MNI US Morning FX Analysis - USD on the Decline for 3rd Session

Dollar on the Decline for Third Session

The BoE's decision to boost the size of their QE programme took markets by surprise, with the Bank adding a further Gbp150bln in bond buys, which may make the path easier for Chancellor Rishi Sunak to later today unveil a sizeable stimulus package on the first full day of the second UK lockdown. GBP rallied in response, pressuring EUR/GBP to 0.9006, with GBP/USD also gaining amid a generally USD-weak environment.

Implied vols remain in retreat, with the front-end of the AUD/USD vol curve slipping to their lowest levels since mid-September as markets make peace with the increased likelihood of a Biden victory. This pattern's pretty uniform across development markets, with USD/JPY and USD/CAD vols also under pressure.

Focus turns to the further trickle through of US election results. A handful of states are still yet to be called, including key races in Pennsylvania, Arizona and Georgia.

The Fed rate decision is due later today. The FOMC aren't seen making any major changes to policy, but the press conference will likely draw focus given the eventful election this week.

EUR/USD TECHS: Extends Recovery Off 1.1603

• 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: 1.1839 High Oct 27
• PRICE: 1.1802 @ 10:30 GMT Nov 5
• SUP 1: 1.1711 Intraday low
• 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 this morning clearing initial resistance at 1.1770, Nov 4 high and extending the recovery off yesterday's 1.1603 low. The break higher signals scope for a climb towards the next key resistance, and hurdle for bulls at 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 TECHS: Bearish Focus

• 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: 1.3140 High Nov 4
• PRICE: 1.3049 @ 10:37 GMT Nov 5
• SUP 1: 1.2911/2855 Low Nov 3 / Low Nov 2
• SUP 2: 1.2863 Low Oct 14 and key near-term support
• SUP 3: 1.2806 Low Sep 30
• SUP 4: 1.2794 76.4% retracement of the Sep 23 - Oct 21 rally

GBPUSD is firmer this morning. The outlook though remains bearish following last week's extension lower. 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 TECHS: Bullish Engulfing Reversal

• RES 4: 0.9149 Oct 20 high
• RES 3: 0.9107 High Oct 23
• RES 2: 0.9085 Trendline resistance drawn off the Sep 11 high
• RES 1: 0.9069 Intraday high
• PRICE: 0.9038 @ 10:45 GMT Nov 5
• SUP 1: 0.9006 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 is firmer today following the rebound off yesterday's 0.8946 low. Yesterday's price action is potentially significant. In pattern terms yesterday's 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 0.9085, drawn off the Sep 11 high. A break of 0.8946 would negate the pattern and resume the downtrend.

USD/JPY TECHS: Bearish Focus, Probes 104.00

• RES 4: 106.11 High Oct 7 and the reversal trigger
• RES 3: 105.85 High Oct 12
• RES 2: 105.75 High Oct 20
• RES 1: 105.34 High Nov 4, 50-day EMA and key S/T resistance
• PRICE: 104.27 @ 11:12 GMT Nov 5
• SUP 1: 103.96 Low Nov 5
• SUP 2: 103.67 76.4% retracement of the Mar 9 - 24 rally
• SUP 3: 103.49 1.0% 10-dma envelope
• SUP 4: 103.09 Low Mar 12

USDJPY is softer following yesterday's volatile session and rejection off the day high of 105.34. The outlook is bearish with attention on 104.00, Sep 21 low that has been briefly probed today. Clearance of this support would suggest scope for a deeper USD sell-off within the bear channel drawn off the Mar 24 high. A break above 105.34 is required to undermine the bearish theme and would expose 105.75 instead, Oct 20 high.

EUR/JPY TECHS: Corrective Recovery

• RES 4: 124.00 High Oct 27
• RES 3: 123.65 50-day EMA
• RES 2: 123.20 20-day EMA
• RES 1: 123.07 High Nov 4 and intraday high
• PRICE: 122.87 @ 10:54 GMT Nov 5
• 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: 120.56 Bear 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 123.07.

