US Dollar Index

The US dollar fell sharply, appreciating more than 1.6% against most major currencies. Former US President Donald Trump secured the more than 270 electoral votes needed to become the next US President. The US Dollar Index is above 105.00, its highest level since early July. The US dollar is consolidating its latest gains against major rivals. The US Dollar Index surged to a near four-month high of 105.31, up more than 1.50% on the day. The US Dollar pulled back slightly as markets were cautious following the results that former US President Donald Trump would win the US presidential election. There was not much difference in the performance of G10 currencies, with the exception of the Canadian Dollar, which fell less than 1%, while other currencies fell by about 1.0-1.7%. This reflects the view that a Republican sweep is positive for the US economy, and therefore Canadian exporters, and that the Canadian Dollar will be less exposed to Chinese tariffs and geopolitical developments during Trump's new presidency. The market is not only preparing for Trump's easy victory in the Electoral College, but also for the prospect of a Republican-controlled Congress. This is key to determining the ability of the incoming president to force policy changes through the US government.

The US dollar was higher against almost all currencies in the world overnight following the news that Donald Trump won the US presidential election. The performance of G10 currencies was not much different, except for the Canadian dollar, which fell less than 1%, while other currencies fell by about 1.0-1.7%. The US dollar index surged to a near four-month high of 105.31, up more than 1.50% on the day. It then fell slightly back below 105.00. For now, the major currencies seem to have found their footing, and the appreciation of the US dollar may be slightly controlled relative to expectations. However, with the opening of European markets and the final results showing that Trump and the Republicans seem to have won a historic election victory, we see another round of US dollar strength, with short-term support focusing on 104.63 (previous high), and 103.85 (200-day moving average). As for resistance, short-term attention is on 105.31 (Wednesday's high), and 105.80 (July 3 high) levels.

Consider shorting the US dollar index near 105.30 today, stop loss: 105.50, target: 104.80, 104.70

WTI crude oil

Crude oil recovered from an earlier 3% drop as the US presidential election supported Trump. Tropical Storm Rafael's impact on the Gulf of Mexico gradually faded from people's sight, while Trump was successfully re-elected as the US president. The US dollar index rebounded strongly on Wednesday, rising nearly 2%. On Wednesday, WTI oil prices traded near the top of $71.00. WTI oil prices fluctuated lower as former US President Donald Trump will win the US presidential election. At the same time, the US dollar rose to 105.31, a nearly 4-point high against a basket of other currencies, as Trump trades continued to rise due to Trump's victory. A stronger dollar makes oil more expensive in other countries. On Sunday, a grouping of OPEC members plus other oil-producing nations called OPEC+ agreed to extend oil production cuts of 2.2 million barrels per day until the end of December 2024. The countries also reiterated their commitment to "full compliance" with production targets and to compensate for any overproduction by September 2025.

Crude oil prices could rise further because Saudi Arabia is hurting: earnings and revenue. On the upside, important technical levels of $73.59 (61.8% Fibonacci retracement) and 89-day SMA (73.51), as well as the 100-day simple moving average (74.30) are the next big hurdles ahead. The 200-day SMA at $76.82 could be a key upside range. As for the downside, the 50-day SMA at $70.50 and $70.00 {a psychological level in the market) should be able to resist any selling pressure. For more downside, look to $68.15 (October 18 low), and $68.08 (last Thursday low).

Consider going long on crude oil around $71.30 today, stop loss: 71.10; target: 72.70; 72.90

Spot gold

Gold remains under tremendous bearish pressure as the market reacts to Donald Trump's victory in the presidential election, trading to a multi-week low of $2,652 below $2,700. The benchmark 10-year Treasury yield rose more than 4% on the day, forcing gold prices lower. Spot gold plummeted after the U.S. Republican presidential candidate and former President Trump announced his victory in the 2024 presidential election after the U.S. market opened on Wednesday (November 6), with gold prices falling to as low as $2,652/ounce, a plunge of nearly $92 on the day. Earlier, Republican nominee Donald Trump led in the approval ratings in key swing states, which led to a strong recovery in demand for the US dollar, which was bearish for commodity prices. In addition, the sharp intraday surge in US Treasury yields and the rise in risk appetite have become another factor suppressing the price of non-yielding gold. Nevertheless, expectations of further volatility after the announcement of the US election results prevented traders from making aggressive bearish bets around the safe-haven precious metal, thereby limiting any meaningful decline in gold prices.

