Volatility Guaranteed In Forex Market This Week
Presidential Election, Interest Rates, and New Lockdown Measures
by Bogdan Giulvezan
The week ahead is shaping up to be one of the busiest of the entire year, with major events across the board. The Presidential Election will be the highlight for the United States, alongside the FOMC policy meetings and if that’s not enough, the week finishes with the most important US jobs data – the Non-Farm Payrolls release.
On the other side of the pond, the worsening COVID-19 situation has determined British Prime Minister Boris Johnson to announce new lockdown measures over the weekend, for a period of at least 4 weeks, and similar measures have been adopted by France and Germany.
On a brighter note, it seems like EU-UK trade negotiations are finally entering a smoother path and some progress appears to have been made, with officials coming closer to breaking the gridlock that’s been lasting for the last 8 months and solving one of the biggest friction points – fisheries.
Dates and Numbers
As most of us know, Tuesday, November 3 the US Presidential Election takes place and late in the evening, we will probably know if President Trump will remain in the White House for another 4 years or not. At the time of writing, polls show Joe Biden ahead in the race but of course, polls are not the final result, thus anything can happen. Expect volatility on US Dollar pairs throughout the day and use caution if trading.
Thursday, November 5 at 12:00 pm GMT the Bank of England will release the Monetary Policy Report as well as the rate votes of the MPC members and the Official Bank Rate. Although the rate is not expected to change (0.10%), the Pound is likely to show volatility at the time of release.
The same day, at 7:00 pm GMT, the FOMC will release their monetary policy statement and half an hour later the Federal Reserve Chair will hold a press conference where audience questions are anticipated. Although the rate is not expected to change, the FOMC Statement and the press conference will likely generate unpredictable reactions from the US Dollar.
The week finishes Friday with the release of the US Non-Farm Payrolls, scheduled at 1:30 pm GMT. This is hands-down the most important jobs data, showing the change in the total number of employed people during the previous month (excluding the farming sector). The anticipated change is 600K and usually, bigger values are beneficial for the US Dollar.
Chart Analysis – EUR/USD
At the time of writing EUR/USD is trading around 1.1640, having dropped for an entire week, from a peak at 1.1880. Several support levels have been breached (1.1750; 1.1695) and now the pair is trading below a bullish trend line, approaching another strong support area represented by the 100 days EMA and the zone between 1.1615 and 1.1600.
Both the MACD and Stochastic are pointing south but the latter is deep in oversold, which combined with the support elements already mentioned, may generate a bounce into higher territory. However, the technical side will be overshadowed by all the events that we’ve already talked about and the pair is prone to wild moves.