AUD/USD TECHS: Clears Key Trendline Resistance

• RES 4: 0.7314 76.4% retracement of the Sep 1 - Nov 2 downleg
• RES 3: 0.7252 61.8% retracement of the Sep 1 - Nov 2 downleg
• RES 2: 0.7243 High Oct 10 and a key resistance
• RES 1: 0.7222 High Nov 4
• PRICE: 0.7217 @ 10:58 GMT Nov 5
• SUP 1: 0.7049 Low Nov 4
• SUP 2: 0.6991 Low Nov 2 and the bear trigger
• SUP 3: 0.6965 23.6% retracement of the Mar - Sep rally
• SUP 4: 0.6931 0.764 proj of Sep 1 - 25 sell-off from Oct 9 high

AUDUSD maintains a firmer tone following this week's volatile activity. The result has been a break of the pairs key short-term trendline resistance drawn off the Sep 1 high. This signals a potential reversal, exposing resistance at 0.7243, Oct 9 high. Clearance of this hurdle would strengthen bullish conditions. On the downside, key support lies at 0.6991, Nov 2 low. This is also the bear trigger, a break would resume recent bearish pressure.

USD/CAD TECHS: All Eyes On Support

• RES 4: 1.3477 2.0% 10-dma envelope
• RES 3: 1.3421 High Sep 30 and primary resistance
• RES 2: 1.3390 High Oct 29
• RES 1: 1.3300 High Nov 4
• PRICE: 1.3120 @ 11:02 GMT Nov 5
• SUP 1: 1.3096 Low Nov 4
• SUP 2: 1.3081 Low Oct 21 and the bear trigger
• SUP 3: 1.3047 Low Sep 7
• SUP 4: 1.2949 2.0% 10-dma envelope

USDCAD continues to trade at the lower end of its recent range following this week's volatile price action. Although a bullish outlook remains intact, attention is on support at 1.3081 Oct 21. A break would negate near-term bullish prospects and instead signal scope for weakness towards 1.2994, the Sep 1 low and a major support handle. The key hurdle for bulls is 1.3390, Oct 29 high. Initial resistance is at 1.3300, yesterday's high.

EUR/USD: MNI KEY LEVELS

• *$1.2009/11 May03-2018 high/YTD Sep01 high
• *$1.1996 May14-2018 high
• *$1.1976 Upper 2.0% 10-dma envelope
• *$1.1959 Upper Bollinger Band (3%)
• *$1.1938 May15-2018 high
• *$1.1893 Upper Bollinger Band (2%)
• *$1.1859 Upper 1.0% 10-dma envelope
• *$1.1850/51 100-mma/Jun14-2018 high
• *$1.1815 Sep24-2018 high
• *$1.1797 Intraday high
• *$1.1796 ***CURRENT MARKET PRICE 09:53GMT THURSDAY***
• *$1.1781/78/77 55-dma/50-dma/Cloud top
• *$1.1762/57 21-dma/Sep27-2018 high
• *$1.1736 Fibo 38.2% 1.3993-1.0341
• *$1.1721/17 200-hma/Cloud base
• *$1.1711 Intraday low
• *$1.1680 100-hma
• *$1.1673 100-dma
• *$1.1651 Sep28-2018 high
• *$1.1630 Lower Bollinger Band (2%)
• *$1.1624/21 Lower 1.0% 10-dma env/Oct16-2018 high

GBP/USD: MNI KEY LEVELS

• *$1.3196/97 Apr03-2019 high/Upper Boll Band (3%)
• *$1.3191 Apr04-2019 high
• *$1.3185 May06-2019 high
• *$1.3144 Fibo 38.2% 1.4377-1.2382
• *$1.3133 Apr12-2019 high
• *$1.3127/31 Upper 1.0% 10-dma env/Upper Boll Band (2%), May07-2019 high
• *$1.3109 Fibo 50% 1.1841-1.4377
• *$1.3080 May08-2019 high
• *$1.3063 Cloud top
• *$1.3041/42 May13-2019 high/Intraday high
• *$1.3038 ***CURRENT MARKET PRICE 09:53GMT THURSDAY***
• *$1.3000/99/96 55-dma/61.8% 1.3381-1.2382/21-dma
• *$1.2991 May10-2019 low
• *$1.2985/80 50-dma/200-hma
• *$1.2970 May14-2019 high
• *$1.2964/59 100-hma/Cloud base
• *$1.2952/50 50-mma/200-wma
• *$1.2933 Intraday low
• *$1.2904 May14-2019 low
• *$1.2894 100-dma
• *$1.2882 Fibo 50% 1.3381-1.2382

