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Tuesday is expected to be another subdued trading session in the financial markets, as a dearth of economic data keeps investors fixated on geopolitics and US holidays.

Action begins at 07:00 GMT with a report on Switzerland’s trade balance. The Swiss trade surplus is forecast to rise steadily in October thanks to higher exports.

Shifting gears to the broader Eurozone, the European Central Bank (ECB) will publish its biannual Financial Stability Review at 09:00 GMT. The report provides an overview of the possible sources of risk impacting financial stability in the common currency region.

In the United Kingdom, the Office for National Statistics will report on public sector net borrowing at 09:30 GMT. The monthly report is expected to show a sharp rise in net borrowing levels, possibly reaching £6.6 billion. September public sector net borrowing was £5.326 billion.

The Treasury Committee is also expected to hold the Inflation Report Hearings at 10:00 GMT. The United Kingdom has witnessed a sharp rise in consumer prices ever since the Bank of England (BOE) cut interest rates into record territory in August 2016. In response, central bankers recently voted in favour of a 25-basis point increase in the benchmark lending rate.

At 11:00 GMT, the Confederation of British Industry (CBI) will report on its monthly Industrial Trends Survey, which provides a qualitative opinion of domestic manufacturing.

The North American session begins with a report from the Chicago Federal Reserve Bank. The National Activity Index is expected to come in at 0.20 in October from 0.17 the previous month. Anything above zero implies growth.

Later in the session, the National Association of Realtors (NAR) will report on existing home sales for the month of October. Sales of previously-owned homes are expected to rise 0.7% to a seasonally adjusted 5.43 million.

Energy traders will also be keeping a close eye on the weekly crude inventory report courtesy of the American Petroleum Institute (API).

In terms of monetary policy, Fed Chairwoman Janet Yellen is scheduled to deliver a speech late on Tuesday.

US OIL

Oil prices edged lower on Monday, but remain in a firm months-long uptrend. US crude remains well supported above $56.00 a barrel, and is currently trading at a $6 discount to Brent. Investors should keep a close eye on inventory data over the next two days.

EUR/USD

The euro gave back gains to the dollar on Monday, as the EUR/USD settled in the lower half of 1.1700. The pair was last seen trading at 1.1737, with immediate support located at 1.1705. A strong resistance is forming at 1.1800.

GBP/USD

The British pound was trading steady on Tuesday, as prices continued to hold well above the 1.3200 handle. Cable recently hit two-and-a-half week highs, but now finds itself consolidating in the mid-1.32 region. GBP/USD is eyeing a close above 1.3260 for confirmation of the next bullish breakout.

WTI Oil stands on the front foot on Tuesday and retests strong barrier at $56.72 (Fibo 61.8% of $57.90/$54.80 pullback) which repeatedly resisted attack in previous sessions.

Bulls regained traction after Monday's strong downside rejection at $55.73 and close above 10SMA ($56.30) which also holds today's action, acting as initial support.

Overall bullish setup favors final break through $56.72 barrier which would open way for extension towards key $57.90 barrier (08 Nov peak) and eventual weekly close above $57.14 (Fibo 38.2% of larger 107.45/$26.04 descend).

Caution on overbought conditions on daily chart which suggest hesitation ahead of $57.90 barrier.

Res: 57.17, 57.90, 58.63, 59.08
Sup: 56.30, 55.98, 55.73, 55.48

XAUUSD (1279.73): Gold prices gave up the gains following the fake break out above 1285 level. Price action failed to hold on the gains as the resistance level of 1285 failed as support. The decline to 1274.70 region puts gold prices back into a sideways range. Support at 1274.70 came due to the confluence between the rising trend line and the horizontal support. Further declines can be seen on a break down below this level of support. This could put gold prices at risk of a decline towards the 1262.00 level of support.

USDJPY (112.55): USDJPY attempted to post a pullback following the declines from Friday. This came amid a bounce off the support level seen at 112.04. USDJPY is expected to remain range bound within the 113.00 and 112.04 levels of resistance and support. Any short-term gains are likely to be limited to the 113.00 resistance level. A reversal here could however increase the odds of a decline with a potential breach of the support level at 112.04. Below this support, USDJPY could be seen pushing lower towards the 110.70 support level. This will mark the downside move following the breakout from the rising wedge pattern on the daily chart.

