Sample Category Title

The price increased in the first part of the day and tried to close the morning gap down, but failed to stay near 0.7084 today's high and now could reach the 0.7053 static support. I've drawn a potential Falling Wedge pattern, but the rate has broken below the downside line of this pattern.

A valid breakdown below the horizontal obstacle will confirm a further drop in the upcoming period, the next downside target will be at the WL2.

Price moves higher on the daily chart after the retest of the upper median line (uml) of the minor ascending pitchfork. Is attracted by the fifth warning line (wl5) and by the upper median line (uml) of the descending pitchfork, actually could be attracted by the confluence area formed between these two lines.

The EUR/USD gained some positions despite tensions in Spain that threaten stability in the European Union. The bulls pushed the price higher on the background of positive macro data. German industrial production increased in August by 2.6% versus the 0.9% forecasted and the Sentix investor confidence index in the Eurozone has grown to 29.7 in October compared to 28.6 expected. The greenback is getting support from positive news on the decline in unemployment to 4.2% in the US. At the same time, economic activity is likely to increase due to rebuilding in the regions that were affected by hurricanes Harvey and Irma.

The British pound demonstrated a confident increase on the back of the news regarding the Minister of Foreign Affairs, Boris Johnson, leaving his office. Prime Minister Theresa May is showing unity within the government and that is vital in the ongoing negotiations on the Brexit terms with Europe. The growth potential is likely to be limited, but tomorrow's publication on industrial production and trade balance in the UK may significantly impact trader sentiment.

The volatility of the USD/JPY decreased because of holidays in Japan and the US. At the same time investors are waiting for the outcome of the Catalan crisis in Europe and in case of easing tensions, the demand for the Japanese yen as a safe haven asset is likely to fall. Some impact on the price may come from the news on the current account balance in Japan that will be released at 23:50 GMT tonight.

EUR/USD

The common currency is testing resistance at 1.1750 and in case of its overcoming we may see the trend reverse to positive with the closest targets at 1.1825 and 1.1925. On the other hand, the next goal within the current downtrend is located at 1.1620 and after breaking through it the quotes may reach into the 1.1500-1.1550 range.

GBP/USD

The GBP/USD price was not able to fix under the support line at 1.3050 and rebounded within the channel. In case of breaking through the upper limit of the descending corridor quotes may rise up to 1.3200 and higher. On the other side, the fall resumption inside the channel is likely to lead to the price declining to psychologically important level of 1.3000.

USD/JPY

The USD/JPY is moving along the lower boundary of the ascending band. In order to continue the upward movement, quotations need to gain a foothold above the resistance at 113.00. After a long consolidation below 113.00 we may see a sharp movement in either direction. For the trend change to negative with potential targets at 111.00 and 110.30 the price needs to fix beyond the limits of the channel.

USD/CHF - 0.9794

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9792

Kijun-Sen level                    : 0.9790

Ichimoku cloud top                 : 0.9803

Ichimoku cloud bottom              : 0.9775

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite surging to 0.9837 on Friday, the subsequent retreat in NY suggests top has possibly been formed there and consolidation with mild downside bias is seen for weakness to 0.9750-55 (50% Fibonacci retracement of 0.9670-0.9837), however, break of 0.9730-35 (61.8% Fibonacci retracement) is needed to add credence to this view, bring further fall towards support at 0.9710 which is likely to hold on first testing.

On the upside, whilst recovery to 0.9805-10 cannot be ruled out, reckon said resistance at 0.9837 would hold and bring another retreat later. Above said resistance at 0.9837 would shift risk back to upside and signal the rise from 0.9421 low is still in progress, then gain to 0.9875-80 would follow but reckon 0.9900 would hold from here. As near term outlook is mixed, would be prudent to stand aside for now.

GBP/USD - 1.3127

Most recent candlesticks pattern   : N/A

Trend                                 : Down

Tenkan-Sen level                 : 1.3144

Kijun-Sen level                    : 1.3110

Ichimoku cloud top              : 1.3160

Ichimoku cloud bottom        : 1.3076

Original strategy :

Sold at 1.3170, Target: 1.3070, Stop: 1.3195

Position : - Short at 1.3170

Target :  - 1.3070

Stop : - 1.3195

New strategy  :

Hold short entered at 1.3170, Target: 1.3070, Stop: 1.3185

Position : - Short at 1.3170

Target :  - 1.3070

Stop : - 1.3185

Although cable surged again earlier today in European session, reckon 1.3190-95 (61.8% Fibonacci retracement of 1.3292-1.3027 as well as 38.2% Fibonacci retracement of 1.3455-1.3027) would cap upside and bring retreat later, below 1.3100 would suggest an intra-day top is formed, bring test of 1.3065-75, break there would suggest the rebound from 1.3027 has ended, bring retest of this level, break there would extend recent decline to psychological support at 1.3000 next.

