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Due to increase of the US Consumer Price Index, the yellow metal continued to advance against the buck simultaneously in two ascending channels. On the one hand, the pair is experiencing pressure from the 55- and 100-hour SMAs, which are continuously pushing it to the top. On the other hand, the pair faces a notable resistance level formed by the monthly PP at 1,304.85, which it has already failed to bypass once. There is a need to notice that intersection between the above two channels reminds another pattern, i.e. rising wedge. If this assumption is true, the pair has to make a breakout to the bottom somewhere between the 1,305 and 1,310 marks. However, if macroeconomic background will remain unfavourable, the rate most likely is going to surge to the 1,314 level.

The Greenback depreciated significantly against the Euro on the US economic reports on Friday. The EUR/USD exchange rate jumped 61 base points or 0.52% to enter the 1.1870 area close to the weekly high. Though, the pair gradually returned to pre-data levels, as EUR/USD remained under the bearish sentiment, putting an exchange rate lower.

The Labour Department showed that the US Consumer Price Index edged 0.5% higher in September, the strongest gain since January, which put the yearly rate of consumer inflation to 2.2% in the reported period. Separate report showed a 1.6% increase in the country's retail sales, where its sustainable firmness could cause a cease of low inflation trend and confirm the Fed's stance to raise interest rates anytime soon.

WTI oil holds firm on Monday and probed above $52.00, hitting new 2 1/2 week high at $52.20. Signs of oil market rebalancing keep the price supported with fresh boost coming on concerns over potential output disruption after Iraqi troops clashed with Kurdish forces in Kirkuk area which is home to Iraq's main oilfields. Technical studies remain in firm bullish setup and supportive for further advance, but bulls may take a breather before final push towards key short-term barrier at 52.84 (29 Sep peak), as slow stochastic is overbought on daily chart. Broken Fibo 61.8% barrier at $51.41 now acts as support, with extended dips expected to hold above rising 20SMA (currently at $50.89). Bullish scenario on firm break above $52.84 sees extension towards $53.74 (12 Apr high), regain of which would unmask key med-term barrier at $55.01 (21 Feb peak).

Res: 52.20, 52.41, 52.84, 53.18
Sup: 51.81, 51.40, 50.87, 50.65

Bulls are pausing on Monday after last week's strong rally which extended for fourth straight days. The rally peaked at 0.7897 on Friday, with Monday's easing being triggered by stronger than expected China's inflation numbers.

The Aussie dipped to 0.7867 in Asia, where 20 SMA offered footstep, with fresh recovery under way.

However, bulls may show stronger signs of stall as studies on daily chart are in mixed mode and slow stochastic entered overbought territory. In addition, converged 30/55SMA's (0.7911), which formed bear-cross, weigh on near-term action.

Failure to clearly break above 0.7900/11 zone would keep the downside vulnerable.

Loss of 20SMA support would risk test of another strong support at 0.7849 (daily cloud base) and generate stronger bearish signal on break. Bulls require lift above 0.7911 (30/55SMA) and 0.7917 (daily Kijun-sen) to signal bullish continuation and expose daily cloud top at 0.7944. Bullish scenario is supported by Friday's close above 0.7874 (Fibo 38.2% of 0.8102/0.7732 descend) which now acts as support.

Res: 0.7897, 0.7911, 0.7917, 0.7944
Sup: 0.7874, 0.7863, 0.7849, 0.7817

The pair is probing again below key 200SMA support (111.78) following Friday’s spike to 111.68 low but failure to close below.

This marks very significant support and firm break here would trigger further downside and test of plethora of supports which lay below.

Rising 30 SMA (111.46) marks initial support, followed by more significant 100SMA / Fibo 38.2% of 107.31/113.43 rally at 111.10 and top of thick daily cloud at 110.90, break of which would confirm reversal.

Bearish near-term techs are supportive for further easing, but oversold slow stochastic on daily chart warns of further hesitation at 200SMA.

No clear direction could be seen while the latter holds.

At the upside, converging 10/20SMA’s (112.44/35 respectively) marks solid resistance which should keep the upside limited and bias with bears.

Res: 112.07, 112.35, 112.44, 112.56
Sup: 111.65, 111.46, 111.10, 110.90

Cable is consolidating on Monday after strong rally last week which was capped by descending 20SMA at 1.3337. Consolidation is so far holding within narrow range, but overbought slow stochastic warns of deeper pullback. Limited downside action could be expected while thickening hourly cloud (spanned between 1.3256 and 1.3222) holds dips. Extension below hourly cloud would risk further easing and test of 10SMA (1.3208) violation of which would generate stronger bearish signal. Conversely, sustained break above 20SMA (currently at 1.3326) and daily Kijun-sen (1.3341) will be bullish signal for fresh upside action towards pivotal barrier at 1.3415 (Fibo 61.8% of 1.3655/1.3026 descend).

Res: 1.3311, 1.3326, 1.3341, 1.3415
Sup: 1.3256, 1.3222, 1.3208, 1.3182

The Euro stands at the back foot at the beginning of the week and extends pullback after last week's double upside rejection at daily Kijun-sen.

Fresh weakness on Monday broke below 1.1800 pivot (Fibo 38.2% of 1.1669/1.1879 upleg) and pressures next supports at 1.1779/74 (10SMA / Tenkan-sen).

Bearishly aligned techs on daily chart favor further downside and break through 10SMA / Tenkan-sen would further boost near-term bears for extension towards daily cloud base (1.1702).

Broken 20SMA marks initial resistance at 1.1813, with south-turning Kijun-sen (1.1850) expected to cap upticks.

