Daily FX Summary: October 21

Courtesy of Talking Forex

EUR/USD

Despite better than expected Eurozone related data on Thursday, the pair failed to post any gains as the USD index staged another rebound. As such, even though the bullish trend still remains intact, the pair continues to have difficulty in posting firm gains above 1.4000 level which indicates that there is a risk of a near-term correction. However given the persistent speculation over the potential asset purchase program which to be initiated by the Fed in November implies that any correction is likely to be short-lived since the USD index is almost certain to make another move to the downside. In terms of technical levels, support is seen at the 10DMA at 1.3932, 21DMA at 1.3791 and then at 1.3511 which is also a 50.0% Fibonacci retracement level. Worth noting that Friday sees the release of the ever so crucial German IFO survey which is expected to be the main driver behind the price action during London hours. There is also an intraday option expiry at 1.4075 which is due to expire at 10am ET NY cut. 

GBP/USD

GBP fell across the board on Thursday amid not only weak UK macro-economic data, but also following dovish comments by BoE’s Miles who said that the monetary policy is extraordinarily expansionary and can still be used further if needed. As a result the pair gave back the majority of the gains it posted on Wednesday and moved back towards 1.5700 level. In turn, this suggests that even though USD weakness will likely persist which should support upside price action, the sellers are eager to push the pair lower and at least in the near-term, risks of further downward correction are exceedingly high. There is no UK related economic data slated for Friday and as such the price action will depend on the USD and also EUR, which is expected to be highly reactive to the German IFO survey release. In terms of technical levels, a major support level is seen at the 50.0% Fibonacci retracement level which is then followed by the 200DMA at 1.5343. Also worth noting that there is also an intraday option expiry at 1.5855 which is due to expire at 10am ET NY cut. 

USD/JPY

The pair traded in a tight range just above 81.00 level but in slight positive territory on Thursday as the USD staged another technical rebound. Still, the pair remains in a downward trend and unless the rebound by the greenback persists, the pair will likely move below 81.00 in coming days. Most expect some sort of action by the MoF/BoJ if the pair breaches 80.00 but given the upcoming G20 meeting suggests that political pressure may be too high on Japanese government to refrain from any intervention until the negotiations are over.

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