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The Euro lost yesterday's gains against the Greenback, after the disappointing report on German industrial production came in. The EUR/USD exchange rate fell 10 base points to the 1.1592 mark.

German industrial output dropped twice as much as anticipated in September, following a strong increase in the prior month. The Germany's Economy Ministry stated that country's industrial production fell 1.6% for the month, though still expanded 0.8% on a quarterly basis. In addition, data revealed that solid demand from other EZ countries for capital goods such as vehicles and machines contributed to a surprise rise in September's industrial orders, suggesting the industrial output to increase in the coming months.

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The AUD/USD currency pair rose slightly on the RBA interest rate statement showing no changes monetary policy. The Aussie added 12 base points to resume zigzagging between 0.7680 and 0.7695 marks.

The Reserve Bank of Australia kept its key interest rate at 1.50% for 15th month in succession, as inflation continued lagging behind surging labour market and stronger global economic growth. The Bank’s Governor Philip Lowe suggested that interest rates remaining at their low level are likely to keep supporting the Australian economy on the way to achieving consumer price growth closer to the 2% target. Moreover, the Australian Dollar was still elevated, being a headwind to the country’s stronger economic expansion.

The Canadian Dollar appreciated slightly against the US Dollar on Monday, following an upbeat Ivey PMI release. The USD/CAD currency pair halted an upward trend rebounding from the 1.2780 mark to fall further below the Friday low of 1.2734.

The Richard Ivey School of Business reported that its PMI index for the purchasing activity in Canada climbed to the strongest level in 21 months in October. The Ivey PMI rose to a seasonally adjusted rate of 63.8 in the reported period, up from 59.6 registered in September, due to an increase in prices and inventories. The PMI report as well as labour market data provided good signs for Canada, despite the economy entering the second half of the year at a slightly weaker pace.

The Aussie dollar moved lower against its US counterpart after the Australian central bank left interest rates unchanged on Tuesday's policy meeting.

The price moved lower after repeated upside rejection under 200SMA (0.7697) with formation of 10/200SMA death-cross, putting the pair under additional pressure.

Negative sentiment for Australian dollar comes also from wide expectations that US Federal Reserve will increase interest rates in December.

Fresh weakness pressures near-term congestion floor at 0.7630 zone (Fibo 38.2% of larger 0.6825/0.8124 ascend), as the price holds within 0.7630/0.7730 range for the second week.

Bearish daily studies keep near-term bias at the downside, with close below 0.7630 pivot to generate stronger bearish signal for extension of pullback from 0.8124 (08 Sep peak) towards targets at 0.7571/35 (05 July/23 June troughs and 0.7475 (50% of 0.6825/0.8124) in extension.

Falling daily Tenkan-sen offers strong resistance at 0.7677, followed by 200SMA at 0.7697, while range top at 0.7730 marks the upper breakpoint.

Res: 0.7677, 0.7697, 0.7729, 0.7753
Sup: 0.7630, 0.7571, 0.7535, 0.7500

The pair bounces above 114.00 on Tuesday after Monday's strong upside rejection and close in red.

However, the downside remains well protected at 113.60 zone (multiple downside rejections / Fibo 61.8% of 112.95/114.73 upleg) and buying dips strategy remains favored while the latter holds.

Close above cracked 114.33 barrier (Fibo 61.8% retracement of 118.66/107.31 pullback) will generate bullish signal for extension towards next targets at 115.00 (round-figure resistance) and 115.50 (10 Mar high).

Bullish setup of daily studies is supportive, with rising 10SMA (113.86) continuing to underpin.

Only reversal below rising 20SMA (113.28) would neutralize and turn near-term focus lower.

Res: 114.45, 114.73, 115.00, 115.50
Sup: 114.00, 113.84, 113.67, 113.53

Cable eases from session high at 1.3177 on Tuesday but remains tall following Monday’s strong acceleration higher.

Gains were repeatedly capped by 10SMA today / Monday, with the pair coming under pressure from downbeat UK data.

Mixed signals from daily chart see no clear direction, as the pair hesitates ahead of plethora of barriers at 1.3190 (20/55SMA forming bear-cross) and 1.3214 (daily cloud base).

Sustained break here is needed to signal fresh upside and expose key barriers at 1.3320 zone (tops of near-term congestion).

On the downside, rising 100SMA marks first pivot at 1.3091, loss of which would expose key supports at 1.3038/26 (lows of 03 Nov / 06 Oct).

Stronger direction signal could be expected on break out of current 1.3026/1.3320 congestion.

With no further releases from the UK scheduled today, focus will turn towards EU/UK divorce negotiations, due later this week.

Res: 1.3177, 1.3191, 1.3214, 1.3278
Sup: 1.3141, 1.3091, 1.3038, 1.3026

The Euro remains in red on Tuesday and maintains downside risk for final attack at 1.1574 pivot (27 Oct low).

Fresh easing offsets signs of indecision ahead of key supports, following yesterday's close in long-tailed Doji.

Negative daily techs favor further weakness with falling 10SMA (1.1644) maintaining pressure.

