Sample Category Title

Pivot (invalidation): 113.50

Our preference Short positions below 113.50 with targets at 112.95 & 112.75 in extension.

Alternative scenario Above 113.50 look for further upside with 113.75 & 114.00 as targets.

Comment As Long as the resistance at 113.50 is not surpassed, the risk of the break below 112.95 remains high.

Pivot (invalidation): 1.3080

Our preference Long positions above 1.3080 with targets at 1.3185 & 1.3230 in extension.

Alternative scenario Below 1.3080 look for further downside with 1.3030 & 1.2970 as targets.

Comment The RSI calls for a new upleg.

Pivot (invalidation): 1.1410

Our preference Long positions above 1.1410 with targets at 1.1500 & 1.1535 in extension.

Alternative scenario Below 1.1410 look for further downside with 1.1390 & 1.1370 as targets.

Comment The RSI is bullish and calls for further advance.

Pivot (invalidation): 2721.50

Our preference Long positions above 2721.50 with targets at 2775.00 & 2798.00 in extension.

Alternative scenario Below 2721.50 look for further downside with 2700.00 & 2675.00 as targets.

Comment The RSI is bullish and calls for further upside.

Pivot (invalidation): 11440.00

Our preference Long positions above 11440.00 with targets at 11570.00 & 11640.00 in extension.

Alternative scenario Below 11440.00 look for further downside with 11370.00 & 11288.00 as targets.

Comment The RSI is mixed to bullish.

Pivot (invalidation): 62.50

Our preference Short positions below 62.50 with targets at 61.30 & 60.70 in extension.

Alternative scenario Above 62.50 look for further upside with 63.30 & 63.90 as targets.

Comment The RSI is bearish and calls for further downside.

Pivot (invalidation): 14.6200

Our preference Short positions below 14.6200 with targets at 14.4500 & 14.3600 in extension.

Alternative scenario Above 14.6200 look for further upside with 14.7100 & 14.8200 as targets.

Comment The RSI is mixed to bearish.

Pivot (invalidation): 1231.00

Our preference Short positions below 1231.00 with targets at 1223.00 & 1220.00 in extension.

Alternative scenario Above 1231.00 look for further upside with 1233.00 & 1236.50 as targets.

Comment The RSI advocates for further decline.

• Rates: Split US Congress can't surprise/inspire markets
  US yields trade slightly lower overnight as Democrats retake the House as widely anticipated, resulting in a split Congress which might hamper the implementation of fiscal stimulus. We don't expect a lasting market impact. Today's eco calendar is empty with investors looking forward to tomorrow's FOMC meeting.
• Currencies: Dollar losing slightly ground post elections
  The dollar extends recent correction as the results of the mid-term election are filtering through. A split Congress probably will make aggressive fiscal stimulus less easy. This might weigh on the USD short-term. However, the dollar might soon find a bottom again if the Fed maintains its assessment on the US economy.

The Sunrise Headlines

• US stock markets gained ground yesterday (+/-0.65%) ahead of the midterm elections. Asian equities are trading mixed after Japan and China paired early gains and are currently trading with losses.
• The US midterm elections played out as expected. The Democrats take back control of the House of Representatives while the Republicans strengthen their majority in the Senate. Markets had widely anticipated a ‘split Congress'.
• Moody's, the credit ratings agency, has said the global picture for ratings is still stable overall, but flagged problems of slowing world growth, political risks, high debt levels and overheating markets.
• Spain's Supreme Court rebuked its own earlier ruling calling on Spanish lenders to pay fees on mortgages which they had been passing on their clients for years. Spanish banks thus avert huge tax bills.
• The meeting between US Secretary of State Mike Pompeo and North Korean officials that was set for this Thursday in New York has been postponed for unknown reasons and to a later but unspecified date.
• New Zealand published a stronger than expected labour report with the unemployment rate dropping to 3.9% in Q3 from 4.4% the period before. The New Zealand dollar, or kiwi, gained on the news. NZD/USD trades now at 0.675.
• Today's economic calendar is very thin with second-tier economic data with EMU retail sales. German industrials production rose by 0.2% M/M (0% forecast) in September. The US and Germany tap the market