Today's calendar is thin with EU trade balance for August (23.3B f/c vs 23.2B prev) and speech from ECB's Lautenschlaeger being key releases from the Eurozone today.

Markets are awaiting news from Spain as Catalonian leader failed to clarify to Spanish PM Rajoy whether he had declared independence of Catalonia, with fresh political tensions expected to impact the single currency.

Res: 1.1813, 1.1850, 1.1879, 1.1917
Sup: 1.1774, 1.1749, 1.1702, 1.1669

EURUSD is neutral since the end of September after pulling back from 1.2091, the highest level since December 2014. The pair is consolidating below 1.1900 around the 50-day moving average. Near-term risk is tilted to the downside with immediate support at 1.1660.

EURUSD is expected to remain soft. The recent recovery from the 1.1660 area lost steam and the market is now looking capped by the 50-day MA. Further declines would target 1.1470 and 1.1290 ahead of the key 1.1100 level.

Rising back above resistance at the 50-day MA at 1.1842 would see prices move up to the 1.1900 level, which if broken, would increase the odds for another extension towards the 1.2091 peak. From here, there would be a resumption of the uptrend from April, with scope to rise to the 1.25 area.

In the bigger picture, the upward trajectory of EURUSD from the 1.08 area stalled at 1.2091 on September 8. Prices have moved out of the rising channel. Trend strength is weak as indicated by the horizontal 50-day MA, while momentum signals are neutral. However, there is no indication of a trend reversal yet unless the market falls below 1.1400.

Gold is tracking higher after bouncing from the 1260.5 low and prices have been rising steadily since October 6. There is room for a further extension higher after a bullish signal was given by the crossover of the 20 and 50-period moving averages on the 4-hour chart.

While risk is tilted to the upside, the market may enter a consolidation phase at current levels in the 1300 handle. This is because the RSI indicator has reached overbought levels and is near 70.

Immediate support is now at the key 1300 level. If it holds and there is a push to the upside, prices would target 1315. Building on these gains would help strengthen momentum for a move towards 1335 and then re-test the 1357.47 peak. Clearing this level would allow for a resumption of the broader uptrend.

A drop below the key 1300 support level would dampen the near-term bullish outlook and shift the focus back to the downside. Next targets are at 1280 and 1260.59.

The euro was on track to post a third consecutive red candle in Asia after Austrian national elections during the weekend heightened political risks in Europe, while markets are eagerly anticipating what the Catalan leader will say today before his deadline. On the other hand, the dollar managed to edge up against a basket of major currencies after the Fed chair shared her hawkish prospects for inflation.

European far-right parties seem to gain support in Europe again despite defeats in France and the Netherlands after a substantial performance in German elections a few weeks ago and in Austria on Sunday. Yesterday, Austrian national elections caused a headache in Europe with exit polls showing a victory for the Eurosceptic leader of the center-right People’s Party (OVP), Sebastian Kurtz (30.1%). The ruling center-left Social Democrats, who currently hold a coalition with Kurtz’s party, came second (27.1%) just ahead of the far-right Freedom Party (25.9%) which strongly increased its share of votes and consequently raised its chances to enter the government after 12 years of absence. Expectations are now for the OVP to form a coalition with the anti-immigration Freedom Party since the former moved further to the right following Europe’s refugee crisis in 2015. Final ballots will be given later this week.

In Spain, the Catalan leader, Charles Puigdemont, has a deadline set by the Spanish government until 0800GMT to clarify whether he has officially declared independence. If indeed he confirms the above, then he will be given another three days to step back from his position before the Spanish government takes control of the region. In the adverse scenario, Puigdemont will lose support from his far-left CUP coalition partner.

The euro, though, fell moderately to $1.1804, down by 0.18%, as markets anticipate the ECB to announce the reduction of its asset purchases program on October 26.

The Fed chair, Janet Yellen, speaking at an international banking seminar in Washington on Sunday, reiterated that the Fed should raise interest rates gradually despite weak inflation, explaining that the US labour market and generally the US economy remains resilient. Commenting on the inflation path, she argued that upcoming evidence on prices, which will be closely monitored, will not be as soft as they are currently, while she also admitted that the wage figures released along with the September job report were encouraging. This followed the release of the US CPI readings on Friday which missed expectations but continued growing.

Regarding the latest developments from the US-North Korea front, the US Secretary of State Rex Tillerson said on Sunday that the US President Donald Trump has given orders for diplomacy with North Korea to continue in a way so as to ease tensions between the nations, with Tillerson saying that “those diplomatic efforts will persist until the first bomb drops”. Meanwhile, US and North Korean navy forces will hold a joint exercise until Friday in Korean waters according to the South Korean defense official.

The dollar index climbed a shade to 93.20. Dollar/yen was mostly steady around 111.85, while safe-haven gold was also flat around $1,300 per ounce.

In other currencies, the aussie retreated by 0.14% to $0.7877 despite Chinese inflation rising above forecasts and iron ore prices surging for the second session. Particularly, consumer prices in China picked up by 0.5% m/m in September, recording the highest growth in eight months. Expectations were for the CPI to remain at August’s mark of 0.4%. The annual gauge stood in line with forecasts at 1.6%; below the 1.8% seen in the previous month. Producer prices increased surprisingly by 0.6 percentage points to 6.9% y/y.

The kiwi was up by 0.24% at $0.7181 with New Zealand’s Prime Minister, Bill English, saying that the next government could be determined by the end of the week.

In energy markets, oil prices drifted higher near three-week highs amid tensions in the oil-rich region of Kirkuk in Iraq. WTI crude rose by 0.76% to $51.84 per barrel and Brent jumped by 1.03% to $57.76.