EURUSD (1.1737): The euro extended declines yesterday, mostly on account of the uncertainty surrounding the German political developments. Price action shows that EURUSD is likely to extend the declines down to 1.1704 level of support seen on the daily chart. This marks the retest of the breakout from the falling wedge pattern from where price previously broke out from. However, further declines can be expected only on a strong close below this support level. With the trend line offering dynamic support and the horizontal support level confluence, the declines could be limited. EURUSD is most likely to maintain a sideways range as a result. On the 4-hour chart, the hidden bullish divergence that is developing adds weight to the limited downside in price.

The euro turned weaker on Monday's open after late Sunday coalition talks between Merkel's CSU/CDU and other parties broke down. The uncertainty led to the possibility of snap elections which weighed on the common currency. However, the declines in the euro were seen to be limited. The weakness in the euro managed to send the U.S. dollar to close higher on the day.

The ECB President, Mario Draghi was also seen speaking yesterday. In his testimony to the European Parliament, Draghi defended the ECB's monetary policy actions. He stated that the Euro area economy still required some stimulus in order to recover from the economic slowdown and for inflation to rise.

Looking ahead, the economic calendar today will see the release of the UK's inflation report hearings. In the U.S. the existing home sales data is expected to show an increase of 5.42 million. The Fed Chair, Janet Yellen will be speaking later in the evening.

The pair trades off today's marginally lower low at 0.7530, after failing to break below weekly 100SMA (0.7544) and showing no significant reaction on RBA minutes released overnight.

Overall structure remains firmly bearish but oversold daily studies warn of stronger corrective action.

Monday's high at 0.7573 marks initial resistance, lift above which would attract falling 10SMA barrier (0.7611).

This marks the first pivot for stronger recovery which could extend to 0.7643 (falling 20SMA) on break.

On the downside, sustained break through weekly 100SMA and 0.7516 (Fibo 76.4% of 0.7328/0.8124) would signal continuation of broader downtrend.

Res: 0.7573, 0.7611, 0.7643, 0.7695
Sup: 0.7544, 0.7516, 0.7496, 0.7460

The common European currency continued to lose value against the Dollar in a junior descending channel, as expected. In first hours of this trading session it made a rebound from the bottom trend-line of a dominant ascending channel, which was additionally supported by the rising 200-hour SMA. From larger pattern’s perspective the currency pair should succeed to break through combined resistance area formed by the 55- and 100-hour SMAs, the weekly PP, the 38.2 Fibonacci retracement level around the 1.1765 mark. However, the rate might actually end the day outside the senior channel due to additional pressure exercised by the 100-day SMA. In addition to that, the aggregate market sentiment remains 62% bearish and majority of traders continue keeping negative outlook on the Euro.

From technical perspective, the cable was expected to make a rebound from an intersection of two senior channels. However, the news about improved offer for the final financial settlement made by the British government led to spike of the price of Pound.

Depending on how markets will interpret today’s inflation report hearings, the pair might either return back into boundaries of the dominant channels or confirm its yesterday’s breakout to the top. In any case, there is a need to take into account that the current advance in junior ascending channel is additionally supported by the rising 55-hour SMA as well as the monthly PP at 1.3238. But in the meantime, majority of traders continue to have bearish outlook on the pair.

In line with expectations, the currency exchange rate has successfully reached the 112.62 mark. But as this level was protected by the weekly PP, the pair was forced to retreat. Currently, it is fluctuating in a limbo between the 55- and 100-hour SMAs.

Unless the buck receives a proper impulse it has little chances to break to the top. However, even if such momentum will be created the surge is not expected to exceed the 113.10 mark, which represents location of the 200-hour SMA. From the opposite direction an equal role plays support area located around the monthly S1 at 112.04. Generally, there is a need to keep in mind that the aggregate market sentiment is bearish and the pair is fluctuating in a medium-term downtrend.