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The Euro extends weakness on Friday and hits fresh three-month lows against the dollar, following sharp fall on Thursday.

The single currency slumped after the European Central Bank announced reduction of QE amount to 30 billion Euros per month, but extended bond buying program until September 2018 and left the door open for further extension of the program.

This reduced chances for rate hike in 2018, as monetary stimulus remains necessary and inflation stays anemic.

The Euro was down 1.38% on Thursday and generated strong reversal signal after breaking key supports.

Initial bearish acceleration broke below daily cloud base (1.1731) and took out 100SMA (1.1677) as well as the neckline of H&S pattern (1.1667), formed on daily chart.

Close below these supports was strong bearish signal, with today’s bearish extension approaching round-figure support at 1.1600 and eyeing next target at 1.1510 (Fibo 38.2% of 1.0570/1.2092 ascend).

Corrective action on profit-taking should be considered in the near-term, with limited upside as former breakpoint now act as strong resistances and expected to cap.

The pair is on track for strong bearish weekly close which would increase persisting bearish pressure.

Res: 1.1666, 1.1678, 1.1731, 1.1757
Sup: 1.1600, 1.1510, 1.1465, 1.1400

USDCAD is trading higher and moving further away from the more than two-year low of 1.2061. After stalling at the key 1.25 level, the pair resumed its rise, with 1.30 now in sight.

USDCAD looks set to extend its correction from the 1.20 area in the coming weeks as risk is clearly tilted to the upside. The bullish RSI and MACD are supporting this view.

Immediate support is seen at 1.2780 (mid-August high). Falling below this would shift the bias back to the downside to target the key 1.2500 level and any losses through this level would set USDCAD on the path to re-test the September 8 low of 1.2060. This was a level not seen since May 2015.

While the downtrend from 1.3793 to 1.2061 has not been reversed yet, trend and momentum indicators on shorter time frame charts are starting to align more bullishly.

Reclaiming the 1.30-handle would strengthen the bullish bias to target resistance at 1.3347. A sustained break above 1.3546 would open the way to additional gains to the 1.3793 peak and from there the overall trend would shift back to the upside.

The US currency stood higher on the day as the Asian session was nearing completion, though barring a development that makes US tax reform more likely, that was mostly due to other majors' weakness rather than any dollar specific factors. Market participants are awaiting the advance estimate of US third quarter GDP growth which is due at 1230 GMT.

The dollar's index against a basket of currencies was trading 0.3% up on the day, near the day's high and not far below the 95 handle. It today rose to its highest since July 20. The US House of Representatives yesterday passed a budget blueprint, paving the way for tax overhaul to be delivered. In terms of today's highlight, economic activity in the world's largest economy is expected to have grown by 2.5% on an annualized basis during the third quarter of the year.

Dollar/yen recorded a three-and-a-half-month high of 114.30 with the pair last being up by 0.2% and not far below the aforementioned peak. Japan saw the release of September inflation figures today, though forex market participants' reaction to the numbers was limited. Core consumer prices grew 0.7% y/y, the same pace as in August and rising for a ninth consecutive month. This was below expectations for an increase by 0.8%.

Euro/dollar was trading 0.2% lower around 1.1625 after losing 1.4% the preceding day. The pair today hit a three-month low of 1.1614. Eurozone's common currency was hurt after the ECB dampened expectations for a rise in interest rates next year as it announced the details of its asset purchase program that will be in effect starting next year. Monthly asset purchases would amount to 30 billion euros per month (from the current 60 billion) and the program would run for nine months with the possibility for an extension should the ECB deem such a move is warranted (i.e. the program is open-ended in nature).

The dollar was also gaining ground relative to sterling, the loonie, the kiwi and the aussie. Pound/dollar was last 0.5% down, trading close to a near three-week low of 1.3083. Dollar/loonie was 0.3% up, near 1.2886, its highest since July 12 touched today. Kiwi/dollar was 0.1% lower, near the multi-month low of 0.6829 hit today. The aussie was hurt as the government lost its majority after it was ruled that Barnaby Joyce cannot remain in parliament as he was also a citizen of New Zealand when elected. Aussie/dollar was 0.3% lower, falling to 0.7623 earlier in the day, its lowest since July 11.

In commodities, gold was 0.1% lower, trading the near three-week low of $1,265.41 an ounce it posted earlier. The dollar-denominated precious metal is hurt on the back of the greenback's strength. WTI and Brent were lower by 0.1% and around 0.05%, trading at $52.60 and $59.29 a barrel respectively.

