MNI Europe Morning FX Analysis: Caution Prevails As U.S. Vote Count Continues

​FOREX: Caution Prevails as U.S. Vote Count Continues

The ongoing vote count in some battleground states provided the main highlight of the Asia-Pac session. While underlying trends are still favouring Biden, the razor-thin margins & suggestions that Georgia can be impossible to call for weeks inspired a degree of caution, generating a tailwind for USD, JPY & CHF.

• AUD, CAD & NOK underperformed in G10 FX space. The Aussie dipped in early trade, seemingly dragged lower by profit-taking activity in the wake of yesterday's surge. Reports pointing to escalating Sino-Australian tensions didn't help the Aussie either. The RBA's latest SoMP offered little new insight.
• NZD was the odd one out among commodity-tied FX, remaining the best G10 performer. There was little in the way of local news/data flow to underpin the kiwi's outperformance, with cross flows driven by the sinking AUD/NZD & positioning ahead of next week's RBNZ decision likely in play. NZD/USD trades just a handful of pips from YtD highs.
• A modest round of USD/CNH sales prompted the rate to print fresh cycle lows and attack key support at CNH6.0004/00 in early trade. Rejection of those levels was followed by a bounce into positive territory. USD/CNY was pushed higher by a softer than expected PBoC fix, which nonetheless saw the central USD/CNY mid-point moved to its 28-month low.
• U.S. NFP report, Canadian jobs data, German & Norwegian industrial outputs, Italian retail sales and comments from BoC's Macklem & ECB's Holzmann take focus today.

MNI FX TECHNICALS:

EUR/USD: Rally Exposes 1.1881

• RES 4: 1.2000 High Sep 1 and major resistance
• RES 3: 1.1917 High Sep 10
• RES 2: 1.1881 High Oct 21 and the bull trigger
• RES 1: 1.1860 High Oct 27
• PRICE: 1.1819 @ 05:43 GMT Nov 6
• SUP 1: 1.1711 Low Nov 5
• SUP 2: 1.1603 Low Nov 4 and the bear trigger
• SUP 3: 1.1576 0.764 proj of Sep 1 - 25 sell-off from Oct 21 high
• SUP 4: 1.1541 Low Jul 23

EURUSD has traded higher Thursday clearing initial resistance at 1.1770, Nov 4 high and extending the recovery off Wednesday's 1.1603 low. The break higher reinforces this week's bullish developments and signals scope for a climb towards 1.1881, Oct 21 high. A break of this level would open 1.2011, The Sep 1 high. On the downside, key support has been defined at 1.1603. A break is required to reinstate a bearish threat.

GBP/USD: Attention Is On Key Near-term Resistance

• RES 4: 1.3357 High Sep 3
• RES 3: 1.3261 2.0% 10-dma envelope
• RES 2: 1.3177 High Oct 21 and the bull trigger
• RES 1: 1.3158 Intraday high
• PRICE: 1.3124 @ 05:51 GMT Nov 6
• SUP 1: 1.2998 20-day EMA
• SUP 2: 1.2911/2855 Low Nov 3 / Low Nov 2
• SUP 3: 1.2863 Low Oct 14 and key near-term support
• SUP 4: 1.2806 Low Sep 30

GBPUSD rallied Thursday. The outlook remains bearish however this week's gains threaten this theme. We do note though that a move below key near-term support at 1.2855, Nov 2 low is required to reinforce bearish conditions. This would pave the way for a move towards 1.2676, Sep 23 low. On the upside, clearance of key resistance at 1.3177, Oct 21 high would alter the picture and reinstate a bullish theme.

EUR/GBP: Monitoring The Bullish Engulfing Candle

• RES 4: 0.9149 Oct 20 high
• RES 3: 0.9107 High Oct 23
• RES 2: 0.9080 Trendline resistance drawn off the Sep 11 high
• RES 1: 0.9069 High Nov 5
• PRICE: 0.9004 @ 05:58 GMT Nov 6
• SUP 1: 0.8989 Intraday low
• 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 positive tone following Wednesday's recovery. In pattern terms the Wednesday candle line is a bullish engulfing reversal. 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 0.9080, 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: Bearish Following 104.00 Breach

• RES 4: 105.75 High Oct 20
• RES 3: 105.27/34 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: 103.56 @ 06:10 GMT Nov 6
• SUP 1: 103.36 Intraday low
• SUP 2: 103.31 3.0% Lower Bollinger Band
• SUP 3: 103.09 Low Mar 12
• SUP 4: 102.02 Low Mar 10

USDJPY traded lower Thursday resulting in a clear break of 104.00 - the first move through that mark since March's Coronavirus fallout. The first notable level provided little support at the 76.4% retracement of the Mar 9-24 rally at 103.67. This keeps the outlook resolutely bearish signalling scope for 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 Recovery

• RES 4: 124.23 Bear channel top drawn off the Sep 1 high
• RES 3: 124.00 High Oct 27
• RES 2: 123.60 50-day EMA
• RES 1: 123.18 High Nov 5
• PRICE: 122.34 @ 06:13 GMT Nov 6
• SUP 1: 121.62 Low Oct 30
• SUP 2: 121.50 0.764 proj of Sep 1 - 28 decline from Oct 9 high
• SUP 3: 120.50Bear channel base drawn off the Sep 1 high
• SUP 4: 120.39 1.000 proj of Sep 1 - 28 decline from Oct 9 high

EURJPY is trading above recent lows but despite the recent recovery, maintains a bearish tone following last week's sell-off. The cross has recently cleared support at 123.03/02 and 122.38, Sep 28 low. This move lower confirmed a resumption of the downleg that started Sep 1. Scope is seen for weakness towards 121.50 next, a Fibonacci projection. Further out, 120.39 is on the radar, also a Fibonacci projection. Initial resistance is at 123.18.

