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The euro is rising against the greenback in early Thursday trade after sellers once again failed to break the 1.1300 support level. The recent technical failure, at 1.1301, has created a bullish double-bottom pattern, which is encouraging intraday buying interest. The next large directional move in the EURUSD pair is likely to occur once the 1.1301 to 1.1380 price range has clearly been breached.

The EURUSD pair is only bearish while trading below the 1.1330 level, key support is found at the 1.1301 and 1.1225 levels.

If the EURUSD pair moves above the 1.1380 level, buyers are likely to test towards the 1.1431 and 1.1500 resistance levels.

Asian markets rose after Chinese communist officials signaled a fresh round of stimulus aimed at supporting the economy. This came after the country reported weak economic data in recent days. This week, the manufacturing PMI data showed that the sector was nearing the contraction phase. Today, the Caixin manufacturing PMI showed slight improvement from 50 to 50.1. The official PMI data from the government surveys a larger number of companies than the Caixin one. As the world’s second largest economy and the world’s biggest producer and consumer, weakness in the economy could be an indicator of the status of the global economy.

Yesterday, sterling neared the important support level of 1.2660. It then started moving higher after fresh Brexit hopes. In a statement, the Brexit minister said that a new deal was about to be made and could be confirmed by November 21. After making the statement, the minister backtracked but traders are now hopeful that a deal will be made. This came ahead of the important monetary policy statement from the Bank of England.

The price of crude oil ended lower yesterday, making October the worst month in more than 2 years. The declines continued in the Asian market as traders worried about supply. Inventory data from the EIA showed that the inventories were at 3.2 million barrels. This was lower than the 4.1 million barrels expected by the market. It was also lower than the 5.7 million released by the American Petroleum Institute (API).

EUR/USD

Yesterday, the EUR/USD pair reached an important low of 1.1300. This was the lowest monthly low. As expected, it then started moving higher as bears took their monthly profit. In the Asian session today, the pair reached an intraday high of 1.1350. While the 15 and 30-day EMA crossover has not happened, there are signs that it could happen as shown below. Therefore, there is a likelihood that the pair will see a rally, albeit short term, that could test the 1.1400 level.

GBP/USD

The GBP/USD pair neared the important support of 1.2660. After the statement from the Brexit minister, the pair jumped and today, it reached a high of 1.2860. After a month of declines, this will likely be a start of a strong rally as the EMA crossover indicates below. The statement by BOE could further provide a catalyst for the rise of sterling. If it rallies, it will likely move to the 1.2980, which is also the 50% Fibonacci Retracement level.

XBR/USD

The price of crude oil continued to move down in the Asian session, reaching a low of $74.55. This was the lowest it has been since August 22. Even with the big declines in October, the pair’s path of least resistance seems to be downwards. The RSI is at 31 while the ADX is at 17, a sign of the weaker trend. However, this will be an important month for crude oil as the Iran sanctions near and the US responds to the murder of Jamal Khashoggi.

UK PMI manufacturing dropped to 51.1. in October, down from 53.8, missed expectation of 53.0. Market noted that "new orders and employment decline for first time in 27 months" Also, "input cost and output price inflation both ease".

Rob Dobson, Director at IHS Markit, which compiles the survey:

"October saw a worrying turnaround in the performance of the UK manufacturing sector. At current levels, the survey indicates that factory output could contract in the fourth quarter, dropping by 0.2%. New orders and employment both fell for the first time since the Brexit vote as domestic and overseas demand were hit by a combination of Brexit uncertainties, rising global trade tensions and especially weak demand for autos.

"Alongside the halt in hiring, the increasingly defensive position of UK manufacturers was also reflected in the slight decreases in purchasing activity and inventory holdings, which firms linked to protecting cash flow and cost-cutting. There was some better news on the prices front, however, with input cost inflation dipping to its lowest for over two years as many global commodity prices fell.

"Looking ahead, manufacturers still maintain a positive outlook for production over the coming year, with 48% forecasting expansion. That said, the second half of the year so far has also seen confidence remain low compared to its long-run average, with views on prospects darkening again in October amid rising Brexit-related uncertainties and escalating global trade tensions."

Full release here.

XAUUSD (1218.03): Gold prices broke down from the support level at 1225.35 and fell to a three week low. While the downside target remains at 1207.00, the current retracement could potentially push prices back to the 1225.35 level. A retest of resistance here could keep the precious metal biased to the downside. However, if gold prices break past 1225.35 then we expect to see a short-term uptrend being resumed.

GBPUSD (1.2849): The GBPUSD currency pair posted a strong rebound just a few pips shy of the lower support level at 1.2683. The rebound in price action is currently seen with a hidden bearish divergence on the Stochastics. However, with price action clearing the short term resistance level of 1.2808, we expect the declines to retest this level. A successful test of this level as support could potentially put GBPUSD on track to post a correction toward 1.3086 region.

EURUSD (1.1345): The EURUSD touched down to the support area of 1.1315 - 1.1300 and is seen currently posting a rebound. The gains are likely to be limited as the EURUSD is likely to see the rebound being capped near the resistance area of 1.1435. To the downside, the gains are also expected to be limited. A breakout above 1.1435 will trigger further gains, but for the moment, we expect the common currency to maintain a sideways range.

The U.S. Dollar maintained strong gains on the last trading day of October. The U.S. Dollar index was seen rising to a two year high briefly on Wednesday.

The Bank of Japan left interest rates and its QE program unchanged at its meeting yesterday. In the press conference, BoJ Governor Kuroda signaled that the central bank was ready to do more if the economic risks due to the trade disputes between the U.S. and China intensified.

The central bank also slightly lowered its forecasts for GDP and inflation for the fiscal year of 2018 and 2019.

Data from the Eurozone covered the German retail sales which rose just 0.1% on the month and missed estimates of a 0.5% increase. The previous month's data was also revised lower to show a 0.3% decline.

Flash GDP estimates from Spain showed a 0.6% increase on the quarter matching estimates.

There was some good news on the inflation front as headline CPI was seen rising 2.2% on the year in October. This was in line with estimates and inflation slightly accelerated from 2.1% increase previously. Core CPI was however lagging, rising 1.1% as expected.

Canada's GDP for August showed a 0.1% increase which beat estimates of a flat print. This marked a seventh consecutive month of GDP gains for Canada.

The European trading session will open to the manufacturing PMI figures from the UK. The Bank of England will be holding its monetary policy meeting later in the day. No changes are expected to the interest rates at today's meeting.

The NY trading session will see the release of the ISM manufacturing PMI. Economists forecast that manufacturing activity as measured by ISM will ease to 59.0 in October from 59.8 the month before. Construction spending data is also due and is expected to show a 0.2% increase on the month.

Pivot (invalidation): 65.50

Our preference Short positions below 65.50 with targets at 64.80 & 64.30 in extension.

Alternative scenario Above 65.50 look for further upside with 65.80 & 66.30 as targets.

Comment The RSI advocates for further downside.

Pivot (invalidation): 14.3600

Our preference Short positions below 14.3600 with targets at 14.2600 & 14.2100 in extension.

Alternative scenario Above 14.3600 look for further upside with 14.4700 & 14.5300 as targets.

Comment As Long as 14.3600 is resistance, expect a return to 14.2600

Pivot (invalidation): 1219.00

Our preference Short positions below 1219.00 with targets at 1214.50 & 1212.00 in extension.

Alternative scenario Above 1219.00 look for further upside with 1223.50 & 1226.50 as targets.

Comment As Long as the resistance at 1219.00 is not surpassed, the risk of the break below 1214.50 remains high.