US DOLLAR UNCHANGED AHEAD OF THE MID-TERM ELECTIONS
The US dollar was unmoved during the Asian session ahead of the US mid-term elections that are scheduled for tomorrow. These elections are being viewed as the most important mid-term elections in history. This is because they will help determine the influence of Donald Trump in American politics. A win by the Republican Party will be an indication of the strength of the US President. A defeat will likely mean a halt of his agenda, more departures from the White House and further congressional investigations on Trump and his administration.
The price of crude oil was unchanged in the Asian session. This is as traders prepare for the Iranian sanctions that will start today. Iran is the third biggest oil producer in the OPEC producing almost 4 million barrels every day. When the sanctions kick in, the country will not be able to trade in the crude oil market which relies extensively on the dollar. Most western firms will avoid the country with the goal of avoiding US sanctions and fines. The reason why there was no major movement in the price was that these effects were already factored in during the trading session.
Sterling rose slightly against the USD ahead of the important services PMI numbers. These numbers show the purchasing activity of the purchasing managers in the services sector. An increase in the activity is a sign that the industry is doing well while a reduction is a bad sign for the economy. Today’s numbers are expected to show the PMIs at 53.3. This will be lower than the September’s 53.9. An improvement in the number will be a positive indicator for sterling.
The EUR/USD pair is trading at 1.1386. This is at almost the same level that it ended the day at on Friday. It is also sharply lower than Friday’s high of 1.1455 and along the 50% Fibonacci Retracement level. The double EMA on the 30-minute chart is almost neutral while the momentum indicator shows that the pair’s downward momentum has eased. Therefore, it is likely that the pair will resume the upward movement as traders wait for the decision by the Fed later this week.
The GBP/USD pair rose in the Asian session to an intraday high of 1.3020. The current price of 1.2987 is almost along the 50% Fibonacci Retracement level. It is also along the middle line of the Bollinger Bands. The RSI is currently at 52 while the momentum indicator shows weak downward momentum as shown below. Therefore, it’s likely that the pair will resume the upward movement. If it does, it will test the important resistance level of 1.3100.
The price of Brent crude was unchanged today ahead of the Iran sanctions. The XBR/USD pair traded at 72.36. This was near to Friday’s low of 72.30, which was the lowest level since August 27. The double EMA of the pair shows that the downward trend is likely to continue as traders start looking at the effects of Iranian sanctions. The RSI is currently at 25. While this is the oversold level, it is also an indication of the strength of the downward trend. If the downward momentum continues, it will likely hit the 70 level.