AUD/USD: Bulls Return

• RES 4: 0.7414 High Sep 1
• RES 3: 0.7339 3.0% 10-dma envelope
• RES 2: 0.7314 76.4% retracement of the Sep 1 - Nov 2 downleg
• RES 1: 0.7289 High Nov 5
• PRICE: 0.7265 @ 06:24 GMT Nov 6
• SUP 1: 0.7145 Low Nov 5
• SUP 2: 0.7138/32 50- day and 20-day EMA support zone
• SUP 3: 0.7049 Low Nov 4
• SUP 4: 0.6991 Low Nov 2 and the bear trigger

AUDUSD rallied sharply higher yesterday reinforcing the significance of this week's trendline break drawn off the Sep 1 high. Yesterday's gains also resulted in a break of 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. Initials support is seen at 0.7145.

USD/CAD: Vulnerable

• RES 4: 1.3421 High Sep 30 and primary resistance
• RES 3: 1.3390 High Oct 29
• RES 2: 1.3300 High Nov 4
• RES 1: 1.3178 High Nov 5
• PRICE: 1.3090 @ 06:30 GMT Nov 6
• SUP 1: 1.3029 Low Nov 5
• 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 Thursday's bearish session in line with general USD weakness. The pair cleared a key short-term support at 1.3081, Oct 21 low, negating a recent bullish theme and instead 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 resistance is at 1.3178, yesterday's high.

MNI KEY LEVELS

EUR/USD: MNI Key Levels

• $1.2011 YTD Sep01 high
• $1.1964/66/75 Upper Boll Band (3%)/Aug18 high/Upper 2.0% 10-dma env
• $1.1917/29 Sep10 high/Sep02 high
• $1.1897/00 Upper Boll Band (2%)/Sep15 high
• $1.1867/81/82 Oct22 high/Oct21 high/Sep16 high
• $1.1858/60/61 Upper 1.0% 10-dma env/Nov05 high/Oct26 high
• $1.1846/50 Intraday high/100-mma
• $1.1824 ***CURRENT MARKET PRICE 05:19BST FRIDAY***
• $1.1805-795 Expiries E2.46bln
• $1.1796/82 Intraday low/55-dma
• $1.1777/66 Cloud top, 50-dma/21-dma
• $1.1759 Cloud base
• *$1.1721/13/11 200-hma/100-hma/Nov05 low
• *$1.1679 100-dma
• *$1.1630/23 Lower Boll Band (2%)/Lower 1.0% 10-dma env

GBP/USD: MNI Key Levels

• $1.3357 Sep03 high
• $1.3319 Sep04 high
• $1.3278/80/92 Upper 2.0% 10-dma env/Sep07 high/76.4% 1.3482-1.2676
• $1.3246 Upper Bollinger Band (3%)
• $1.3177 Oct21 high
• $1.3158/67 Intraday high/Upper Boll Band (2%)
• $1.3147 Upper 1.0% 10-dma envelope
• $1.3132 ***CURRENT MARKET PRICE 05:28BST FRIDAY***
• $1.3112 Intraday low
• $1.3063 Cloud top
• $1.3010/02/00 21-dma/55-dma/100-hma
• $1.2990/83 200-hma/50-dma
• $1.2956/54/53 200-wma/50-mma/Cloud base
• $1.2933 Nov05 low
• $1.2915/11 Nov04 low/Nov03 low

EUR/GBP: MNI Key Levels

• Gbp0.9137/49 Oct21 high/Oct20 high
• Gbp0.9110/22 Upper 1.0% 10-dma env/Upper Boll Band (2%)
• Gbp0.9101/06/07 Cloud top/Oct26 high/Oct23 high
• Gbp0.9076/79/85 Oct28 high/Cloud base/Oct27 high
• Gbp0.9063/69/72 55-dma/Nov05 high/50-dma
• Gbp0.9044/52 21-dma/100-dma
• Gbp0.9010/12/24 100-hma/Intraday high/200-hma
• Gbp0.9003 ***CURRENT MARKET PRICE 05:34BST FRIDAY***
• Gbp0.8989 Intraday low
• Gbp0.8975/64 76.4% 0.8946-0.9069/Lower Bollinger Band (2%)
• Gbp0.8946 Nov04 low
• Gbp0.8929/25 Lower 1.0% 10-dma env/Sep07 low, Lower Boll Band (3%)
• Gbp0.8919 200-dma
• Gbp0.8900 Sep04 low
• Gbp0.8866/64 Sep03 low/Jun09 low

