Sample Category Title

Pivot (invalidation): 0.7260

Our preference Long positions above 0.7260 with targets at 0.7300 & 0.7325 in extension.

Alternative scenario Below 0.7260 look for further downside with 0.7235 & 0.7210 as targets.

Comment The RSI has just broken above a declining trend line.

Pivot (invalidation): 1.3100

Our preference Long positions above 1.3100 with targets at 1.3135 & 1.3155 in extension.

Alternative scenario Below 1.3100 look for further downside with 1.3080 & 1.3060 as targets.

Comment The RSI calls for a bounce.

Pivot (invalidation): 1.0000

Our preference Long positions above 1.0000 with targets at 1.0045 & 1.0070 in extension.

Alternative scenario Below 1.0000 look for further downside with 0.9985 & 0.9965 as targets.

Comment The RSI is bullish and calls for further advance.

Pivot (invalidation): 1.3160

Our preference Short positions below 1.3160 with targets at 1.3105 & 1.3070 in extension.

Alternative scenario Above 1.3160 look for further upside with 1.3200 & 1.3235 as targets.

Comment A break below 1.3105 would trigger a drop towards 1.3070.

Pivot (invalidation): 1.1455

Our preference Short positions below 1.1455 with targets at 1.1405 & 1.1390 in extension.

Alternative scenario Above 1.1455 look for further upside with 1.1475 & 1.1500 as targets.

Comment The RSI is bearish and calls for further downside.

The pair holds positive tone in early Thursday's trading and looks for retest of Fibo barrier at 113.80 (76.4% of 114.54/111.37) which capped previous day's attack.

Long-legged Doji was left on Wednesday after the action was rejected on both sides (Fibo barrier capped upside attempts while dips were contained by daily cloud top), as the greenback was on bumpy ride after results of US midterm elections were announced.

The greenback regained traction after being initially sold on concerns about split power in US congress, keeping bullish bias.

Bulls need clear break above 113.80 pivot to spark fresh acceleration through 114.00 (round-figure / option barrier) and possible extension towards key barrier at 114.54 (04 Oct peak).

But sideways-moving momentum and overbought slow stochastic on daily chart warn that bulls may run out of steam again.

Broken Fibo 61.8% barrier now acts as solid support at 113.33, with extended dips to remain above daily cloud top (113.01) and keep bullish stance.

Res: 113.80, 114.00, 114.10, 114.54
Sup: 113.46, 113.33, 113.01, 112.67

ECB's monthly bulletin paints an upbeat picture on the Eurozone economy. In short, even though incoming information was "somewhat weaker than expected", they remains consistent with "ongoing broad-based economic expansion". The expansion is supported by " domestic demand and continued improvements in the labour market.  Risks are "broadly balanced".

On prices, measures of underlying inflation "remained generally muted but stand above earlier lows". At the same time "Supply chain price pressures for non-energy industrial goods in the HICP continued to increase." "Wage growth developments point to increasing domestic cost pressures."

Also, ECB noted that the EONIA forward curve shifted slightly upwards over the review period. And, that indicates "market participants revised up their interest rate expectations for longer horizons."

Here are some highlights of ECB monthly bulletin:

External environment

• Global survey indicators of economic growth have weakened recently as the global economic cycle matures.
• Risks to the global economy remain to the downside, amid ongoing actions and threats regarding trade tariff increases by the United States and possible retaliation by the affected countries.
• Global financial conditions remain supportive for advanced economies, while creating headwinds for emerging market economies.
• The global trade momentum has moderated, but the near-term outlook remains steady.
• Global inflation was stable in August.
• Oil markets have been mainly affected by factors related to the US sanctions against Iran.

Financial developments

• Euro area government bond yields have risen since mid-September.
• Broad indices of euro area equity prices declined.
• Yield spreads on bonds issued by euro area NFCs remained relatively insulated from tensions in sovereign debt and equity markets.
• The EONIA forward curve shifted slightly upwards over the review period. Market participants revised up their interest rate expectations for longer horizons.

Economic activity

• Incoming information, while somewhat weaker than expected, remains overall consistent with ongoing broad-based economic expansion.
• Looking ahead, short-term indicators point to continued strength in the labour market in the coming quarters.
• Household income continued to support growth in private consumption.
• Private consumption is expected to display resilient growth in the coming quarters.
• Following the weak first quarter of 2018, investment growth rebounded in the second quarter.
• Investment is expected to continue to grow solidly, supported by robust domestic demand and favourable financing conditions.
• Euro area trade growth remained moderate at the beginning of the third quarter of 2018.
• Overall, the latest economic indicators suggest ongoing broad–based growth.
• The economic expansion is supported by domestic demand and continued improvements in the labour market.
• The risks surrounding the euro area growth outlook are assessed as broadly balanced.

