29.10.2020: USD comes out on top: outlook for USDX, USD/JPY, AUD/USD

Risk-off sentiment prevails in the market. Investors factor in the record growth in the number of people infected with coronavirus in Europe. France and Germany have decided to re-impose a nationwide lockdown: in France from Friday and in Germany from Monday.
The US dollar as a safe-haven asset is gaining momentum amid such news. Yesterday, the US dollar index, which measures the strength of the greenback against a basket of six major currencies, notched the biggest daily gain since mid-September. It reached the key level of 93.60. If the US dollar breaks above this level, it will be able to strengthen across the board.
The lack of progress in negotiations between Democrats and Republicans on a new stimulus package also facilitates risk aversion. Investors are worried about the outcome of the upcoming US presidential elections whose results are likely to be disputed.
Meanwhile, аgainst this background, US stock indices remain near a 3-month low. The yen/dollar pair, which is always vulnerable to any swings in the stock market, is trading flat. Technical analysis experts think that the pair may correct upwards after yesterday’s fall. If it breaks and consolidates above the 104.86 level, it may well advance to 105.50. However, the downward movement is also possible if the pair slips below yesterday’s low of 104.14. If so, it will tumble to 103.75.
Finally, the Australian dollar has picked a clear trajectory. The AUD/USD pair, which is often viewed as a barometer of risk sentiment in the Asia-Pacific session, is affected by risk-off sentiment. It dripped down below the first bearish target at 0.7058. So, the pair may hit the levels of 0.6970 and 0.6938. However, it is likely to develop a short-lived upward correction before it decreases.
Today, investors are anticipating the report on the US GDP for the third quarter. The US dollar is expected to gain momentum after its publication as GDP figures are likely to rise after a sharp decline in the second quarter.

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