Daily Forex Market Preview, 26/10/2017
The British pound was seen posting strong gains yesterday as the third quarter preliminary GDP data showed that the economy expanded at a pace of 0.4% on the quarter. This was better than the forecasts of a 0.3% increase. The data is likely to cement expectations of a BoE rate hike in November.
The Bank of Canada held its monetary policy meeting yesterday, and as widely expected, the BoC's statement was cautious. The overnight rate was held steady at 1.0%.
Looking ahead, the focus turns to the European Central bank which is expected to announce its policy decision today. The markets are expecting to see the ECB announce the second tapering to its QE program, by as much as 30 billion euro. The central bank will also give its forward guidance. The euro was seen strengthening ahead of today's ECB event.
EURUSD intraday analysis
EURUSD (1.1827): EURUSD posted strong gains yesterday as investors were seen bidding up the common currency. The euro closed at a three day high and was seen extending the gains in the early trading session today. Price action was seen retesting the resistance level of 1.1822 which also marks the test of the falling trend line level. A breakout above this level is required for EURUSD to post further gains. However, it is unlikely for the euro to post further gains in the near term. The sideways range could be maintained within 1.1822 and 1.1710 levels of resistance and support.
GBPUSD intraday analysis
GBPUSD (1.3270): The British pound closed with strong gains yesterday on a better than expected GDP print. Price action has managed to break out to the upside from the long-term triangle consolidation pattern. This could see the pound sterling extend the gains towards 1.3360 - 1.3361 levels in the near term. With the minor inverse head and shoulders pattern that emerged, GBPUSD is on track to complete the minimum upside move towards 1.3282 level, followed by an extension towards 1.3360. We also notice that there is an ascending triangle pattern being formed that adds to the upside bias.
USDJPY intraday analysis
USDJPY (113.48): The USDJPY continued to post declines following the doji reversal formed above the 114.00 handle. The downside breakout below 114.00 suggests a near-term retracement. Price action is expected to test the lower support level at 113.00. However, if price fails to find support at this level, we can expect further declines to push USDJPY towards the 112.00 region. In the near term, however, USDJPY could be seen maintaining the range within 114.00 and 113.00.