After the rebound in gold prices in the early part of this week was capped by the key resistance level of $2,746.00/oz, the stochastic indicator sent a negative signal. After the US Republican presidential candidate and former President Trump announced his victory in the 2024 presidential election, spot gold plummeted, with the price of gold falling to as low as around $2,652.50/oz, a plunge of nearly $92 on the day. This is the largest single-day drop since June 7, and this factor has pushed gold prices to continue the corrective bearish trend for some time to come. The next bearish target for gold is $2,647.50 {76.4% Fibonacci retracement level of 2603.50 to 2790}, and $2,643 (October 14 low). If it breaks, it will test $2,536.50 (50-day moving average). As the price of gold has fallen too fast, it is not ruled out that the price of gold will make a technical rebound and break through $2,674.70 {61.8% Fibonacci retracement level), which will lead to a further rebound to $2,696.70 (50.0% Fibonacci retracement level), and $2,698.50 (25-day moving average), with a short-term target of $2,700 (market psychological level).

Consider going long on gold today before 2,655.00, stop loss: 2,650.00; target: 2,680.00; 2,685.00

AUD/USD

AUD/USD fell to multi-month lows amid a rebound in the US dollar driven by Trump's enthusiasm. Concerns about new tariffs and a trade war with China further weighed on the AUD. The Reserve Bank of Australia's hawkish stance and impulsive risk helped limit losses for major currencies. AUD/USD fell to around the 0.6500 psychological mark in early European trading on Wednesday, hitting its lowest level since August 8, and has now rebounded about 70-75 pips from there. However, spot prices remained deeply in negative territory in the first half of the European session and are currently trading near the 0.6600 mark, still down more than 0.85% on the day. AUD/USD's sharp intraday decline of more than 130 pips was caused by a strong recovery in demand for the US dollar. In fact, the US dollar index surged to a four-month high of 105.31 after the US presidential election showed the victory of Republican nominee Donald Trump. Moreover, Republicans are expected to gain a major share of the House of Representatives after securing seats in the Senate. Meanwhile, the renewed fear of new tariffs and trade war against China following the election of Trump as president further weighed on the Chinese proxy currency, the Australian dollar.

On Wednesday, the AUD/USD pair fell to around 0.6512 before the 0.6500 psychological mark, hitting its lowest level since August 8, from which it is currently trading around 0.6570-0.6580. Technical indicators on the daily chart suggest that the bearish trend may continue. The pair has fallen below the 10-day (0.6590) and 200-day (0.6628) moving averages, signalling downward momentum. Moreover, the 14-day relative strength index (RSI) remains below the 50 mark (latest around 39), further supporting the bearish outlook for the pair. Immediate support for the AUD/USD pair is located at the three-month low of 0.6512, and around 0.6500 (market round number). A break below this level could see the pair heading towards the August 6 low of 0.6472, which would come into play. On the upside, the pair will face additional resistance at the 200-day moving average at 0.6028, if it can re-cross the 12-day moving average at 0.6601, and the 0.6600 (market psychological level) resistance. A break above these levels could signal a strengthening of momentum, which could target the key psychological level of 0.6700.

Consider going long on AUD today until 0.6555, Stop Loss: 0.6540; Target: 0.6600; 0.6610.

GBP/USD

GBP/USD continues to fall, trading below 1.2900. The US dollar outperformed its rivals, not allowing the pair to gain traction as Donald Trump completed his political comeback, becoming the second US President to win a second non-consecutive term. GBP/USD gave up the previous day's gains, plunging more than 1% during the Asian session on Wednesday, while plummeting to around 1.2845 in early London trading. The GBP/USD pair faced intensive selling as investors flocked to the so-called "Trump trade" after former US Republican presidential candidate and former President Trump delivered a speech at the Palm Beach Convention Center in Florida, declaring victory in the 2024 presidential election. It is currently recovering slightly above 1.2865. The US dollar gained momentum on the back of a stronger Trump trade, as the pair fell as votes for Republican candidate Donald Trump in the US presidential election triggered a decline in the currency pair. Risk currencies were hit hard as investors expected Trump to raise import tariffs after taking office, which would have a significant impact on the exports of close US trading partners.

