USD Spikes on Obama Presidential Win

Tonight’s news of Barack Obama being elected as the 44th President of the United States spiked the US Dollar, sending most pairs back considerably from daily highs and lows. The freshman Senator’s win had USD buyers across the board, bringing back former trends.

What we have now is a mixed environment. On one side we have dollar strength being driven by dollar strength alone and lingering poor data from abroad, and on the other hand we have the potential for equity markets to accelerate on news, sending risk-related pairs upwards. This pull, if strong enough, could bring USD lower today if pairs pegged to carry trades become more bid.

Tonight in Japan, the Nikkei is trading up once again, and the S&P index closed up considerably today, giving rise to any risk related pairs and bringing up base pairs with them. S&P futures are pointing higher as I write, and currently resting at 1008.50 resistance. A break of this targets 1034.00.

What is to be noted, however, is that the S&P is trading in a tight channel, and the lower level has become very fragile at this point. Any downside moves could accelerate quickly.

Crude has been seeing mixed sentiment in the past 3 days, as had Gold, but fading tonight and weakness noted. It hit resistance today rather hard today and falling off quite nicely. Gold has been in a sideways channel as well, and like Gold, falling lower tonight.

In times like these of mixed sentiment, I look for breakouts of key areas for bias, giving consideration to existing macro trends. Our current trends are still intact: EUR/USD short, GBP/USD short, USD/CHF long and USD/JPY short. I’m maintaining this bias on all, with careful attention being paid to the equity environment.

Currently short EUR/USD and GBP/USD. Key trendlines on hourlies are present on both, but ultimately looking for lower on these pairs. USD/CHF just the opposite; look for a breakout of 1.1800 to accelerate price. USD/JPY could get a lift higher, and if it does, I’ll be tracking the equity environment for any potential reversal points, but ultimately looking to sell it as well.

The Dollar Index

For the dollar, the macro trend is still up, though the disturbance of this yesterday sank the dollar index back to 85.00 support. The next support level lower rests at approximately 83.30, with a target on longs at 90.70. At this point, 85.00 has weakened, and any attempts to take it out should not be done with great difficulty. Regardless, it is still intact, and keeping with the trend, I’m long until I see confirmation (break below 83.30) otherwise.

Pair Focus: EUR/USD

Looking for a 'buildup and breakout' of current 1.2788 lows with initial target 1.2650, the next major support level down. Very little support on the way down here in between these marks. Look for intraday price action on 15 minute timeframes to confirm areas for sells. If pair jumps higher, looking for break of major diagonal trendline around key resistance areas to spear buying opportunities. 1.2920 another potential breakout upside point, being careful because short term resistance lies right ahead at 1.2960 area. Not many other major obstacles in current path; might have to wait out sideways movement for further volatility.


Levels:

EUR has levels above at 1.3048, 1.3150, 1.3290, levels below at 1.2673, 1.2650, 1.2525, 1.2442, 1.2333
GBP has levels above at 1.5916, 1.5982, 1.6107, 1.6172, 1.6228, 1.6400 levels below at 1.5760, 1.5725, 1.5605, 1.5550
CHF has levels above at 1.1750, 1.1800, 1.1888 (61.8% monthly), 1.1980 area, levels below at 1.1650, 1.1588, 1.1568, 1.1523, 1.1476, 1.1464 (long term level, 50% of monthly)
JPY has levels above at 101.36, 102.40, 103.00, levels below at 98.35, 97.88, 97.40, 96.50