USD/JPY: MNI Key Levels

• Y104.45 200-hma
• Y104.43 100-hma
• Y104.35 Cloud Tenkan Sen
• Y104.00 Sep21 low
• Y103.93 200-mma
• Y103.76 Intraday high
• Y103.59 Lower Bollinger Band (2%)
• Y103.48 ***CURRENT MARKET PRICE 05:42BST FRIDAY***
• Y103.36/31 Intraday low/Lower 1.0% 10-dma env
• Y103.22/09 1.618% swing 104.03-105.34/ Mar12 low
• Y103.00 Lower Bollinger Band (3%)
• Y102.27 Lower 2.0% 10-dma envelope
• Y102.02 Mar10 low
• Y101.22 Lower 3.0% 10-dma envelope
• Y101.20 Nov09-2016 low

EUR/JPY: MNI Key Levels

• Y123.36 Cloud Kijun Sen
• Y123.33 21-dma
• Y123.19 Oct28 high
• Y123.18 Nov05 high
• Y122.81 Cloud Tenkan Sen
• Y122.72 Intraday high
• Y122.43 200-hma
• Y122.35 ***CURRENT MARKET PRICE 05:49BST FRIDAY***
• Y122.31/22/21 100-hma/Intraday low/Nov05 low
• Y121.96 Nov04 low
• Y121.81 Nov03 low
• Y121.72 100-wma
• Y121.70 Nov02 low
• Y121.62 Oct30 low
• Y121.47 Jul14 low

AUD/USD: MNI Key Levels

• $0.7453/64 Aug09-2018 high/Jul25-2018 high
• $0.7414 YTD Sep01 high
• $0.7382 Sep02 high
• $0.7340/42/44 Sep03 high/Upper Boll Band (3%)/Upper3.0% 10-dma env
• $0.7324/34 Sep21 high/Sep18 high
• $0.7284/89 Intraday high/Nov05 high
• $0.7270/72 Upper Boll Band (2%)/Upper 2.0% 10-dma env
• $0.7260 ***CURRENT MARKET PRICE 05:56BST FRIDAY***
• $0.7252/49/43 50-mma/Intraday low/Oct09 high
• $0.7242 200-wma
• $0.7222/10 Nov04 high/Cloud top
• $0.7201/88/86 Upper 1.0% 10-dma env/Cloud base/55-dma
• $0.7181 50-dma
• $0.7145/40/31 Nov05 low/100-hma/21-dma
• $0.7129 100-dma

USD/CAD: MNI Key Levels

• C$1.3300/08 Nov04 high/100-dma
• C$1.3239/52 Cloud base/Cloud top
• C$1.3223 200-hma
• C$1.3199/04 55-dma/50-dma
• C$1.3178 50-mma, Nov05 high
• C$1.3160/70/74 200-wma/100-hma/21-dma
• C$1.3097 Intraday high
• C$1.3088 ***CURRENT MARKET PRICE 06:00BST FRIDAY***
• C$1.3068 Lower 1.0% 10-dma envelope
• C$1.3040/38/29 Intraday low/Sep02 low/Nov05 low
• C$1.3024 Lower Bollinger Band (2%)
• C$1.2994 Sep01 low
• C$1.2976 Jan08 low
• C$1.2957/52/47 YTD Jan07 low/Dec31-2019 low/Lower Boll Band (3%)
• C$1.2936 Lower 2.0% 10-dma envelope

OPTIONS: Expiries for Nov6 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1600(E1.8bln), $1.1700(E688mln), $1.1725-35(E1.1bln), $1.1795-05(E2.46bln), $1.1845-50(E1.2bln), $1.2000(E870mln)
• USD/JPY: Y103.30($450mln-USD puts), Y104.00($501mln), Y104.89-00($1.45bln)
• EUR/GBP: Gbp0.8980-00(E720mln-EUR puts)
• AUD/JPY: Y73.75(A$979mln), Y74.60(A$947mln-AUD puts)
• USD/CNY: Cny6.62($810mln), Cny6.70($1.2bln), Cny6.80($523mln)

Larger Option Pipeline

• EUR/USD: Nov09 $1.1780-00(E1.1bln), $1.1900(E2.5bln-EUR calls); Nov10 $1.1800(E1.2bln);
  Nov11 $1.1650-55(E1.1bln); Nov13 $1.2000(E1.2bln-EUR calls)
• USD/JPY: Nov10 Y103.00($1.3bln-USD puts), Y103.75-80($1.1bln), Y104.40-50($2.8bln), Y105.00-05($1.1bln);
  Nov12 Y103.00($1.4bln-USD puts), Y105.40-50($1.1bln); Nov13 Y101.00($970mln-USD puts)
• EUR/JPY: Nov16 Y123.00(E1.3bln)
• EUR/AUD: Nov12 A$1.6520(E973mln)
• USD/CNY: Nov11 Cny6.65($1.0bln)