The University of Michigan Consumer Sentiment survey due at 1400 GMT and the US Baker Hughes oil rig count at 1700 GMT will also be gathering attention.

EUR/USD

Current level - 1.1629

The acceleration of the slide from 1.1837 during the ECB press conference broke through 1.1720 crucial static support, showing a completion of the prolonged consolidation pattern above 1.1660. The overall outlook is bearish on the senior frames, for a slide towards 1.1480 and 1.1300 area. Intraday resistance lies at 1.1660, followed by the break-out level at 1.1720.

USD/JPY

Current level - 114.18

My outlook remains positive, for a rise towards 114.50, en route to 115.50 zone. Key support is still projected at 113.05.

GBP/USD

Current level - 1.3115

The break through 1.3220 and 1.3160 signals a completion of the prolonged consolidation pattern above 1.3020 on the daily chart and the general downtrend has been renewed, towards 1.2910, en route to 1.2760. On the intraday frames the bias is bearish, for a break through 1.3100, towards 1.3020 low.

The common European currency collapsed against the Dollar after the ECB President Draghi cut the size of asset purchases but prolonged the quantitative easing program for nine months. From technical point of view, this event signified a breakout from symmetrical triangle pattern. In other words, the pair bounced off from a combined resistance formed by the 55-day SMA and the upper trend-line of a dominant descending channel. During today’s trading session bulls are likely to try to recover the Euro. However, these attempts are expected to fail, as the pair will need to cross the monthly S1 at 1.1658 and the weekly S2 at 1.1662. On chart this scenario even more unlikely, as the northern side there is additionally secured by the 100-day SMA.

Following a report that the key Brexit draft law will be debated in parliament in the middle of November, the Pound dropped against the Dollar. This news as well as prolongation of the quantitative easing program announced by the Mario Draghi gave an excellent opportunity to return the cable to the 1.3130 level, from which it started a massive surge this Wednesday. Despite such high volatility the lower trend-line of a dominant ascending channel is expected to block any further attempts of the rate to sneak to the bottom at least until release of the US Advance GDP later this day. However, another round of rapid surge is not expected either, as path to the north is reliably secured by a combination of the 55-, 100- and 200-hour SMAs together with the weekly PP at 1.3197.

In result of the weaker than expected Japan's national CPI data release as well as the ECB announcement, the pair found support at the 113.34 level and then resumed the surge. Similarly to Wednesday, it failed to break above the weekly R1, which is located at the 114.19 level. In principle, a release of better than expected information on the US GDP growth later this day might provide a necessary impulse for successful break through the above resistance level. In that case, bulls will get a chance to elevate the rate to the monthly R1 at 114.75. Otherwise the currency pair is expected to retreat back to the 113.80 level, which represents location of the 55- and 100-hour SMAs, or even lower.

After making a breakout from the falling wedge formation, the yellow metal was expected to continue the surge at least until the clash with 200-hour SMA. However, a plunge in Euro amid the ECB meeting led to downfall of the exchange rate. As a result, it has finally slipped below the weekly S1 located at the 1,269.58 mark. Such outcome simultaneously signified dissolution of the junior ascending channel and increased probability of a contact with combined support formed by the 200-day SMA and the bottom trend-line of the dominant ascending channel. In fact, on hourly chart at the moment there are no technical barriers between the above barriers and the exchange rate. However, a release of the US Advance GDP might alter this scenario and restore the value of gold.

Disappointing data on the US pending home sales caused little changes in the USD/JPY exchange rate. The pair made an ordinary move of 0.04% down to the 113.79 mark, where bulls continued to push it highr to touch the weekly high one again on Friday morning.

The National Association of Realtors revealed that there was no change in the number of pending home sales in September. However, the August’s figure was revised down, putting the yearly rate to 3.5% in the observed period. The report showed that the US housing market continued suffering from weaker sales due to tight inventories, while builders cited labour and land shortages as a restraint on construction. Activity is expected to fall further the lack of available properties.

The Euro started to fall against the US Dollar, after the ECB made an interest rate announcement on Thursday. The EUR/USD currency pair lost 0.40% or 47 base points to confirm the decline at the 1.1765 mark and fall further given the dovish stance of the Bank.

The European Central Bank held its key interest rate unchanged at 0.00%, as widely expected. The Bank also announced that it aims to start the exit from the QE program in a very cautious way, without seeing the strengthening of the Euro. Moreover, interest rate levels are unlikely to be moved until much later when the asset-buying program ends. As there was no the specific date mentioned, the rates could stay on hold at least for the year from now.