MNI Europe Morning FX Analysis: Biden Bounce Has Risk Favoured Into Europe

FOREX: Biden Bounce Has Risk Favoured Into Europe

Risk started the week with a bang after Joe Biden was declared U.S. President-elect, with markets shelving concerns over uncertainty surrounding legal action taken by incumbent President Trump & the run-off Senate election in Georgia. High-beta FX rallied, leaving safe haven currencies at the bottom of the G10 pile.

• Kiwi outperformed all of its G10 peers, with NZD/USD surging to levels not seen since Apr 1, 2019. NZ FinMin Robertson met with RBNZ Gov Orr for a "general catch up on the general state of the economy" rather than policy matters. The RBNZ will deliver its last MonPol decision of the year on Wednesday.
• USD/JPY extended its recovery after the Japanese MoF stressed the importance of stability in FX markets, while refusing to comment on specific levels or drivers of FX moves. The yen landed at the bottom of G10 scoreboard, but in the grand scheme of things USD/JPY remains near worst levels since Mar.
• A contact flagged Japanese selling of EUR around the Tokyo fix, but buyers emerged into the dip.
• EUR/USD opens Europe with a buoyant tone but seen meeting headwind resistance into $1.1900(level holds E3.1bln of expiring EUR call option strikes for today's NY cut).
• Greenback weakness filtered through into Asian EMFX space, with USD/Asia losing ground across the board. USD/CNH & USD/KRW printed fresh multi-month lows. The redback may have drawn some additional support from wider than exp. trade surplus reported by China over the weekend.
• TRY went bid after the abrupt departure of CBRT Gov Uysal & Turkish FinMin Albayrak. The reshuffle, which involved the nomination of ex-FinMin & market-friendly technocrat Agbal as the new CBRT chief, was interpreted as a potential signal of a change of tack in Turkey's economic policy.
• Today's economic docket is light, features German trade balance & comments from Fed's Mester & Kaplan, ECB's Lagarde, Rehn & Mersch as well as BoE's Bailey & Haldane.

MNI FX TECHNICALS: 

EUR/USD: Clears A Key Resistance

• RES 4: 1.2011 High Sep 1 and major resistance
• RES 3: 1.1980 2.0% 10-dma envelope
• RES 2: 1.1917 High Sep 10
• RES 1: 1.1896 Intraday high
• PRICE: 1.1892 @ 05:46 GMT Nov 9
• SUP 1: 1.1796 Low Nov 6
• SUP 2: 1.1747 50-day EMA
• SUP 3: 1.1711 Low Nov 5
• SUP 4: 1.1603 Low Nov 4 and the bear trigger

EURUSD maintains a firmer tone following last week's gains and most recently, the breach of key resistance at 1.1881, Oct 21 high. The break of this level reinforces underlying bullish conditions paving the way for a climb towards 1.2011, Sep 1 high. The first objective though is 1.1917, Sep 10 high. On the downside, key support has been defined at 1.1603. A move below this support is required to reinstate a bearish threat.

GBP/USD: Bulls Clear An Important Hurdle

• RES 4: 1.3319 High Sep 4
• RES 3: 1.3292 76.4% retracement of the Sep 1 - 23 sell-off
• RES 2: 1.3280 2.0% 10-dma envelope
• RES 1: 1.3193 Intraday high
• PRICE: 1.3181 @ 05:59 GMT Nov 9
• SUP 1: 1.3093 Low Nov 6
• SUP 2: 1.3013 20-day EMA
• SUP 3: 1.2911 Low Nov 3
• SUP 4: 1.2855 Low Nov 2 and a key support

GBPUSD is starting the week on a firmer note following last week's gains. Importantly, the pair has pushed higher overnight and traded above former key resistance at 1.3177, Oct 21 and Nov 6 high. The break above this level signals scope for further gains with attention turning to 1.3292 next, 76.4% of the Sep 1 - 23 sell-off. Note that price has traded above the 61.8% retracement at 1.3174. Initial support lies at Friday's 1.3093 low.

