The ECB is preparing to calm the markets

Eurozone

Today, the ECB will hold a regular meeting on monetary policy issues. It is expected that the ECB will have its final decision to phase out the incentive program, which in the current structure should be completed in January 2018. Consolidated market expectations suggest that the regulator will prolong the asset repurchase program for another 9 months, while the volume of redemption will be reduced to 30 billion euros per month.

If the decision on the buy-back program coincides with the market expectations, the euro will react rather poorly to the results of the meeting. Otherwise, there might be fluctuations in either direction. For example, the program can be extended by 6 months instead of 9 months, and the total volume of redemption will be reduced 40 billion euros instead of 30 billion euros.

The ECB is interested in not provoking a tightening of financial conditions as well as the growth of the euro. Therefore, both the results of the meeting and the rhetoric of Mario Draghi at the press conference are expected to be mild.

United Kingdom

The U.K. GDP published on Wednesday grew by 0.4% in the third quarter and the annual growth was 1.5%. These preliminary data indicate a faster economic growth than forecasted yesterday.

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The pound responded to the publication with a confident growth, since in a week the Bank of England will hold a regular meeting on monetary policy and the accelerating GDP growth increases the chances that the rate will be raised on November 2.

At the same time, there is no certainty of an increase in the rate. Primarily this is because of high inflation which is due to the decline of the GBP and the appreciation of imports but not to the growth of economic activity.

The pound will remain a favorite pair with the dollar in the short term. Nonetheless, there are no reasons to wait for its strengthening above the October high of 1.337 for the time being.

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Global macro overview for 26/10/2017

Global macro overview for 26/10/2017:

Yesterday's data on US Durable Goods Orders outperformed estimates - the September increase was 2.2% on monthly basis and beat the expectations of 1.0%. Moreover, orders without transport and aviation increased 1.3% on monthly basis. Shipments of capital goods excluding aircraft and military equipment rose an annualized 10.6% in the three months ended in September. Those figures feed into calculations for the third-quarter gross domestic product that is scheduled for release this Friday.The September advance in durable goods orders was fairly broad-based with gains in fabricated metals, electronics, communications equipment and commercial aircraft.

The agencies also reported that US Treasury Secretary Steven Mnuchin expressed satisfaction with the progress of the tax bill reform, although speculation has yet to be made that further details will not be presented sooner than early November. Meanwhile, another Republican Senator, Jeff Flake of Arizona, has expressed his disapproval of a form of policy led by President Donald Trump. He also announced his withdrawal from politics in November 2018, and he will not seek re-election. This raised concerns about the gathering of sufficient support in the Senate for tax bills.

Today there will be a fairly important vote on the draft bill os next year's budget bill in the US House of Representatives, which will open the way to the procedure of key tax reform. The first voting in the beginning of October was smooth, but this time the number of oppositionists grew, so there may even come to a situation where you will not be sure that the bill will be accepted. The disagreement lies in a new proposal called SALT, which allows individual states to set tax rates independently of federal government proposals. If there is no agreement today in that matter, the US Dollar might depreciate across the board.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market has broken above the technical resistance at the level of 94.03 and now is heading towards the next resistance at the level of 94.26. Violation of this level will open the road towards the next target at the level of 95.05.

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Global macro overview for 26/10/2017

Global macro overview for 26/10/2017:

The Bank of Canada decided to maintain the overnight rate at 1.0%, which was widely expected by the surveyed market participants. Investors are reminded of a more cautious approach to future rate hikes and that economic growth in Canada will probably be lower next year than it was this year. BoC policymakers should also monitor the strength of the Canadian currency, which weighs on the pressure of inflationary processes and on the volume of exports. To make its case, the bank also pointed to the substantial, persistent unknowns around geopolitical developments as well as US related fiscal and trade policies, such as the renegotiation of the North American Free Trade Agreement.

Governor Stephen Poloz has introduced two rate hikes since July — at consecutive policy meetings — in response to the economy's impressive run over the last four quarters. The increases removed the two rate cuts introduced in 2015 as insurance following the collapse in oil prices.

Let's now take a look at the USD/CAD technical picture at the H4 time frame. After the news, the price of USD/CAD has managed to broke out above the technical resistance at the level of 1.2777 and now is consolidating gains around this level. The next technical resistance is seen at the level of 1.2858 and the nearest support is now the level of 1.2777. Please notice the overbought market conditions that might result in temporary correction.

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Bitcoin analysis for October 26, 2017

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The Bitcoin (BTC) has been trading upwards. The price tested the level of $5.866. Singapore has no plans to regulate cryptocurrencies such as bitcoin, according to the head of the Monetary Authority of Singapore. However, some laws are being formalized that could apply to some cryptocurrency activities and initial coin offerings (ICOs). Technical picture looks bullish today.

Trading recommendations:

According to the 15M time frame, I found a broken intraday trading range, which is a sign that buyers are in control. There is also a broken pivot resistance 1 at the price of $5.789. My advice is to watch for potential buying opportunities. The upward targets are set at the price of $5.983 and $6.058

Support/Resistance

$5.792 – Pivot resistance 1

$5.909 – Pivot resistance 2

$5.575– Pivot level

$5.458 – Pivot support 1

With InstaForex, you can earn on cryptocurrency's movements right now. Just open a deal in your MetaTrader4.

