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GBP/JPY is trading in a three-month descending triangle and a junior falling wedge which was formed on October 20. If looking at the current situation, the Pound is facing the combined resistance of the 100-, 55– and 200-hour SMAs and the weekly PP in the 148.30/65 area. This area coincides with the upper boundary of the wedge. Technical indicators suggest that the bearish sentiment might prevail in the market during this session. This might push the pair down to the lower triangle boundary circa the psychological 147.00 mark. Subsequently, both patterns point to a surge in the medium term, as it is more likely that the wedge is breached to the upside. The nearest northern target for this week could be the weekly R1 and the monthly PP circa 149.70. The latter , however, will change on Friday as a new month is to start.

The gold continued to rally against the buck on Monday. In result of the seven-hour surge, the pair managed to reach combined resistance formed by the monthly and weekly R1 at 1,297.00-1,298.00 and confirmed an assumption about transformation of the channel into the rising wedge formation. The appearance of new pattern only additionally confirmed that bulls are trying to push the rate to the 1,302.00 level. As that area is protected by the 23.6% Fibonacci retracement level, the pair is expected to make a fully-fledged rebound. However, in shorter perspective there is need to take into account that Trump’s meeting with Senate Republicans regarding prospects of tax reform as well as Powell’s appearance before Congress are likely to lead to strengthening of the buck and retreat to 1,292.00.

After making a rebound from the upper edge of the currently active descending channel, the pair slipped through the 38.2% Fibonacci retracement level and landed on the weekly S1 at 110.84. As early hours of the current trading session did not bring any significant news, the pair made a rebound and approached the upper trend-line for the second time. As the boundary is secured by the falling 55- and 100-hour SMAs, it is unlikely that bulls will manage to break the pattern. On the other hand, a reaction on various events in the United States might lead to short-term spike to the 111.60 level. However, even in case this scenario materializes, the general downtrend should not be affected due to resistance formed by the 100- and 200-day SMAs that are explicitly seen on daily chart.

During previous trading session the cable surged to resistance zone located at 1.3370-1.3380 and then pulled back to the 1.3220. The plunge once again was stopped by a combination of the 55- and 100-hour SMAs, which are lying along the bottom boundary of an ascending channel. For now, such soars and retreats were proofed to be successful. Today, the rate is likely to try to plummet to the weekly PP amid the Governor Powell’s testimony before Congress and Trump’s meeting with Senate Republicans about adoption of the new tax reform. However, neither of these events is expected to stop the rate in medium perspective from reaching and making a rebound from the upper boundary of a long-term dominant descending channel near 1.3400.

After reaching the 1.1960 level the currency exchange rate returned back to the 55-hour SMA located at 1.1900, as expected. The correction was based on hawkish comments made by the Fed’s Kaplan as well as anticipation of the Governor Powell appear before Congress and Trump’s meeting with Senate Republicans regarding the new tax reform. If traders concentrate on positive moments of those meetings, the pair is likely to plunge even further, towards combined support formed by the weekly PP and the 100-hour SMA near 1.1865. Even though bears might take the lead in second half of the day, the overall movement of the rate is still expected to be guided by bulls. Their first goal is expected to be the new resistance at 1.1960, while the ultimate is located at 1.2000.

The European single currency remained relatively strong agains the Greenback, despite much stronger-than-anticipated the US new home sales figures. Following the report, EUR/USD depreciated 9 pips or 0.07% to 1.1930 to remain above the 1.1900 level despite some bearish signals.

Sales of new single-family homes in the US marked solid increase to reach a ten-year high due to robust demand throughout the country, providing a boost to the property market. The Commerce Department showed that new home sales rose 6.2% to a seasonally adjusted yearly rate of 685K in October, the highest level in ten years. Moreover, upbeat results indicated that housing kept gaining momentum after the lack of available properties and suitable land restraned the growth.

The British pound has pulled back from a two-month trading high against the U.S dollar, as the U.S tax reforms were endorsed by another U.S Senator. Price-action is now trading around the 1.3330 zone, with the pair surviving yet another technical re-test of the 1.3307 support level in Asia. This Tuesday, the BOE will release the Financial Stability report and the Bank of England’s stress test results, followed later by a key-note speech by BOE Governor Mark Carney.