EUR/GBP: Focus Is On The Bullish Engulfing Candle

• RES 4: 0.9149 Oct 20 high
• RES 3: 0.9107 High Oct 23
• RES 2: 0.9074 Trendline resistance drawn off the Sep 11 high
• RES 1: 0.9069 High Nov 5
• PRICE: 0.9019 @ 06:03 GMT Nov 9
• SUP 1: 0.8989 Low Nov 6
• SUP 2: 0.8946 Low Nov 4 and the key near-term support
• SUP 3: 0.8924 Low Sep 7
• SUP 4: 0.8900 Low Sep 4

EURGBP maintains a potential positive tone following the Nov 4 recovery. In pattern terms a bullish engulfing reversal marks the Nov 4 session. If correct, it signals a floor has been established at 0.8946. Further gains would open 0.9107, Oct 23 high. Note there is a trendline resistance that intersects at 0.9074, drawn off the Sep 11 high and represents a key short-term hurdle for bulls. On the downside, a break of 0.8946 would resume the downtrend.

USD/JPY: Still Under Pressure

• RES 4: 105.75 High Oct 20
• RES 3: 105.16/34 50-day EMA / High Nov 4 and key S/T resistance
• RES 2: 104.54 High Nov 5
• RES 1: 104.00 Low Sep 21 and this week's break out level
• PRICE: 103.54 @ 06:07 GMT Nov 9
• SUP 1: 103.18/09 Low Nov 6 / Low Mar 12
• SUP 2: 102.02 Low Mar 10
• SUP 3: 101.32 Bear channel base drawn off the Mar 24 high
• SUP 4: 101.19 Low Mar 9 and major support

USDJPY remains heavy following last week's sell-off. The pair cleared 104.00 - the first move through this mark since March's Coronavirus fallout. Also, the first notable level provided little support at the 76.4% retracement of the Mar 9-24 rally at 103.67. With bearish conditions dominating, scope is seen for continued weakness within a bear channel drawn off the Mar 24 high and opening 103.09 next, Mar 12 low. Initial resistance is seen at 104.00.

EUR/JPY: Corrective Bounce

• RES 4: 124.17 Bear channel top drawn off the Sep 1 high
• RES 3: 124.00 High Oct 27
• RES 2: 123.56 50-day EMA
• RES 1: 123.20 Intraday high
• PRICE: 123.06 @ 06:18 GMT Nov 9
• SUP 1: 122.21 Low Nov 5
• SUP 2: 121.62 Low Oct 30
• SUP 3: 121.50 0.764 proj of Sep 1 - 28 decline from Oct 9 high
• SUP 4: 120.44 Bear channel base drawn off the Sep 1 high

EURJPY is holding onto recent gains. The underlying bearish theme remains intact and recent gains are still considered a correction which appears set to extend near-term. A potentially strong band of resistance is seen between 123.08/56, the 20- and 50-day EMA's. Clearance of this zone would expose the bear channel top at 124.17. The channel is drawn off the Sep 1 high. First support is at 122.21, Nov 5 low. The bear trigger is at 121.62.

AUD/USD: Needle Points North

• RES 4: 0.7414 High Sep 1
• RES 3: 0.7343 3.0% 10-dma envelope
• RES 2: 0.7314 76.4% retracement of the Sep 1 - Nov 2 downleg
• RES 1: 0.7300 Intraday high
• PRICE: 0.7292 @ 06:27 GMT Nov 9
• SUP 1: 0.7239 Low Nov 6
• SUP 2: 0.7145 Low Nov 5
• SUP 3: 0.7144/43 20- day and 50-day EMA support zone
• SUP 4: 0.7049 Low Nov 4

AUDUSD is bullish. The pair rallied sharply higher last week reinforcing the significance of the recent trendline break drawn off the Sep 1 high. Gains on Nov 5 also resulted in a break of former resistance at 0.7243, Oct 9 high. With bullish conditions strengthened, scope is seen for a climb towards 0.7314 next, a Fibonacci retracement and 0.7345, Sep 16 high. Initial firm support is seen at 0.7145.

