26.10 .2020: USD lacks bullish momentum: outlook for USD/JPY, AUD/USD

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The new trading week kicked off with the risk-off sentiment. Investors are refraining from active trading amid uncertainty over the new stimulus package as well as record growth of new coronavirus cases across the globe.
The US dollar index, which measures the strength of the greenback against a basket of six major currencies, started the week before the US presidential election near the level of 93.00. At the same time, the quote is likely to break above this level given the risks associated with the pandemic. Yet, these risks are likely to affect the US economy as well.
In an interview with CNN, White House Chief of Staff Mark Meadows acknowledged that the Trump administration cannot control the spread of the virus across the United States. Over the past two days, the highest number of new cases was recorded in the US, while France saw a record increase in daily coronavirus infections over the weekend. Spain declared a new state of emergency.
Wall Street opened the new trading week with gains in anticipation of the approval of a new stimulus package. The major stock indexes also advanced amid expectations that the vaccine against the coronavirus will be ready in November. The dollar/yen pair rose amid an increase in the equity market. The chart is moving up to consolidate above Friday's peak at 104.95. If so, the pair may well hit the target level of 105.55. However, technical analysis experts suggest that its rally may be quite difficult and they do not exclude the possibility of a false breakout. It means that the dollar/yen pair is more likely to resume the downward movement declining below the level of 104.56.
The AUD/USD pair, which is often viewed as the barometer of risk sentiment in the Asia-Pacific session, also signals risk aversion among investors. Apart from the coronavirus, traders are also concerned about the upcoming Plenum of the Chinese Communist Party. Speculators fear that the government may revise the forecast for the growth of China’s economy. At the moment, China is one of the few countries that is quickly recovering from the pandemic crisis. Its rapid revival is also beneficial for other countries. This is why traders are worried about some amendments to the current forecast. Presently, the pair is trading sideways. Technical analysis experts think that it may develop a short-term rally. Taking into account the differences in the fundamental and technical analysis, it is now recommended to refrain from active trading with this currency pair.

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