Prices and costs

• Euro area annual HICP inflation was 2.1% in September, up from 2.0% in August.
• Measures of underlying inflation have remained generally muted but stand above earlier lows.
• Supply chain price pressures for non-energy industrial goods in the HICP continued to increase.
• Wage growth developments point to increasing domestic cost pressures.
• Both market and survey-based measures of longer-term inflation expectations have remained stable.

Full ECB monthly bulletin here.

The Australian dollar holds positive tone and extends bull-leg from 0.7182 trough into fourth straight day. Fresh extension higher offsets fears of rally's stall after bulls spiked 0.7299 (the highest since 26 Sep) on Wednesday but failed to close above daily cloud top and trendline resistance (0.7274/81). Upbeat Chinese Oct Export/Imports data, released overnight, boosted Aussie for renewed attempts above daily cloud and bear-trendline drawn off 0.7988 (11 Feb high) look for final push towards key barrier at 0.7314 (26 Sep spike high). Strong bullish momentum and positive setup of MA's on daily chart supports scenario, as strong bullish signal is expected on close above falling daily cloud, with extension above 0.7314 pivot, needed to confirm base at 0.7050 zone and generate reversal signal. Broken 100SMA (0.7264) is expected to hold and keep bulls intact, while break lower would signal deeper correction.

Res: 0.7299, 0.7314, 0.7381, 0.7446
Sup: 0.7274, 0.7264, 0.7244, 0.7212

There was a positive reaction of the stocks on Wednesday, gaining momentum during the day. As a result, the U.S. main indices held an impressive rally with a growth by more than 2%.

The dynamics of the American dollar was not a one-way street. Following the initial decline due to the recovery of demand for risks, the demand for the dollar returned as the focus of market participants shift to Fed’s monetary policy decision.

No change in the rates is expected today, but there have been hints for an increase in December. However, there is room to strengthen the American currency. According to CME’s FedWatch tool, the markets price only 80% probability of raising the rates again by the year end, which is lower than a month ago.

In the case that the Fed is confident in the economy and is determined to prevent overheating, the U.S. dollar will return to growth, which was interrupted at the beginning of the month due to the pre-election uncertainty.

At the same time, it is impossible to completely exclude surprises. The heightened turbulence of the markets last month may capture the central bank’s attention. Especially, considering that the hawkish comments were one of the main reasons for volatility subsequent to Jerome Powell’s words in regard to the willingness of raising the rates above the neutral level.

In previous years, the Fed paid attention to the economic conditions and the behaviour of the stock markets, not only domestically but also in other regions. For example, amid the collapse of Crude Oil and turbulence in China’s markets in 2015, plans for tightening policies were postponed.

This attentiveness to the situation is not as manifests this year. The Fed raised the rate in September, despite turbulence in the markets of developing countries. The persistence of current policy path can lead to a new wave of pressure on the stock markets and greatly spur the growth of the dollar. This option looks unlikely, but it cannot be completely excluded.

The USD weakened against the basket of major currencies. The USD Index (#DX) closed in the red (-0.11%). Democrats have won the House of the Representatives in the US while the Republicans are holding onto the Senat. The investors are waiting for the Federal Reserve to determine the new key interest rates. Watch out for the comments and the polemics by the Federal Reserve represetnatives.

A number of important economic reports was published yesterday. Canada released a Purchasing Managers' Index by Ivey for October, which reached 61.8 instead of expected 50.9. The Reserve Bank of New Zeland left the key interest rate at 1.75%, as was expected. Today, during the Asian trading session, China has released positive data regarding their trade balance. For example, the volume of export rose in October to 15.6%, while the volume of import – to 21.4% instead of the expected 11% and 14% respectively.

The prices on oil started to recover. At the moment, the WTI futures are at 62 USD/barrel.

Market Indicators

The US stock market has been showing some aggressive buy-outs lately: #SPY (+2,14%), #DIA (+2,17%), #QQQ (+3,14%).

10-year US government bonds yield is 3.22-3.23%.

The Economic News Feed for 08.11.2018:

Fed Interest Rate Decision – 21:00 (GMT+2:00).