USD/CAD: Approaching Key Support

• RES 4: 1.3300 High Nov 4
• RES 3: 1.3224 50-day EMA
• RES 2: 1.3178 High Nov 5
• RES 1: 1.3097 High Nov 6
• PRICE: 1.3018 @ 06:32 GMT Nov 9
• SUP 1: 1.3007 Intraday low
• SUP 2: 1.2994 Low Sep 1 and a key support
• SUP 3: 1.2952 Low Dec 31, 2019 and primary support
• SUP 4: 1.2939 2.0% 10-dma envelope

USDCAD remains vulnerable following last week's bearish activity. The pair Thursday cleared a key short-term support at 1.3081, Oct 21 low, negating a recent bullish theme and instead this highlights a stronger bearish near-term risk. The break lower refocuses attention on the key supports at 1.2994, Sep 1 low and the Dec 31, 2019 low of 1.2952. Initial firm resistance is at 1.3178, Thursday's high.

MNI KEY LEVELS:

EUR/USD: MNI Key Levels

• $1.2107 Upper 3.0% 10-dma envelope
• $1.2032 May02-2018 high
• $1.2011 YTD Sep01 high
• $1.1989/95 Upper 2.0% 10-dma env/Upper Boll Band (3%)
• $1.1966 Aug18 high
• $1.1917/20/29 Sep10 high/Upper Boll Band (2%)/Sep02 high
• $1.1895/00 Intraday high/Sep15 high
• $1.1894 ***CURRENT MARKET PRICE 05:31BST MONDAY***
• $1.1876/71 Intraday low/Upper 1.0% 10-dma env
• $1.1860/51 Nov05 high/100-mma
• $1.1796/85 Nov06 low/55-dma
• $1.1780/77/76 100-hma/50-dma/Cloud top
• $1.1772 21-dma
• $1.1752 Cloud base
• $1.1736/31 38.2% 1.3993-1.0341/200-hma

GBP/USD: MNI Key Levels

• $1.3427 Upper 3.0% 10-dma envelope
• $1.3403 Sep02 high, Sep02 high
• $1.3357 Sep03 high
• $1.3319 Sep04 high
• $1.3297 Upper 2.0% 10-dma envelope
• $1.3280/85 Sep07 high/Upper Boll Band (3%)
• $1.3193/96 Intraday high/Upper Boll Band (2%)
• $1.3188 ***CURRENT MARKET PRICE 05:36BST MONDAY***
• $1.3166 Upper 1.0% 10-dma envelope
• $1.3148 Intraday low
• $1.3093 Nov06 low
• $1.3078 Cloud top
• $1.3068 100-hma
• $1.3018 21-dma
• $1.3006/05 200-hma/55-dma

EUR/GBP: MNI Key Levels

• Gbp0.9121 Upper Bollinger Band (2%)
• Gbp0.9101/06/07 Cloud top/Oct26 high/Upper 1.0% 10-dma env, Oct23 high
• Gbp0.9085 Oct27 high
• Gbp0.9074/76/79 50-dma/Oct28 high/Cloud base
• Gbp0.9055/63/69 Nov06 high/55-dma/Nov05 high
• Gbp0.9043/44/52 21-dma/Intraday high/100-dma
• Gbp0.9018/20 10-dma/200-hma
• Gbp0.9017 ***CURRENT MARKET PRICE 05:39BST MONDAY***
• Gbp0.9014 Intraday low, 100-hma
• Gbp0.8989 Nov06 low
• Gbp0.8965 Lower Bollinger Band (2%)
• Gbp0.8946 Nov04 low
• Gbp0.8927/26 Lower 1.0% 10-dma env/Lower Boll Band (3%)
• Gbp0.8925/22 Sep07 low/200-dma
• Gbp0.8900 Sep04 low

