This morning, stocks in most ATP countries are trading in the red zone, oil is losing more than 2%, and December gold futures are below $1,900 an ounce amid fears of rising COVID-19 cases.

Along with fears related to the development of a pandemic, we focus our attention on the upcoming US elections. Nordea believes that there is a high probability of a "blue wave" scenario, that is, Biden's victory in the presidential election and Democratic control of both houses of Congress. The Economist model assumes that the probability of Biden winning has reached 92%, while Deutsche Bank gets 87.5% in its calculations. In turn, bookmakers are still on Biden's side, albeit with a smaller margin – the gap between candidates is about 8% according to polls.

Mr. Biden's victory is widely expected to weaken the dollar, but Friday's CFTC report showed that the dollar's upward trend continues. The net short position on the dollar has fallen again, and although the margin is still noticeable, there is no trend that would indicate expectations of its weakening.

There is an interesting collision. On the one hand, investors are bombarded daily by the majority of financial institutions with news that Biden's victory is inevitable and that the dollar is expected to weaken, if he wins the US elections. At the same time, more specific indicators look quite the opposite – futures for the purchase of the dollar tend to grow, that is, the number of players trading on its future growth is developing.

It should also be noted that the US stock markets are trading uncertainty. The S&P 500 ended in the red zone for the second week in a row, even despite a slight upward pullback on Friday. Stock indices directly reflect players' expectations for liquidity, that is, investors prefer to take a wait-and-see position before the elections, assuming that the expansion of the aid package can not wait at all. Therefore, the risks of a fall in the stock market increase.

So far, the Fed is sending cautious signals that the financial world will not wait for real rates to rise in 2021 (real rates = the difference between nominal rates and inflationary expectations), that is, there are clear hints of a way out of the crisis through a weaker dollar.

It would seem that investors should eventually build up a short position, as the dollar simply has nowhere to go, except to further weaken. However, the players' behavior is exactly the opposite, which increases the intrigue before the elections.

EUR/USD

The next meeting of the ECB will take place on Thursday, October 29. Monetary policy changes are not forecasted, as both ECB's head Lagarde and Chief Economist Lane said earlier that a certain adjustment could occur at the December meeting, when new economic forecasts become available.

According to the market's consensus, these measures will include an increase in the PEPP program to 2 trillion euros and a 0.1% reduction in the deposit rate. At the same time, a sharp increase in the COVID-19 cases in Europe could lead to a faster pace of economic slowdown, which will require a quick response. Therefore, we cannot exclude the possibility of a surprise that could weaken the Euro on Thursday.

The estimated price is still inclined downwards.

The most likely scenario is a pullback down from the local high of 1.1880, followed by the breakdown of the lower limit of the rising channel (approximately at 1.1750/60), after which it is likely to move to the level of 1.15.

GBP/USD

Despite the fact that retail sales in September were significantly higher than expected, the pound was unable to take advantage of the positive statistics, as the latest polls showed a slowdown in consumer activity. Consumer confidence index Gfk fell in October from -25 to -31p, which turned out to be worse than forecasted. Moreover, PMI in the services sector slowed from 56.1p to 52.3p.

The target price slowed the decline, supported by weekly revisions in the CFTC report and improved expectations for the Brexit negotiations.

Here, recent data indicate that both sides in the negotiations are willing to make concessions. However, we should not wait for the pound to rise, since it was proven that Mr. Johnson intends to wait for the results of the US elections and only then make a decision on the deal. If these expectations are confirmed, the pound will sharply decline.

The nearest target is 1.2820/40, followed by 1.2670. If the second goal is reached, it will mean that the corrective growth is already done.