EURUSD
- Current Movement: The EUR/USD pair remains steady, trading below 1.0900 in the early European session on Tuesday as investors await key global developments later in the week.
- ECB’s Panetta: Last week, ECB Governing Council member Fabio Panetta cautioned against overly delaying rate reductions, warning that a lack of timely cuts could lead to excessive deflationary pressures.
- ECB’s Schnabel: ECB board member Isabel Schnabel supports a gradual rate adjustment strategy, arguing that inflation is unlikely to drop below the ECB’s 2% target. These statements underscore the ECB’s mixed outlook on policy easing, which tempers expectations for larger rate cuts in December.
- Eurozone Economic Data: Recent Eurozone economic indicators have led traders to scale back expectations for aggressive ECB rate cuts next month, maintaining support for the Euro against the USD.
- US Political and Monetary Events: The US presidential election and Fed policy decision are key events for EUR/USD this week. Polls indicate a close race between Democratic candidate Kamala Harris and Republican Donald Trump, and results may take days post-election. Additionally, the Fed’s upcoming interest rate decision could shift USD positioning, with traders anticipating any hints toward future easing.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The EUR/USD remains in a consolidation phase, reflecting cautious ECB sentiment and the Eurozone's economic stability. The pair’s trajectory this week depends heavily on US election outcomes and Fed policy signals; a Fed leaning towards rate cuts could support EUR/USD gains, while any surprises from the ECB or strong US political shifts may alter this outlook.
GBPUSD
- Current Movement: GBP/USD holds a stable position above 1.2950 in European trading on Tuesday, benefiting from a weakened US Dollar amidst election sentiment and Fed expectations.
- US Dollar Influence: The US Dollar Index (DXY), which measures the USD’s strength against six major currencies, recently fell below 104.00, hitting two-week lows around 103.60. This decline aligns with improved polling for Democratic candidate Kamala Harris, which has pressured the USD lower.
- Fed Policy Expectations: The Federal Reserve’s rate decision on Thursday is expected to deliver a standard 25 basis point (bps) rate cut rather than the larger 50 bps cut from its last meeting. Markets await this decision, as it will shape the USD outlook, potentially providing more stability or further declines depending on future guidance.
- BoE Rate Outlook: For the GBP, economists predict a 25-bps rate cut by the Bank of England (BoE) to bring the benchmark rate to 4.75%. However, BoE Governor Andrew Bailey is unlikely to signal additional cuts this year, which leaves longer-term GBP/USD sentiment somewhat neutral.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: GBP/USD is underpinned by USD weakness tied to the approaching US election and tempered Fed expectations. The pair’s trajectory will depend heavily on Thursday’s Fed and BoE rate decisions. A Fed cut in line with expectations could stabilize USD, while any surprise guidance from the BoE may impact GBP sentiment through year-end.
GOLD
- Current Price Movement: Gold currently trades around $2,740 after testing the $2,730 demand area, with buyers stepping in to support prices as sellers briefly attempted to push below this level.
- Technical Analysis: Gold’s recent attempt near the top boundary of an ascending channel from late July followed by a pullback from its all-time peak indicates potential bullish exhaustion. This technical pattern may suggest limited upside in the near term unless new bullish momentum arises.
- USD Sentiment: The US Dollar faced renewed selling pressure on Monday due to a shift in sentiment as new polls placed Democratic candidate Kamala Harris ahead of Donald Trump in Iowa. This polling result has led to an unwinding of the “Trump trade,” which weighed on the USD, thus providing some support to the non-yielding gold.
- Geopolitical Impact: The Middle East conflict remains an important consideration for gold investors. Recent escalations, including Israel’s announcement that it killed a Hezbollah commander in southern Lebanon, have heightened demand for gold as a safe-haven asset amid geopolitical uncertainties.
- Upcoming US Data: Later Tuesday, the ISM Services PMI will be released in the US, though it may have a limited impact on gold prices as markets primarily await the US presidential election results, which could bring more volatility to the USD and gold.
Closing statement: Gold remains in a consolidative mode near $2,740, bolstered by political uncertainties and shifting USD sentiment. Both the US election and Middle East conflict are likely to play key roles in shaping gold’s near-term trajectory, as demand for safe-haven assets could increase with further global uncertainties.
CRUDE OIL
- Current Price Movement: WTI crude oil trades around $71.40 per barrel during European trading on Tuesday, maintaining gains after a strong 3% rise on Monday.
- OPEC+ Production Cuts: The OPEC+ alliance, which includes major oil producers such as Saudi Arabia and Russia, announced on Sunday an extension of its 2.2 million barrels per day (bpd) production cut through December 2024. This move reflects the group’s concerns over weak demand and increasing supply from non-OPEC+ sources, likely supporting oil prices in the near term.
- US Presidential Election Influence: Both Donald Trump and Kamala Harris are making strong closing arguments in Pennsylvania, each predicting victory as the race narrows. This last-minute campaigning adds to broader economic uncertainty, which could influence oil demand expectations in the coming weeks.
- China’s Potential Stimulus: The Standing Committee of the National People's Congress (NPC) in China is expected to approve new stimulus measures during its meetings from November 4 to 8. As China remains one of the largest oil consumers, any stimulus intended to support its slowing economy could lead to increased crude demand, supporting prices.
- Fed Rate Cut Prospects: Oil prices might encounter headwinds as traders recalibrate expectations regarding the Federal Reserve’s November policy decision. With fading expectations for a significant rate cut, some upward momentum may be capped, as lower borrowing costs generally bolster economic activity and could support energy demand.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI crude oil remains steady around $71.40, bolstered by OPEC+ production cuts and potential Chinese economic stimulus. However, uncertainties surrounding the US election and shifting expectations for Fed rate policy may introduce volatility into the market, influencing oil’s ability to maintain its recent gains.
DAX
- Tech Sector: Shares of SAP and Infineon Technologies faced declines of 1.36% and 0.65%, respectively, following Morgan Stanley's downgrade of STMicroelectronics to underweight, which weighed on the broader European tech sector.
- Germany’s Manufacturing PMI: The HCOB Manufacturing PMI for Germany was revised upward to 43.0 in October from a preliminary 42.6, showing improvement from September’s 40.6. This modest recovery signals some resilience in Germany's manufacturing sector, although the index remains below the neutral 50 mark, indicating contraction.
- US Data and Fed Rate Cut Prospects: US factory orders reported a 0.5% decline in September, following a 0.8% drop in August. This pattern of weakening demand has raised investor speculation of a December rate cut by the Fed, as softer economic activity could influence the Federal Reserve’s stance.
- ISM Services PMI: Investors await Tuesday’s ISM Services PMI report in the US. A decrease from 54.9 in September to an expected 53.8 in October could support market views of slowing growth, further impacting Fed expectations and international investor sentiment.
- US Election Impact: The US election is a major factor for DAX. A Trump lead could introduce trade-related uncertainties, potentially pushing the DAX below 19,000. Alternatively, a Harris lead may stabilize trade outlooks and could help the DAX approach 19,350.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: DAX stocks are being buoyed by both local and international developments, including stronger-than-expected Chinese economic data and potential Fed rate cuts. German and US data this week will be critical for investors, who remain focused on economic indicators that may either support or temper expectations for global demand stability.