The GBPUSD pair will likely be met with further selling pressure while price trades below the 1.3360 level. Sellers will look to target the 1.3307 and 1.3268 levels.

Should the GBPUSD pair start to trade above the 1.3360 technical level again, further buying towards the 1.3382 and 1.3400 levels appears likely.

The euro has moved lower against the U.S dollar, finding support at the key 1.1890 technical level, as the U.S dollar index attempts to recover Friday’s steep losses. The EURUSD pair fell from the 1.1957 level, despite positive headlines from the eurozone, confirming that Angela Merkel has said she is willing to make compromises, so a strong coalition deal to be reached. During the U.S trading session, investors await the release of U.S Consumer Confidence data, we also have a raft of Federal Reserve members delivering speeches.

A sustained loss of the 1.1890 technical support level should lead to a EURUSD sell-off towards the 1.1860 level. Extended euro support is found at 1.1834.

Should EURUSD price-action hold above the 1.1890 technical level, further buying towards the 1.1955 and 1.1990 levels cannot be ruled out.

The US dollar was consolidating its gains from the previous day when hopes for tax reform were rekindled by an optimistic tweet by President Trump.

Euro/dollar was pushed back below 1.19 as the single currency showed it was not yet ready for a test of the key psychological 1.20 level. The previous day's high was 1.1961 – a more than 2-month high – but the euro was last trading at 1.1888. Dollar/yen also reflected some strength by the greenback as it climbed back above 111 to 111.26.

The yen was a little weak despite a mood of apprehension in equity markets, as Chinese equities were at first under pressure but managed to reverse those losses and go slightly positive after posting three consecutive days of losses on Monday and the previous week. There are worries that the regulatory clampdown by authorities of certain types of financial activities in China could lead to tighter conditions in local markets.

President Donald Trump met with Republican Senators on Monday and the mood was one of optimism that tax reform would get a positive vote in the Senate. A vote could take place as soon as Thursday, but there were still Republicans that needed to get on board for a positive vote to happen. Trump tweeted that the tax plan was 'coming along very well', which had a positive effect on the dollar. Also dollar-positive were better-than-expected new home sales for October.

Sterling lost ground against the greenback as the previous day's rally to 1.3377 was met with strong selling that drove the pair back to 1.3324. The pound was doing a little better against the euro as the single currency has failed to punch through the 90 pence level and was last at 0.8922. In today's news, the Bank of England said all major UK lenders passed the so-called 'stress tests' and did not appear to need fresh capital. Stress tests involve checking whether a bank's capital level is adequate for adverse economic scenarios. This was good news for the pound, as at least one bank – RBS – was suspected to have failed the tests. In addition, the BoE found that UK banks were adequately capitalized to make it through a 'disorderly' Brexit if that particular scenario materializes.

Following the release of the Bank of England's financial stability review and Governor Mark Carney's press conference, there is little exciting in the European calendar. Market participants might take an interest in Eurozone credit growth followed by the German GfK consumer climate index. Most of the action for today will take place in the United States. In terms of data, the S&P/Case-Shiller house price index will come out, followed by the Conference Board's consumer confidence index. A number of Fed officials are also speaking today. Jerome Powell will appear in Congress for his confirmation hearing for the post of Federal Reserve President. He is not likely to be seriously challenged as he is not a controversial figure and could attract bipartisan support for his nomination. Other Fed speakers today will be William Dudley and Patrick Harker, while Treasury Secretary Steven Mnuchin is also speaking a little before the close of New York trading. In Canada, Bank of Canada Governor will also make a speech

XAUUSD (1294.44): Gold prices continue to remain volatile although price action has managed to clear the resistance level of 1285. We expect this ranging phase to continue with another retest of 1285 where support could be formed. On the upside, the target towards the 1300 level remains in focus. Gold prices could be seen edging closer to this level in the near term. However, there is a risk of price posting a correction. Unless the support at 1285 fails to hold price, we can expect gold prices slipping below this level.