The US dollar turned to the upside on Monday. Let's discuss what to expect next from the market.
Main market movements on September 21
Safe-haven currencies such as the US dollar and the Japanese yen have started the week on the positive footing amid rising new virus cases, pushing riskier assets to the downside.
US-China tensions continue escalating. The US President Donald Trump approved Oracle’s bid to buy TikTok’s US assets, while US curbs on WeChat have been put on hold by a judge. Besides, investors are waiting for some development over fiscal stimulus in the USA as the impasse of the stimulus package in combination with upcoming elections weighs heavily on the US dollar. All eyes on Powell’s speech this evening.
Meanwhile, new virus cases are rising in the European Union. Even fresh restrictions have been imposed in Greece and Denmark. The European Central Bank has launched a review of its pandemic bond-buying program. It will decide for how long the PEPP will take place and debate the necessity of extra asset purchases.
Let’s look at the EUR/USD chart. It has just broken the strong resistance of 1.1800. The move below the support of 1.1755 will push the pair even deeper to the level at the next round number of 1.1700. Resistance levels are 1.1800 and 1.1880.
S&P 500 has dropped to the lowest levels since August 5 as a massive sell-off of tech stocks has started. Amazon, Facebook, and Apple slumped dramatically. The move below the low of July 31 at 3 250 will drive the stock index lower to 3 200. On the flip side, if it jumps above the resistance of 3 330, it will push the price to the high of September 18 at 3 370.
Moving on to gold, it has been trading sideways. The move above the high of September 18 at $1 960 will drive the price to the next resistance of $1 970. Otherwise, if it drops below the support of $1 925, it will push the price to the next support of $1 910.
Finally, let’s talk about the British pound. It has been driven upwards by the upbeat comments of the European Commission President over Brexit. However, the fresh lockdown in the country added headwinds to the GBP. The move below the low of September 15 at 1.2830 will drive the price lower to 1.2780. Resistance levels are 1.2960 and 1.3015.
Three main drivers of the market: the stimulus package, the US presidential election and the coronavirus. Let's look how market reacts.
EU Flash Manufacturing & Services PMI will come out on Friday at 11:00 MT time!
The focus of traders’ attention shifted from Brexit and the US stimulus to the coronavirus . The WHO claimed that Europe become the new Covid-19 epicenter.
Canada will publish the monthly GDP growth on October 30 at 14:30 MT time.
The European Central Bank publishes the monetary policy statement alongside with an update on the interest rate on October 29, at 14:45 MT time.