​USD/JPY: MNI Key Levels​

• Y104.28 200-hma
• Y104.26 Cloud Tenkan Sen
• Y104.03 100-hma
• Y104.00 Sep21 low
• Y103.93 200-mma
• Y103.76 Nov06 high
• Y103.51 Intraday high
• Y103.47 ***CURRENT MARKET PRICE 05:44BST MONDAY***
• Y103.36 Lower Bollinger Band (2%)
• Y103.19 Intraday low
• Y103.18 Nov06 low
• Y103.16 Lower 1.0% 10-dma envelope
• Y103.09 Mar12 low
• Y102.70 Lower Bollinger Band (3%)
• Y102.12 Lower 2.0% 10-dma envelope

EUR/JPY: MNI Key Levels

• Y124.02 Cloud base
• Y124.00 Oct27 high
• Y123.94 50-dma
• Y123.71 100-dma, Upper 1.0% 10-dma env
• Y123.41 Oct23 low
• Y123.36 Cloud Kijun Sen
• Y123.20/26 Intraday high/21-dma
• Y123.10 ***CURRENT MARKET PRICE 05:51BST MONDAY***
• Y122.69/55 Intraday low/100-hma
• Y122.41 Cloud Tenkan Sen
• Y122.34 200-hma
• Y122.22 Nov06 low
• Y122.21 Nov05 low
• Y121.96 Nov04 low
• Y121.81 Nov03 low

AUD/USD: MNI Key Levels

• $0.7453/64 Aug09-2018 high/Jul25-2018 high
• $0.7414 YTD Sep01 high
• $0.7382 Sep02 high
• $0.7361/68 Upper3.0% 10-dma env/Upper Boll Band (3%)
• $0.7340 Sep03 high
• $0.7324/34 Sep21 high/Sep18 high
• $0.7300 Intraday high
• $0.7296 ***CURRENT MARKET PRICE 05:55BST MONDAY***
• $0.7290/89 Upper 2.0% 10-dma env/Upper Boll Band (2%)
• $0.7268 Intraday low
• $0.7253/42/39 50-mma/200-wma/Nov06 low
• $0.7218/10/06 Upper 1.0% 10-dma env/Cloud top/100-hma
• $0.7189/79 55-dma/50-dma
• $0.7165 Cloud base
• $0.7145/33 Nov05 low/21-dma, 100-dma

USD/CAD: MNI Key Levels

• C$1.3227 Cloud base
• C$1.3195/03/04 55-dma/50-dma/200-hma
• C$1.3176/78 50-mma/Nov05 high
• C$1.3159/67 200-wma/21-dma
• C$1.3097/11 Nov06 high/100-hma
• C$1.3068 Intraday high
• C$1.3044 Lower 1.0% 10-dma envelope
• C$1.3008 ***CURRENT MARKET PRICE 05:58BST MONDAY***
• C$1.3007/96 Intraday low/Lower Boll Band (2%)
• C$1.2994 Sep01 low
• C$1.2976 Jan08 low
• C$1.2957/52 YTD Jan07 low/Dec31-2019 low
• C$1.2917/12/10 Oct16-2018 low/Lower 2.0% 10-dma env/Lower Boll Band (3%)
• C$1.2891 Oct05-2018 low
• C$1.2857 Oct04-2018 low

OPTIONS: Expiries for Nov9 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1800(E782mlnln), $1.1900(E3.1bln-EUR calls)
• GBP/USD: $1.3000(Gbp705mln), $1.3100(Gbp462mln)
• USD/CAD: C$1.3300-20($850mln)
• ----------------------
• Larger Option Pipeline
• EUR/USD: Nov10 $1.1800(E1.2bln); Nov11 $1.1650-55(E1.1bln); Nov13 $1.2000(E1.38bln-EUR calls)
• USD/JPY: Nov10 Y103.00($1.5bln-USD puts), Y103.75($1.1bln), Y104.40-50($2.8bln), Y105.00-05($1.1bln);
  Nov12 Y103.00($1.9bln-USD puts), Y105.40-50($1.1bln); Nov13 Y101.00($995mln-USD puts)
• EUR/JPY: Nov16 Y123.00(E1.25bln)
• EUR/AUD: Nov12 A$1.6520(E973mln)
• USD/CNY: Nov11 Cny6.65($1.0bln)