GBP/USD plunged to an 11-week low of around 1.2845, a drop of more than 1.60%, temporarily holding just before the 200-day moving average of 1.2813. The pair adjusted to a high of 1.3025, the 89-day moving average, earlier this week, but its rebound was capped by 1.3085 (65-day moving average), and 1.3103 {October 15 high} before turning around and falling to 1.2845. The 14-day relative strength index (RSI) indicator fell to a low of 38.60, indicating that bearish momentum has resumed. Looking down, the horizontal support of 1.2813 {200-day moving average} and 1.2800 {market psychological barrier} will become the main buffer for GBP bulls. If it breaks, it will test the support level near 1.2763 {August 13 low}.

Today, it is recommended to go long on GBP before 1.2865, stop loss: 1.2850, target: 1.2940, 1.2950

USD/JPY

During the Asian session on Wednesday, the minutes of the Bank of Japan meeting showed that the central bank will continue to raise interest rates if the economic and price forecasts meet the requirements, and the yen hit a two-week high against the US dollar. However, investors seem to believe that Japan's political landscape may make it difficult for the Bank of Japan to tighten monetary policy further. In addition, the market maintains a general risk appetite, which also suppresses the safe-haven asset yen. This, coupled with the results of the US presidential election, which showed Republican nominee Donald Trump winning the election, saw USD/JPY rise more than 300 points intraday and jump to its highest level since July 30, around 154.35-154.40. This triggered a rise of nearly 1.7% in USD/JPY to 154.35, a high in more than 3 months. With Trump's election, people are worried about the possibility of inflation-inducing tariffs. This, coupled with concerns about deficit spending and bets on the extent of Fed easing policy, pushed US Treasury yields sharply higher. In fact, the benchmark 10-year US government bond yield soared to its highest level since July 2 and prompted funds to flow out of the lower-yielding yen.

From a technical perspective, USD/JPY rose strongly on Wednesday after remaining firm below the very important 200-day moving average of 151.62 overnight. This, coupled with the stabilization of daily oscillators in positive territory and the price moving above the 154.00 mark, supports further upside in the pair in the short term. Therefore, a subsequent move towards the intermediate resistance of 154.70 - 154.75 and the psychological level of 155.00 is highly likely. The next relevant resistance is near the 155.20 area (July 30 high), a break of which would make it more likely that the spot price will extend the recent uptrend from the September swing low. On the other hand, the 153.50-153.45 horizontal area currently seems to be a short-term support, followed by the 153.00 round number. Any further declines are likely to attract bargain hunting around the 152.45-152.40 area, which in turn should help limit the downside for USD/JPY around the 152.15 area. The 152.00 mark is next to follow.

Today, it is recommended to short the US dollar before 155.00, stop loss: 155.20; target: 154.00, 153.80

EUR/USD

EUR/USD is expected to remain under heavy pressure as investors continue to digest Trump's victory, while the hawkish message from the Fed at Thursday's meeting is likely to prompt the spot to retest recent lows around 1.0680. EUR/USD plunged more than 1.60% to around 1.0702 in European trading on Wednesday. The dollar gained momentum due to former US President Donald Trump's victory in the US presidential election. The dollar received positive bids and surged to a four-month high, which in turn weighed on EUR/USD. Meanwhile, a Republican win in the election could set in motion potentially inflationary tariffs. This, coupled with concerns about deficit spending and bets on the Fed to ease its accommodative policy, pushed US Treasury yields sharply higher, which favored the dollar. In addition, the next focus shifted to the Fed's monetary policy decision to be announced on Thursday. In the eurozone, strong eurozone GDP data prompted traders to reduce bets in favor of a larger rate cut at the December policy meeting. The market expects the ECB to cut the deposit facility rate again in December.

Technically, EUR/USD surged to a four-month high of 1.2702 yesterday, driven by former US President Donald Trump's victory in the US presidential election, and then rebounded to 1.0770 on profit-taking. If the pair can hold 1.2702 (Wednesday's high) - 1.2700 (round mark) and can re-cross 1.2800 (market psychological mark), it will have a chance to challenge the 1.2851 (5-day moving average) level. On the other hand, the 14-day relative strength index (RSI) also supports the downward momentum, as the index is below the mid-line near 38.00, indicating the least resistance to the downside. If EUR/USD falls below 1.2702 - 1.2700 again, the next target will be 1.0666 (June 26 low).

Today it is recommended to short the Euro before 1.0745, stop loss: 1.0760 target: 1.0680, 1.0670.

Disclaimer:

The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.