As we head into Thursday, November 7, 2024, the global forex market is poised for a potentially volatile session. The U.S. dollar has become the focal point for traders, responding to the surprise election outcome with Donald Trump defeating Kamala Harris. This unexpected victory has heightened market uncertainty as investors reassess the potential economic policies and international trade stance the new administration may pursue.
In the currency markets, the EUR/USD pair experienced heightened volatility, heavily influenced by the political shift in the U.S. and mixed economic data from both the Eurozone and the United States. The euro remains under pressure amid this political uncertainty, as traders anticipate further developments in U.S. policy direction and await key Eurozone data releases.
Meanwhile, the GBP/USD pair saw a sharp decline, reflecting both a weaker British pound and a strengthening U.S. dollar as the election results prompted a wave of USD buying. The pair’s movements were further influenced by the Bank of England’s recent decisions and commentary, keeping traders alert for any additional guidance.
The AUD/USD pair exhibited significant volatility as well, primarily driven by U.S. election-related risk sentiment and Australian economic data. Traders are closely monitoring this pair, as the Australian dollar often serves as a proxy for risk sentiment, particularly in the face of U.S. political shifts.
EUR/USD
Technicals in Focus
The EUR/USD pair remained volatile, closing near the 1.0750 level after a sharp drop earlier in the session. This movement was heavily influenced by the U.S. election results, which strengthened the U.S. dollar as markets digested the implications of Trump’s return to office. Technically, the MACD indicator shows a bearish crossover, indicating potential further downside. The Stochastic Oscillator is near oversold territory, suggesting the possibility of a corrective bounce. The 14-day RSI is also trending downward, signaling persistent selling pressure.
Trading Strategy: Neutral to Sell
Sell below 1.0770-1.0750 with targets at 1.0720-1.0700 and 1.0670-1.0650, with a stop loss above 1.0800. Alternatively, consider long positions above 1.0800 with targets of 1.0830-1.0860, with stops below 1.0770.
GBP/USD
Technicals in Focus
The GBP/USD pair dropped to the 1.2900 level, impacted by both U.S. dollar strength and ongoing concerns surrounding the U.K.’s economic outlook. The pair was further pressured by the market’s reaction to Trump’s victory, as traders anticipate a potential shift in U.S.-U.K. trade relations. On the technical side, the MACD has turned bearish, indicating further downside potential. The Stochastic Oscillator is in oversold territory, suggesting a potential short-term bounce. The 14-day RSI is neutral, reflecting cautious sentiment.
Trading Strategy: Neutral to Sell
Sell below 1.2920-1.2900 with targets at 1.2860-1.2830 and 1.2800-1.2770, with a stop loss above 1.2950. Alternatively, consider buying above 1.2950 with targets at 1.2980-1.3010, with a stop below 1.2920.
AUD/USD
Technicals in Focus
The AUD/USD pair faced significant volatility, trading near the 0.6590 level after a steep decline. The Australian dollar remains sensitive to U.S. risk sentiment, and the election outcome has introduced new uncertainties that are likely to weigh on risk assets. Technically, the MACD shows a bearish trend, but the Stochastic Oscillator indicates oversold conditions, signaling a potential rebound. The 14-day RSI is neutral, suggesting a wait-and-see approach.
Trading Strategy: Neutral to Buy
Buy above 0.6590-0.6570 with targets at 0.6620-0.6650 and 0.6680-0.6710, with a stop loss below 0.6540. Alternatively, consider selling below 0.6540 with targets of 0.6510-0.6480, with stops above 0.6590.
Market Outlook
Looking ahead, the market’s attention will be firmly on the implications of Donald Trump’s victory. The anticipation of changes to fiscal policies, trade agreements, and international relations could introduce additional volatility for the U.S. dollar, especially as Trump’s administration provides further details on its agenda. The upcoming U.S. initial jobless claims and consumer sentiment data will also be closely watched for additional insights into the U.S. economic outlook under the new administration.
For EUR/USD, traders will monitor updates from the European Central Bank and upcoming Eurozone economic data to gauge the region’s resilience against potential shifts in U.S.-Europe relations. The GBP/USD pair will be influenced by any U.K.-U.S. trade discussions that may emerge following the election outcome. Meanwhile, the AUD/USD will remain tied to global risk sentiment, as the Australian dollar reacts to the potential ripple effects in global trade and economic policies.
Overall, the market is expected to remain sensitive to both economic data and political developments, with potential for increased volatility as traders adjust to the implications of the election results and upcoming economic indicators.