USD PRICE OUTLOOK: ELECTION RISK, STIMULUS UNCERTAINTY, EQUITY EARNINGS & COVID-19 GUIDELINES KEY CATALYSTS FOR US DOLLAR VOLATILITY
- The US Dollar seems primed for elevated volatility this week as a result of a collision of key threat drivers
- DXY Index pivots greater as COVID-19 instances mount and market sentiment deteriorates broadly
- USD value motion is strengthening amid intensifying uncertainty across the election, stimulus
The US Greenback superior broadly on Monday. Souring threat urge for food largely explains the bid beneath top safe-haven currencies and newest enhance to USD value motion. This largely follows a breakdown in major stock indices. It seems that market sentiment is deteriorating totally on the again of mounting COVID-19 instances globally and fading optimism for a fiscal stimulus deal. To not point out, with a barrage of fairness earnings on faucet this week, and the November 2020 election proper across the nook, merchants could possibly be unwinding threat publicity in mild of heightened uncertainty.
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US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (19 JUN TO 26 OCT 2020)
Chart by @RichDvorakFX created utilizing TradingView
The collision of key macro threat drivers this week may exacerbate US Greenback volatility and contribute to missing conviction for a directional bias. That stated, there could possibly be potential for the DXY Index to proceed oscillating round its 50-day simple moving average till readability emerges after the US election.
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If threat aversion positive aspects traction, nevertheless, US Greenback bulls may try to eclipse final week’s excessive and make a push towards September’s prime. Alternatively, breaching final week’s low may improve potential for USD value motion to increase its bearish slide again towards multi-year lows, however this state of affairs appears much less doubtless with the broader US Greenback bouncing off its decrease Bollinger Band.
USD PRICE OUTLOOK: US DOLLAR IMPLIED VOLATILITY TRADING RANGES (1-WEEK)
But, in response to the newest US Greenback implied volatility readings, USD value motion is predicted to be comparatively tame. US Greenback one-week implied volatility readings look comparatively in-line with their respective 20-day averages and appear muted when ranked on a 5-year percentile foundation as effectively. This highlights potential for dealer complacency and larger-than-expected strikes throughout major currency pairs if volatility accelerates on the again of basic catalysts famous above.
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Additionally price mentioning, the DailyFX Economic Calendar particulars a number of different high-impact knowledge releases and threat occasions on the docket this week with potential of contributing to US Greenback volatility extra broadly. EUR/USD value motion may swing violently in response to the scheduled European Central Bank fee choice. GBP/USD may steal the highlight as the newest Brexit headlines cross market wires. USD/JPY and AUD/USD each look inclined to sizable reactions this week as effectively with upcoming inflation experiences in focus. Choices-implied buying and selling ranges are calculated utilizing 1-standard deviation (i.e. 68% statistical likelihood value motion is contained throughout the implied buying and selling vary over the desired time-frame).
Preserve Studying – US Dollar (USD) Presidential Election Performance May Prove Anything but Typical
— Written by Rich Dvorak, Analyst for DailyFX.com
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