Global macro overview for 23/10/2017

Global macro overview for 23/10/2017:

The Thursday's decision of the European Central Bank will be the key event of the week. The historically low interest rates will probably not change, but - as promised by Mario Draghi - at the October meeting the Governing Council will announce the arrangements for the future quantitative easing program (QE). If the content of the message or the words of the president (the beginning of the conference at 12.30 pm GMT) deviates from the market consensus (cutting the scale of purchases from 60 to 40 billion euros per month, extending the program by at least half a year), then we can face serious turmoil in almost all markets . The choice of one of these solutions should be regarded as obligatory because of the fact that Germany exceeds the maximum exposure to the country debt limit in the next eight months. Traders should not expect the ECB message to include references to a clearly defined end of the QE, which should in some cases be linked to the first potential date for a rate hike. Mario Draghi will certainly be tempted to mention the lack of recalibration of key parameters in a slightly longer period and the presence of relatively dampened core inflation trends in the euro area.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. Before the week's main event, the price is moving inside of the tight horizontal zone between the levels of 1.1729 - 1.1880. The 61% Fibo at the level of 1.1876 is still the key level to the upside and any violation of this level will lead to range breakout and a rally towards the next technical resistance at the level of 1.1936. The key level to the downside is seen at the level of 1.1665.

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