Forex Signals Brief November 5: The US Election Day Is Here!

Today is the big event of the month, the US presidential elections, which will likely have a sizeable impact on the USD, as indicated by yesterday’s price action. Yesterday the economic calendar was light to start the week, however markets opened with a gap after the weekend, as the USD retreated on presidential polls. However, in the US session USD buyers returned and most currencies gave back most of the gains against the USD.

The final manufacturing readings from Europe showed a marginally better activity, which also helped the Euro somewhat. Despite an improvement in risk sentiment, U.S. stock futures struggled to hold onto gains, pressured by large-cap tech stocks. In the bond market, the U.S. Treasury held a $58 billion auction of 3-year notes, achieving a high yield of 4.152%.

Oil prices moved higher, with crude surpassing $71 after OPEC+ announced it would delay its planned output increase for December. In contrast, cryptocurrencies faced downward pressure, as Bitcoin was unable to reach the $70,000 mark, adding to the sector’s recent weakness.

Today’s Market Expectations

The anticipated U.S. ISM Services PMI reading is 53.8, down slightly from 54.9 previously. Since 2022, this PMI has stayed within a relatively stable range, showing no strong directional trends. However, the services sector has shown notable resilience and appears to be gaining momentum in recent quarters. According to S&P Global Services PMI, demand in the sector has strengthened, with new order inflows hitting their highest level in nearly 18 months.

In New Zealand, the labor market report is expected to show some contraction, with an unemployment rate projected to rise to 5.0% from 4.6%. Quarterly labor market growth is forecasted to slow, contracting by -0.5% in Q3 after growing 0.4% in Q2. Additionally, the Labour Cost Index (Y/Y) is anticipated to decrease to 3.4% from 3.6%. The Reserve Bank of New Zealand (RBNZ) recently cut rates by 50 basis points, with another 50 basis point cut expected in the next meeting. Market forecasts include four further 25 basis point cuts through 2025.

Key Event: US Presidential Election This week, the U.S. presidential election is expected to dominate market sentiment. The election, along with its immediate aftermath and pre-election speculation, will be the main focus. A “blue sweep” (Democratic majority) is anticipated to be a bearish scenario for the U.S. dollar, while a “red sweep” (Republican majority) could support a bullish outlook for the dollar. Other economic events are likely to have limited influence on markets in light of the election’s significance.

Yesterday we got caught on the wrong side of the market as it opened with a gap higher over the weekend, while we were short on AUD/USD. However, we made up for it during the day, opening seven trading signals in total, and closing the day with five trades, all of them winning forex signals.

The 50 SMA Turned into Resistance for Gold

Gold has surged nearly 35% in 2024, climbing from its starting price of $2,000 and approaching the $2,800 level. Various factors, including technical indicators and economic uncertainty, have fueled this increase. However, as the U.S. presidential election nears, the market has grown more volatile. In response to this volatility, a gold sell signal was opened when buyers approached the 100 SMA on the H1 chart. This moving average acted as resistance, leading to a profitable close on the sell signal as prices reversed downward.

XAU/USD – H4 Chart

EUR/USD Can’t Hold Above 1.09

The EUR/USD opened with a 50-pip bullish gap last night due to shifts in U.S. election polls. Despite this uptick, the daily chart indicates a continued bearish trend, with the price remaining below key moving averages and under the 1.10 mark. Last week’s sharp reversal on Friday pushed the pair down nearly one cent from its peak, and the next move will likely hinge on election results and market reactions.

EUR/USD – Daily Chart

Cryptocurrency Update

Bitcoin Returns to $70K Again

BTC/USD – Daily chart

Ethereum Falls Below $2,500

Ethereum demonstrated strong buying momentum in October, breaking above the 100-day SMA and reaching $2,700. Although it briefly dipped below $2,500, Ethereum regained support above the 50-day SMA, confirming its upward trend. Yet, over the weekend, the price slipped again, moving below the $2,500 level.

ETH/USD – Daily chart