Dollar steadies ahead of U.S. Presidential Elections

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    November, 2020

    On Monday, the U.S. dollar ranged as investor are preparing for the uncertainties of the U.S. presidential elections on Tuesday.

    The dollar held to its gains after its largest weekly percentage rise since late September in the previous week

    On the other hand, the pound suffers amidst coronavirus worries as British Prime Minister Boris Johnson announced a one-month lockdown across England.

    Investors are regarding the U.S. dollar as a safe-haven once again amidst uncertainties in the U.S. presidential elections.

    Democratic challenger Joe Biden leads in national opinion polls yet the race is seen as close with that of President Trump.

    “Currency volatility can extend well beyond Election Day because there is a high risk the losing candidate will dispute the election results. The 2000 election took around one month to resolve the disputes,” analysts at Commonwealth Bank of Australia said in a client note.

    Meanwhile, In Europe there are new COVID-19 cases which have doubled in five weeks.

    The Euro steadied in the Asia trade sessions.

    “The euro has been selling since infection cases and lockdowns stood in Europe,” said Daisuke Uno, chief strategist at Sumitomo Mitsui

    “But infection cases in other countries, like the U.S. have been on a rise as well. As time goes on, I think increasing coronavirus cases and lockdowns will be common topics in any country, to the extent that they are no longer themes for the currency market,” he said.

    There are 87,000 reported cases on Saturday in the United Stated and recorded hospitalizations in Midwestern states.

    Besides the U.S. Presidential Elections, there are also other economic data’s that traders and investors can look into such as the PMI data from the United States, Euro zone and elsewhere, as well as U.S. non-farm payrolls and Chinese trades.

    This week, three central banks are also due to announce their policy decision. The Reserve Bank of Australia meets on Tuesday, while the Bank of England and U.S. Federal Reserve will announce their decisions on Thursday.

    Technical Outlook

     

    In the daily charts of GBP/USD, the pair edged lower early morning in Sydney session all throughout the Tokyo session.

    As what we can see in the daily charts of GBP/USD, the pair is still trading inside the area of support at 1.28907 and resistance level at 1.31966. With the newly imposed one-month lockdown by PM Boris Johnson in U.K., economic activities may be halted for a while, the sterling may fall further against the dollar amidst the uncertainty of U.S. presidential elections and other economic indicators.

    Investors and retail traders are once again looking at the dollar as a safe-haven currency. If the pair will continue to breakdown this support at 1.28907, it may fall further in the coming days and will test the support at 1.26878. Traders are pre-cautious in planning out their short positions in this the 1.28907 support area and will further confirm the position once the price breaks down.

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