Daily FX Summary: October 25

Submitted by Talking Forex

EUR/USD

Despite renewed USD weakness, the pair failed to post substantial gains and after moving above 1.4000 level yet again, edged back towards the mid-1.3900's in the closing hours of trade on Monday. Still, the pair remains in a bullish trend and there is plenty of economic data from both sides of the pond on tap on Tuesday which, given the looming Fed meeting will result in high volatility by the USD and should the data disappoint, would lead to another attempt by the pair to surpass the 1.4100 mark. In terms of technical levels, to the upside 1.4100 remains a crucial psychological level and below, resistance levels are seen at 1.4005 and 1.4050. To the downside, supports levels are seen at the 10DMA at 1.3942, followed by the 21DMA at 1.3843. There is also an intraday option expiry at 1.3800 which is due to expire on Tuesday at 1500BST NY cut.

GBP/USD

GBP also benefited from renewed USD weakness on Monday following a research note by Goldman Sachs, which suggested that the Fed may carry out USD 2trl QE and in a worst case scenario the central bank will be forced to pump in almost USD 4trl. GBP also benefited from a somewhat lackluster appetite for EUR, with EUR/GBP trading below 0.8900. Going forward, majority of market participants expect the BoE to announce a resumption to its asset purchase program but the size will be open to debate after the release of the GDP data on Tuesday morning. The price action during the latter half of the day will likely be dominated by the USD flow, which is expected to be highly reactive to the economic data in form of housing, consumer confidence and Richmond Fed. In terms of technical levels, resistance levels are seen at the 10DMA at 1.5827, which is then followed by the 21DMA at 1.5836. To the downside, major support is seen at the 200DMA at 1.5337.

USD/JPY

The USD story was the main driver behind yet another move lower by the pair today, which printed a fresh 15y low at 80.41 and remains on track to make a test on 80.00. The greenback is expected to weaken further and unless the Fed decided not to proceed with QE v2.0, the pair will weaken further and eventually test the historic low at 79.75. As such, it remains highly uncertain as to what level will prompt an intervention by the BoJ and some speculate that only a convincing break below the historic low will prompt such action. There is also an intraday option expiry at 81.90 and 80.00 which is due to expire on Tuesday at 1500BST NY cut.

Comments

[Number 156]

Dollar is still worth something? Im shocked.

[HarryWanger]

Dollar dropping again tonight can only mean one thing - another green day for stocks.

[gwar5]

With a potential $4 trillion money printing on it's way, where is the USD-Dirt peg going? We've had a 20% decline in USD in 24 months.

Is there another 20%-50%-80% devaluation over the next 3 years on it's way?  That would be Iceland territory.

[Unbeliever]

The USD is in for a chilly reception?

[steveo]

USD Futures are fully outside the PRS channels, and supported by Person Pivot, and the fake out head and shoulders should be the coup de gras on dollar bears.

Lastly, UNG is a PIG, an amazing PIG. Oil up, winter coming in, and UNG down down down.....
The fund operators make money, no one else does.

http://oahutrading.blogspot.com/

[unum mountaineer]

.

[Oh regional Indian]

For all you currency heads, and excellent article, from which I quote...

The rush to devalue national currencies is like cutting off your foot so your favorite transnational corporation can sell you an overpriced prosthesis, made in their overseas sweatshop, to an HMO that Medicare will cover. Soon with Obamacare, only Medicaid recipients will qualify. The way to look at devaluing your countries currency is that it takes more worthless fiat species to buy the same amount of products. How laudable is this economic policy?

Awesome graphic up top...You can find the article here:  http://batr.org/autonomy/102410.html

Can anyone say rigged casino? I can... Rigged Casino.

ORI

http://aadivaahan.wordpress.com

[99er]

Charts

EURUSD     http://99ercharts.blogspot.com/2010/10/eurusd_26.html

USDJPY      http://99ercharts.blogspot.com/2010/10/usdjpy_26.html

More...          http://www.zerohedge.com/forum/99er-charts

[99er]

A BRIC In The Wall

(Reuters) - Second thoughts about the outcome of the next Federal Reserve meeting weakened stocks and steadied the dollar's decline on Tuesday, underlining how crucial the prospect of more Fed asset-buying has become to financial markets.

http://www.reuters.com/article/idUSTRE69K04L20101026

[unum mountaineer]

get your advance in advance, amen.

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