.94. Wave (iii) lower ended at 5702.8 and wave (iv) ended at 5772.5. Final leg wave (v) ended at 5696.06 which completed wave ((c)) of 4. The Index has turned higher in wave 5. Near term, as far as pivot at 5696.09 low stays intact, expect the Index to extend higher.

S&P 500 (SPX) 45 Minutes Elliott Wave Chart

SPX Elliott Wave Video

https://www.youtube.com/watch?v=G6wEOv2I-fY

Markets

At the moment of writing, the outcome of the US elections is still a developing story. The Republican Party regaining a 51+ majority in the Senate is definitively called. The battle for a House majority is still a close call. In the race for President, Trumping winning the battleground States of North Carolina and Georgia and taking an almost decisive lead in Pennsylvania is seen as paving the way for Donald Trump to secure a second term as President of the US. So concludes the market fully resorting to the basics of the ‘Trump-trade’ including higher long term US yields, a rise in US equity futures and a resumption of the recently aborted/paused USD rally. At the moment of writing, US yields in a bear steepening move are rising between 9 bps (2-y) and 17 bps (30-y). The US 2-y yield (4.26%) almost fully reverted the decline starting after the July 31 Fed meeting and disappointing early August US payrolls. At 4.42%, the US 10-y yield already is already (more than) one step further, closing in on the July 01 top just below 4.50%. It’s too early to already shift to an in depth micro analysis. That said, this morning’s rise in LT US yields is mainly driven by higher inflation expectations, less by a rise in real yields. Whatever, the market clearly is preparing for a stimulative, growth and inflationary supportive policy. Together with a likely big batch (import) tariffs, this won’t go unnoticed for the Fed. Markets are further scaling back the probability of additional interest rate cuts. A 25 bps step tomorrow and at the December meeting is still seen has likely . For the end of next year, expectations are scaled back to only additional steps (cumulative 100 bps from current level) by the end of next year.

On equity markets, the Trump trade clearly, at least in a first reaction, is seen as mainly favoring US companies, especially those with a focus on the domestic economy. US major indices (Dow, S&P 500 and Nasdaq) currently add about 1.5%. The Russel 2000 contract gains about 3.0%. The China CSI 300 trades little changed. This also applies European equity futures.

Higher US yields and the potential negative fall-out from the Trump trade policy on some/most of the US trading patterns also drives the Trump rally of the dollar. The DXY index jumps from the 103.50 area at the close yesterday to above the 105 barrier. USD/JPY this morning jumps from the 151.30 area to 154.3. Similar narrative for the yuan (USD/CNY 7.169 from 7.125). The Mexican peso is another ‘evident’ victim (USD/MXN from 20.1 to 20.8). For EUR/USD, the technical charts suggested that the outcome of the race between Harris and Trump could be a binary split between returning to 1.06 or 1.12. It looks that it might be a swift return to the latter (or lower). Despite an apparently first mild reaction on equity markets, one also shouldn’t ignore a further underlying rise in global risk premia (including real yields) and its potential impact on the assessment of smaller countries with a more risk-sensitive profile. This morning’s pressure on the Central European currencies serves as a good illustration. (EUR/CZK from 25.32 to 25.44; EUR/PLN from 4.355 to 4.375 and especially EUR/HUF from 409 to 412.25).

News & Views

New Zealand employment fell by 0.5% Q/Q in Q3 2024, marginally more than expected (-0.4% Q/Q). Compared with Q3 2023, employment was 0.4% lower. The employment rate was 67.8%. The unemployment rate rose from 4.6% in Q2 to 4.8% in Q3, coming from a 3.2% bottom in Q3 2022. The labour force participation rate was 71.2%, down 0.5 ppt over the quarter and 0.8 ppt over the year. Some of the largest increases in those not in the labour force over the year came from people mainly engaged in leisure activities, studying or training, and taking care of themselves due to their own sickness, illness, injury, or disability. Annual wage inflation was 3.8%, slowing from 4.3% in Q2. Labour market data justify the RBNZ’s recent acceleration to a 50 bps rate cut especially given CPI readings (2.2% Y/Y in Q3). NZD/USD is heading for a test of the YTD lows (0.5850) driven by USD strength.

Daily Pivots: (S1) 197.18; (P) 197.53; (R1) 198.07; More...

GBP/JPY is extending consolidation from 199.79 and intraday bias stays neutral. Further rally is expected as long as 55 D EMA (now at 194.61) holds. Above 199.79 will resume the rebound from 180.00 to retest 208.09 high. However, sustained break of 55 D EMA will argue that the corrective rise has completed already, and turn near term outlook bearish for 180.00/183.70 support zone.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 165.39; (P) 165.72; (R1) 166.04; More....

Intraday bias in EUR/JPY remains neutral as consolidations continue below 166.67. Further rally is expected as long as 164.25 minor support holds. Sustained break of 61.8% retracement of 175.41 to 154.40 at 167.38 will pave the way to retest 175.41 high. However, considering bearish divergence condition in 4H MACD, firm break of 164.25 will indicate short term topping, and turn bias to the downside for 55 D EMA (now at 163.22).

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.