EUR/GBP: MNI KEY LEVELS

• *Gbp0.9160 Upper Bollinger Band (3%)
• *Gbp0.9134 Sep11-2017 high
• *Gbp0.9123/24 Upper Boll Band (2%)/Upper 1.0% 10-dma env
• *Gbp0.9108 Jan03-2019 high
• *Gbp0.9101 Cloud top
• *Gbp0.9079 Cloud base
• *Gbp0.9068/71 Intraday high/50-dma
• *Gbp0.9062/64 Jan11-2019 high/55-dma
• *Gbp0.9053 100-dma
• *Gbp0.9048/51 Jul16-2019 high/21-dma, Jul17-2019 high
• *Gbp0.9047 ***CURRENT MARKET PRICE 09:53GMT THURSDAY***
• *Gbp0.9039 Jul18-2019 high
• *Gbp0.9030 200-hma
• *Gbp0.9010/09/06 Jul10-2019 high/100-hma/Intraday low
• *Gbp0.9005/00 Jul23-2019 high/Jul22-2019 high
• *Gbp0.8975 Lower Bollinger Band (2%)
• *Gbp0.8953 Jul23-2019 low
• *Gbp0.8943/38 Lower 1.0% 10-dma env/Lower Boll Band (3%)
• *Gbp0.8921 Jul02-2019 low
• *Gbp0.8916 200-dma
• *Gbp0.8874/73/72 Jun19-2019 low/Jun20-2019 low/Jun12-2019 low

USD/JPY: MNI KEY LEVELS

• *Y105.60 Upper 1.0% 10-dma envelope
• *Y105.42 55-dma
• *Y105.34 50-dma
• *Y105.19 Cloud base
• *Y105.07 Cloud Kijun Sen
• *Y104.97 21-dma
• *Y104.87 Jan03-2019 low
• *Y104.69 Cloud Tenkan Sen
• *Y104.62 100-hma
• *Y104.54/56/58 Intraday high/Mar26-2018 low/200-hma
• *Y104.24 ***CURRENT MARKET PRICE 09:53GMT THURSDAY***
• *Y104.20 Intraday low
• *Y104.01 Lower Bollinger Band (2%)
• *Y103.94 200-mma
• *Y103.55 Lower Bollinger Band (3%)
• *Y103.51 Lower 1.0% 10-dma envelope
• *Y102.46 Lower 2.0% 10-dma envelope
• *Y101.42 Lower 3.0% 10-dma envelope
• *Y101.20 Nov09-2016 low
• *Y101.19 YTD low
• *Y100.75 Sep30-2016 low

EUR/JPY: MNI KEY LEVELS

• *Y123.72 Fibo 61.8% 115.21-137.50
• *Y123.66 100-dma
• *Y123.54 Fibo 50% 109.57-137.50
• *Y123.51 May22-2019 high
• *Y123.47 21-dma
• *Y123.36 Cloud Kijun Sen
• *Y123.18 Jun11-2019 high
• *Y123.11 Fibo 50% 118.71-127.50
• *Y123.08 Fibo 38.2% 126.81-120.78
• *Y122.97/01 Intraday high/Jun12-2019 high
• *Y122.96 ***CURRENT MARKET PRICE 09:53GMT THURSDAY***
• *Y122.93 Cloud Tenkan Sen
• *Y122.57 200-hma
• *Y122.56 Jun13-2019 high
• *Y122.23 Jul12-2019 high
• *Y122.21 Intraday low
• *Y122.20 100-hma
• *Y122.13 Jun17-2019 high
• *Y122.07 Fibo 61.8% 118.71-127.50
• *Y121.95 Fibo 50% 94.12-149.78
• *Y121.92 Jun20-2019 high