In addition, falling 20SMA is heading towards 100SMA and about to form bearish cross which would reinforce negative outlook.

Widening hourly cloud (spanned between 1.1626 and 1.1642) also weighs on near-term action.

However, risk of prolonged consolidation above 1.1574 pivot exists as slow stochastic is entering oversold territory on daily chart.

Expect upside attempts to be capped by 10SMA to keep bears intact for final break through 1.1574 and extension towards 1.1510 target (Fibo 38.2% of 1.0570/1.2092 rally / rising weekly Kijun-sen).

Conversely, lift above 10SMA is needed to sideline immediate bearish threats, while sustained break above 1.1700 resistance zone would neutralize and generate initial signal of recovery.

ECB President Draghi's speech and EU Retail Sales for September are in focus today.

Res: 1.1624, 1.1644, 1.1690, 1.1705
Sup: 1.1574, 1.1510, 1.1445, 1.1400

GBPUSD has maintained a neutral bias during the past month after declining from the high of 1.3656. Strong support is provided at the key 1.3000 level.

Near-term risk is tilted to the downside as GBPUSD continues to trade below the 50% Fibonacci retracement level of the upleg from 1.2773 to 1.3656. This level at 1.3215 will act as immediate resistance. A move above the 38.2% Fibonacci (top of current range) at 1.3318 is needed to weaken downside pressure and shift the market’s focus to the upside for a re-test of the 1.3656 high. From here the market would see a resumption of the longer-term uptrend.

A daily closing below 1.3000 would bring more softness for GBPUSD to shift it out of neutral to a bearish phase to target the 1.2773 low.

In the meantime, the market is expected to continue to trade in a range in the short-term, and likely at the lower end of the one-month range. The oscillators reflect a lack of clear direction. Both RSI and MACD are currently neutral.

Early on Tuesday, the RBA decided to hold interest rates steady at record low levels, retaining its confidence on economic growth and the labour market. The aussie, however, posted short-lived gains following the policy statement as weak inflation continued to worry policymakers. Meanwhile, in New Zealand, the Finance Minister said that targeting the currency was not the new government’s monetary goal, lifting the kiwi higher for a while.

In the wake of the RBA decision to keep rates at 1.5%, the aussie was on track to break the $0.77 key-level as the policy statement revealed that policymakers remained optimistic that GDP growth will approach 3% in the next few years, driving unemployment lower. A few minutes later, though, the currency dropped back to 0.7670 as the RBA Governor Philip Lowe expressed in the statement that inflation is projected to “remain low for some time, reflecting the slow growth in labour costs and competitive pressures”. On Friday, the central bank will also release its latest quarterly economic forecasts, giving a clearer picture of the inflation path.

The New Zealand dollar stretched yesterday’s uptrend, reaching a high of $0.6952 before it slipped back to $0.6920 after the Finance Minister, Grant Robertson, admitted that the new government has no plans to target the currency as part of its monetary policy framework, but instead has a desire to maximize employment, while publishing minutes of the Reserve Bank’s policy meetings was also under consideration.

The greenback rebounded to 94.86, being 0.14% up on the day as markets continued to price a third Fed-rate hike in December despite questions remaining on whether the US tax overhaul will succeed to pass through Congress. Uncertainties also arise from how the Fed board will be formed after the New York Fed President, William Duddley – known as the most influential dove policymaker – retires from his role in mid-2018 before his term officially ends in January 2019. Dollar/yen climbed by 0.40% to 114.13, reversing partially yesterday’s losses.

Dollar/loonie bounced from the two-week low of 1.2694 touched yesterday on the back of higher oil prices, last trading at 1.2729 (+0.21%). Loonie traders will also focus on BOC Governor, Stephen Poloz’s speech later today.

In Germany, industrial production decreased sharply by 1.6% m/m in September, while analysts anticipated a softer contraction of 0.8%. In the previous month, German manufacturing output rose substantially by 2.6%. Following the data, the euro broke below the $1.16 key-level to $1.1590 before the session-end (-0.15%).

Next on the day, investors will keep a close eye on ECB chief Mario Draghi’s speech at the 2nd ECB Forum on Banking Supervision “Europe’s changing banking landscape” in Frankfurt, Germany, as well as on retail sales readings out of the Eurozone.

The pound was weaker by 0.16% at $1.3148 as Brexit-related developments were weighing on the currency.

Turning to commodities, oil prices continued to fluctuate around two-year highs while gold pared some its yesterday’s gains. WTI crude was flat at $57.35 per barrel and Brent was slightly up at $64.39. Gold pulled back by 0.23% to $1,278.80 per ounce.

EUR/USD

Current level - 1.1606

The recent test of 1.1570 lows has failed, but the overall bias remains bearish, for a violation of the mentioned level, towards 1.1480.

USD/JPY

Current level - 113.95

There is a reversal at 114.70, but while 113.50 support remains intact, the outlook will be bullish, for a rise towards 115.50.

GBP/USD

Current level - 1.3165

The climb above 1.3130 resistance has neutralized the bearish intraday bias, but my outlook is rather counter-trend, for a reversal and return below 1.3130, en route to 1.3020.