September 29, 2020 23:18:11
The USD dipped for a second day leading into the first US Presidential debate of 2020. The downside on the USD over the start of the week is potentially down to profit-taking leading into the end of the month. The debate will be at 11am (AEST) and investors will be watching closely for any indication into who they feel will become a front runner.
The debate will run for 90 minutes without commercials. The moderator will choose topics ranging from the corona-virus pandemic, the BLM protests, the economy and Supreme Court.
Technical analysis is showing the USD has completed a potential 5 wave structure lower. Immediate support can be found at 93.60 and resistance 94.60. It appears as though the DXY is in a corrective structure.
DXY INDEX
It has been reported that Trump is currently behind in the polls and this debate gives him a chance to progress in the race. For Biden, it provides him a chance to mess things up. Trump has criticised Biden for his “Basement strategy” as he avoids public speaking remaining hidden from the spotlight. The recent swing in the USD could be undone if public opinion changes during and after the first debate. Trump is estimated to be behind by roughly a 6 point margin, however, Hillary Clinton was in a similar position during the 2016 election campaigns.
Economists are forecasting a stronger USD if Trump wins, which will be a sign of confidence in his ability to lead the economy through this tough time.
In other major news, the Senate in the US will agree on a temporary stop-gap funding bill that will support the US economy in the short term whilst the Democrats and Republicans continue the negotiations over the next stimulus package. Markets are very much waiting for the debate between Trump and Biden, however, this news will also provide support to the US stock market.
The rally in the stock market since Friday is giving investors something to cheer about. The SP500 has broken out of a falling wedge formation. On the shorter-term time frame, a potential inverted head and shoulders formation is in play.
SP500
Immediate support can be found at 3321, which would be in line with the left shoulder. A break above the neckline could see the SP500 rise towards the 3429-resistance zone. A break below the shoulder line will invalidate the technical analysis.
Whilst this debate may not provide much of an indication into the result of the US Presidential Campaign, it may provide an extremely interesting watch!
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