In view of this, we are holding on to our short position entered at 1.3170. Above 1.3190-95 would risk test of previous support at 1.3222-29 (now resistance), break there would abort and signal low has been formed at 1.3027 instead, bring further gain to 1.3250 but price should falter below resistance at 1.3292.

EUR/USD - 1.1738

Most recent candlesticks pattern   : N/A

Trend                      : Down

Tenkan-Sen level              : 1.1734

Kijun-Sen level                  : 1.1734

Ichimoku cloud top             : 1.1729

Ichimoku cloud bottom      : 1.1704

Original strategy  :

Buy at 1.1690, Target: 1.1790, Stop: 1.1655

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1690, Target: 1.1790, Stop: 1.1655

Position : -

Target :  -

Stop : -

Although the single currency extended recent fall to 1.1669, the subsequent rebound late Friday suggests a temporary low has possibly been formed there, hence consolidation with upside bias is seen for gain to 1.1750 and then towards resistance at 1.1788, however, break there is needed to add credence to this view, bring retracement of recent decline to 1.1800 and later towards resistance at 1.1832 which is likely to hold from here.

In view of this, we are looking to turn long on dips as 1.1690-00 should limit downside and bring another rebound. Only break of strong support at 1.1662-69 would signal recent decline is still in progress and may extend weakness towards 1.1625-30 but reckon 1.1600 would hold.

USD/JPY - 112.68

Most recent candlesticks pattern   : N/A

Trend                      : Up

Tenkan-Sen level              : 112.67

Kijun-Sen level                  : 112.61

Ichimoku cloud top             : 113.01

Ichimoku cloud bottom      : 112.88

Original strategy  :

Sell at 113.10, Target: 112.10, Stop: 113.45

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 113.10, Target: 112.10, Stop: 113.45

Position :  -

Target :  -

Stop : -

Although the greenback jumped to 113.44 on Friday, the subsequent reversal from there to 112.32 suggests top has possibly been formed there and consolidation with downside bias is seen for test of support at 112.21, however, break there is needed to add credence to this view, bring retracement of early upmove to 112.00, then 111.75-80 but previous support at 111.47 should remain intact.

In view of this, we are looking to sell dollar on recovery as resistance area at 113.20-26 should cap upside and bring another decline to aforesaid downside targets. Only break of said resistance at 113.44 would abort and signal recent upmove is still in progress for further gain to 113.75-80 and possibly towards 114.00-10 which is likely to hold from here, bring correction later. 

EUR/GBP - 0.8931

Original strategy  :

Sold at 0.8930, Target: 0.8750, Stop: 0.8970

Position : - Short at 0.8930

Target :  - 0.8750

Stop : - 0.8970

New strategy  :

Hold short at 0.8930, Target: 0.8750, Stop: 0.8970

Position : - Short at 0.8930

Target :  - 0.8750

Stop : - 0.8970

 
As the single currency faltered below indicated resistance at 0.8970 and has retreated, retaining our bearish view and as long as this level holds, prospect of another retreat remains, below support at 0.8850 would signal top is formed, bring further fall to 0.8820-25 but break of 0.8800-05 is needed to signal the rebound from last month’s low at 0.8746 has ended, then subsequent decline to 0.8770 would follow. 

In view of this, we are holding on to our short position entered at 0.8930. Above said resistance at 0.8970 would signal the rise from 0.8746 low is still in progress for retracement of early decline to psychological resistance at 0.9000 but reckon previous resistance at 0.9048 would remain intact. 

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

USD/JPY has shown little movement at the start of the week. In Monday's North American session, the pair is trading at 112.71, up 0.06% on the day. In the US, banks are closed for Columbus Day, and there are no US events on the schedule. Later in the day, Japan releases Current Account, with the surplus expected to narrow to JPY 1.98 trillion.

US employment data was a mix on Friday. Non Farm Employment change surprised with a decline of 33 thousand, compared to the estimate of a gain of 85 thousand. The weak reading didn't cause any alarm in the markets, but rather underscored the severe impact of Hurricanes Harvey and Irma, which hit the US in late August and early September. The two storms caused $150-200 billion in damage and also took a toll on the employment market, although the labor market is expected to rebound as the recovery effort intensifies. On a brighter note, wage growth accelerated to 0.5%, above the estimate of 0.3%. This reading is pointing to stronger inflationary pressure, although we'll have to wait for additional inflation indicators, such as CPI, to gauge inflation is moving higher. There was more good news from September job data, as the unemployment rate fell from to 4.2% in September, down from 4.4% a month earlier.

Early in the year, the Federal Reserve broadly hinted that it would raise rates three or four times in 2017, and a third hike in December now appears very likely. Fed futures are currently priced in at 91%, which is remarkable, considering that only a month ago, the odds of a December increase were just 31 percent. A strong US economy has helped raise the odds, but the primary reason for the huge shift in market sentiment can be attributed to the Fed policymakers that have come out in support of a rate hike, notably Fed Chair Janet Yellen. The lack of inflation remains the most significant impediment to raising rates, but Yellen and other FOMC members have insisted that strong economic conditions will lead to higher inflation levels.