AUD/USD: MNI KEY LEVELS

• *$0.7414 YTD Sep01 high
• *$0.7394 Dec04-2018 high
• *$0.7356 Dec05-2018 high
• *$0.7324 Upper 3.0% 10-dma envelope
• *$0.7311 Upper Bollinger Band (3%)
• *$0.7295 Jan31-2019 high
• *$0.7274 Dec06-2018 high
• *$0.7252/53 50-mma/Upper 2.0% 10-dma env
• *$0.7243/48 200-wma/Upper Boll Band (2%)
• *$0.7216 Intraday high
• *$0.7214 ***CURRENT MARKET PRICE 09:53GMT THURSDAY***
• *$0.7210/07 Cloud top/Feb21-2019 high
• *$0.7206 Apr17-2019 high
• *$0.7190 Cloud base
• *$0.7183/82/81 55-dma/Upper 1.0% 10-dma env/50-dma
• *$0.7153 Apr17-2019 low
• *$0.7145 Intraday low
• *$0.7140 Apr16-2019 low
• *$0.7124/23 100-dma/21-dma
• *$0.7116 Apr12-2019 low
• *$0.7110 Apr10-2019 low

USD/CAD: MNI KEY LEVELS

• *C$1.3300 Jun13-2019 low
• *C$1.3286 Jun20-2019 high
• *C$1.3266 Cloud top
• *C$1.3243 Cloud base
• *C$1.3236 200-hma
• *C$1.3224/26 100-hma, 50% 1.2783-1.3665/Jun10-2019 low
• *C$1.3203/06 55-dma/50-dma
• *C$1.3178/83 Intraday high, 50-mma/21-dma
• *C$1.3160/63/64 200-wma/Feb21-2019 low/Jul23-2019 high
• *C$1.3150/51 Feb20-2019 low/Jun20-2019 low
• *C$1.3127 ***CURRENT MARKET PRICE 09:53GMT THURSDAY***
• *C$1.3120/16 61.8% 1.2783-1.3665/Jul23-2019 low
• *C$1.3113 Feb25-2019 low
• *C$1.3107/04 Jun26-2019 low/Intraday low
• *C$1.3079 Lower 1.0% 10-dma envelope
• *C$1.3066 Fibo 38.2% 1.4690-1.2062
• *C$1.3053 Fibo 38.2% 1.2062-1.3665
• *C$1.3044 Lower Bollinger Band (2%)
• *C$1.3015 Oct25-2018 low
• *C$1.2975 Lower Bollinger Band (3%)
• *C$1.2970 Oct24-2018 low

Expiries for Nov5 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1500(E558mln), $1.1540-50(E588mln), $1.1750(E886mln-EUR calls)
• USD/JPY: Y102.00($700mln), Y105.00($964mln), Y106.06-09($1.6bln), Y106.40-50($754mln)
• EUR/JPY: Y124.50(E1.1bln)
• EUR/GBP: Gbp0.8980-00(E570mln)
• AUD/USD: $0.7125-33(A$775mln)
• USD/CAD: C$1.3140-50($674mln), C$1.3240-50($610mln)
• USD/CNY: Cny6.60($885mln-USD puts), Cny6.75($1.25bln), Cny6.80($2.0bln), Cny6.85($1.26bln)

Larger Option Pipeline

• EUR/USD: Nov06 $1.1600(E1.8bln), $1.1795-05(E1.5bln); Nov09 $1.1900(E1.9bln-EUR calls); Nov10 $1.1800(E1.2bln); Nov11 $1.1650-55(E1.1bln)
• USD/JPY: Nov06 Y105.00($1.0bln); Nov10 Y103.00($1.1bln), Y104.50($2.3bln), Y105.00-05($1.1bln); Nov12 Y103.00($1.4bln), Y105.40-50($1.1bln)
• EUR/AUD: Nov12 A$1.6520(E973mln)
• USD/CNY: Nov06 Cny6.70($1.2bln)