Currencies: Dollar Losing Slightly Ground Post Elections

USD losing modest ground after mid-terms

Investors avoided big directional bets on Tuesday, counting down to the outcome of the US elections. In technical trade, the dollar initially lost of few ticks, but in the end daily changes were very small. EUR/USD closed at 1.1427. USD/JPY slightly outperformed and closed at 113.43. As expected, the US midterms will probably result in in split Congress with the Democrats regaining the House, but the conservative party extending its majority in the House. With this outcome, president Trump will probably have to be more selective in using fiscal stimulus to support the economy. Asian equities and US equity futures opened stronger, but gains are evaporating as trading continues. The outcome probably doesn't change the US-China trade rift in a profound way. The dollar showed some nervous swings as the first results came in. At the moment for writing, the trade-weighted dollar drops to the 96 area. USD/JPY reversed an earlier spike higher, trading in the 113.25 area. EUR/USD gains a few ticks (1.1450 area). The yuan opened weaker but also regained some ground. Later today, the eco calendar is thin with few US data. EMU retail sales are a bit outdated. Markets will ponder the potential implications of the new balance of power in Congress. President Trump being forced to turn more selective in its fiscal stimulus might be a (temporary) negative for the dollar. However, the election result probably won't change the Fed's assessment in a profound way. We started the week with a neutral bias on EUR/USD. Last week's rejected test of the 1.13 area/2018 low suggests that the USD rebound lost momentum. Some further USD losses after the election are possible. EUR/USD might regain some further ground in the 1.13/1.16 range, but we don't expect a sustained, significant break higher. An unchanged Fed assessment later this week might already help to put a floor for the dollar. We assume the 1.1621 range top will hold.

Sterling rebounded recently as markets saw growing signs that a brexit deal/compromise is coming closer. Yesterday, the rally slowed as it appeared that there was a lot of work to do for PM May to convince her cabinet/party. Still, EUR/GBP closed the session at 0.8722, within reach of recent lows. Today, the Brexit debate might continue. For now markets are convinced that chances on a deal (and approval in the UK) are rising. In this context, sterling might remain well bid. EUR/GBP is nearing a first important support area (0.8723/0.8681/0.8621)

EUR/GBP: sterling testing first resistance on Brexit hope

The reality of the outcome from the mid-term election results that Democrats will take control of the House while Republicans hold the Senate has not created too much volatility for financial markets.

Investors were reasonably well positioned for this outcome before the event, therefore it hasn’t been as much of a nervous few hours for investors as some political events have been in recent history. The USD has edged gradually lower against many of its counterparts over the course of this week, with this related to expectations that the Democrats winning some influence could provide some legislative resistance towards Trump further pushing forward pro-America policies.

The eventuality that the Democrats have fallen short of achieving a 'blue wave' has prevented the worst-case scenario for financial markets from occurring. It was always going to be a long shot due to its unlikely probability, but there were concerns that the Democrats winning control of the Senate would have ramped up the chances of President Trump being impeached. This would have been the most unfavorable outcome for investors despite its low probability, because it would have run the risk of sparking wild financial market volatility and potential black swan events.

What matters moving forward is whether this change of play represents enough uncertainty around political 'gridlock' that it will weigh on the USD. The Greenback itself remains at historically very strong levels and does appear overvalued against many of its global counterparts, however it is not clear whether this result will create enough change to foreign and trade policy decisions that it would encourage investors to seriously unwind USD positions.

At the moment we do see some near-term pressure on the USD but the jury is very much out for how long this could last. This depends on whether a shift in power could actually influence Trump's policies from being passed through legislation.

The Greenback has edged lower against most of its counterparts in Asia at time of writing, and this form is being replicated across most of the G10 as European trading is set to get underway.But investors would need to see some fundamental shifts that the outcome in the mid-terms could really change matters behind the scenes to receive the needed encouragement to drag the Greenback further lower moving forward.