• European equities tread water today with Spain outperforming (+0.75%) following this weekend's developments in the Spain-Catalunya stand-off. US markets are closed for Columbus Day.
• German industry rebounded from a summer lull with its best month in six years, keeping Europe's largest economy on a solid footing in the second half of the year. Output, adjusted for seasonal swings and inflation, increased 2.6% from July when it fell a revised 0.1%.
• After 208 days of tough negotiations, the leaders of four Dutch parties (VVD, D66, CU and CDA) agreed on a draft program for a new centre-right coalition government under Prime Minister Mark Rutte that will likely push policies further to the right.
• Theresa May's attempt to put pressure on the EU to move on to the next stage of Brexit talks received an early setback after the European Commission said that the "ball is entirely in the UK's court".
• Germany's Greens rejected a deal reached within Chancellor Angela Merkel's conservative bloc to limit migrants to 200,000 a year, but said coalition talks should get under way anyway.
• The ECB is still concerned with the stock of bad loans clogging up bank balance sheets in the euro zone, ECB Mersch said. The ECB last week issued new proposals that will force banks from 2018 to set aside more cash to cover newly classified bad debts and may also present additional measures to tackle the sector's huge stock of soured debt.

Rates

Bund treads water in thin market conditions

The German Bund gained slightly ground after today's opening, but hovered sideways in a narrow range for the remainder of the European session. Traded volumes were extremely low. Japanese and US markets are closed today and the EMU eco calendar only contained (very strong) German production data. Last week's failure to break above 0.50% resistance (German 10-yr yield) suggests some consolidation ahead despite this week's heavy EMU supply calendar.

The German yield curve bull flattens at the time of writing with yield changes ranging between flat (2-yr) and -1.1 bp (30-yr). On intra-EMU bond markets, 10-yield spread changes versus Germany range between +1 bps and -1 bps with Italy (-3 bps) and Spain (-5 bps) outperforming. Spanish bonds profit after this weekend's mass demonstrations against the Catalan secession case which play in the advantage of PM Rajoy's in the current stand-off. Dutch bonds don't react to the announcement of a new centre-right coalition government under PM Rutte after more than 200 days of negotiation.

The Slovak debt agency announced the near-term syndication (likely tomorrow) of a new 30-yr benchmark. The new issue is a significant lengthening of the Slovak curve. Currently, the longest-dated outstanding Slovak bond is a 20-yr one (SLOVGB 1.875% Sep2037; issued in Q1 2017).

Currencies

Sideways trading in main dollar crosses

The greenback traded listless in a tight range during today's session following a failed attempt of the dollar to gain more ground after the payrolls on Friday. A thin calendar and the absence of US traders (Columbus Day) contributed to the dull trading. Tensions between the US and Turkey and ongoing uncertainty about Catalonia didn't affect global currency markets. At the time of writing, EUR/USD trades around 1.1740, barely 10 ticks above Friday's close. USD/JPY trades at 112.70, nearly unchanged on the day.

Overnight, Japanese markets were closed, making the start of trading even thinner than is usual the case on Monday. Weak Chinese PMI's were ignored, leaving a modest risk-on sentiment in equity markets. However, it didn't impact USD/JPY or EUR/USD, which both traded near opening levels.

A shy attempt to push EUR/USD lower at the start of European trading after very strong August German production data ran rapidly into resistance and an intraday low around 1.1720 was reached when European equities started trading. Tensions about Catalonia's independence eased after the mass demonstrations in favour of Spanish unity. We shouldn't give too much credence to explain the sluggish move higher of the euro to this intrinsically euro positive factor. The pair topped out even before reaching the 1.1750 level and trades currently at 1.1740, insignificantly above Friday's closing levels. Moves in USD/JPY were even smaller during the European session.

Sterling strengthens as PM May re-asserts her authority

Following a 6 days losing streak, when investors scaled back sterling long positions, sterling managed to gain ground today versus euro and dollar. There were no economic data of importance, but the political future of PM May became again a bit more secure. On the weekend, she reasserted her authority as she mulled over a cabinet reshuffle in which Foreign Secretary Boris Johnson may be axed. This bit of news might have been enough to bolster sterling, as the trimming of sterling long positions might have finished (for now). We would currently consider the sterling rebound as corrective in nature. The alleged attempt of PM May to put the Brexit-ball in the EU camp during a speech that she will give later today, was already countered by the EU-27. A EU Commission spokesman said the ball is entirely in the UK Court. EUR/GBP was already downwardly oriented in late Asian trading and continued to slide lower in the European session. The pair is currently still near the intraday low near the 0.8910 level from Friday's 0.8915 close. Cable trades at 1.3160, up from 1.3066 Friday's eve.