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Analysis of Gold for October 26, 2017

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Recently, the XAU/USD has been trading upwards. The price tested the level of $1,282.57. Anyway, according to the 15M time – frame, I found that there is a breakout of intraday rising wedge in the background, which is a sign that buying looks risky. There is also a fake breakout of pivot resistance 1 at the price of $1,282.00, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward targets are set at the price of $1,272.00 (S1) and the price of $1,267.00 (S2).

Resistance levels:

R1: $1,281.00

R2: $1,285.20

R3: $1,290.30

Support levels:

S1: $1,272.30

S2: $1,267.30

S3: $1,263.20

Trading recommendations for today: watch for potential selling opportunities.

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Technical analysis of USD/CHF for October 26, 2017

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Overview:

  • The USD/CHF pair is still trading in the bullish trend from the support spot of 0.9870- 0.9900. On the H4 chart, the price is in a bullish channel. This is confirmed by the RSI indicator signaling that it is still in a bullish trending market. As the price is still above the moving average (100), immediate support is seen at 0.9836, which coincides with a golden ratio (61.8% of Fibonacci). Hence, the first support is set at the level of 0.9836. So, the market is likely to show signs of a bullish trend around the area of 0.9810- 0.9836. In other words, buy orders are recommended above the prices of 0.9810- 0.9870 with the first target at the level of 0.9892 (pivot point). Furthermore, if the trend is able to break out through the first resistance level of 0.9892. Moreover, the pair could climb towards the second resistance levels of 0.9917 and 0.9950. Alos, it should be noted that the 3rd resistance is seen at the point of 0.9970. However, it would also be wise to consider where to place a stop loss; this should be set below the second support of 0.9850.
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Technical analysis of NZD/USD for October 26, 2017

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Overview:

  • As expected, the NZD/USD pair continues to move downwards from the zone of 0.6942 and 0.7880. Yesterday, the pair dropped from the level of 0.6942 to 0.6942 which coincides with a ratio of 23.6% Fibonacci on the H4 chart. Today, resistance is seen at the levels of 0.6945 and 0.7033. So, we expect the price to set below the strong resistance at the levels of 0.6945 and 0.7033; because the price is in a bearish channel now. The RSI starts signaling a downward trend. Consequently, the market is likely to show signs of a bearish trend. So, it will be good to sell below the level of 0.6942/0.6900 with the first target at 0.6800. If the NZD/USD pair is able to break out the daily support at 0.6800, the market will decline further to 0.6760 in order to test the daily support two. However, the price spot of 0.6942 remains a significant resistance zone. Thus, the trend is still bearish as long as the level of 0.6942 is not breached.
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GBP/USD analysis for October 26, 2017

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Recently, the GBP/USD has been trading upwards. The price tested the level 1.3278. Anyway, according to the 15M time – frame, I found a fake breakout of yesterday's high at the price of 1.3270, which is a sign that buying looks risky. There is also a testing of intraday Fibonacci retracement 61.8% at the price of 1.3238, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward targets are set at the price of 1.3160 (S1) and 1.3055 (S2, extreme intraday target).

Resistance levels:

R1: 1.3319

R2: 1.3376

R3: 1.3480

Support levels:

S1: 1.3160

S2: 1.3055

S3: 1.2995

Trading recommendations for today: watch for potential selling opportunities.

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NZD/USD Intraday technical levels and trading recommendations for October 26, 2017

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Daily Outlook

A recent bullish breakout above the downtrend line took place on May 22. Since then, the market has been bullish as depicted on the chart.

This resulted in a quick bullish advance towards next price zones around 0.7150-0.7230 (Key-Zone) and 0.7310-0.7380 which was temporarily breached to the upside.

The recent bearish pullback was executed towards the price zone of 0.7310-0.7380 (newly-established demand-zone) which failed to offer enough bullish support for the NZD/USD pair.

Re-consolidation below the price level of 0.7300 enhanced the bearish side of the market. This brought the NZD/USD pair again towards 0.7230-0.7150 (Key-Zone) which failed to pause the ongoing bearish momentum.

An atypical Head and Shoulders pattern was expressed on the depicted chart indicating a high probability of bearish reversal.

Bearish persistence below the neckline 0.7150 confirms the reversal pattern. Next bearish targets are located around 0.7050, 0.6925 and eventually 0.6800.

As expected, the price level of 0.7050 offered temporary bullish support before bearish breakdown could take place. That's why the further bearish decline should be expected towards 0.6925 and eventually 0.6800 (Reversal pattern bearish targets).

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Intraday technical levels and trading recommendations for EUR/USD for October 26, 2017

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Monthly Outlook

In January 2015, the EUR/USD pair moved below the major demand levels near 1.2050-1.2100 (multiple previous bottoms set in July 2012 and June 2010). Hence, a long-term bearish target was projected toward 0.9450.

In March 2015, EUR/USD bears challenged the monthly demand level around 1.0500, which had been previously reached in August 1997.

In the longer term, the level of 0.9450 remains a projected target if any monthly candlestick achieves bearish closure below the depicted monthly demand level of 1.0500.

However, the EUR/USD pair has been trapped within the depicted consolidation range (1.0500-1.1450) until the current bullish breakout was executed above 1.1450.

The current bullish breakout above 1.1450 allowed a quick bullish advance towards 1.2100 where recent evidence of bearish rejection was expressed (Note the previous Monthly candlestick of September).

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Daily Outlook

In January 2017, the previous downtrend reversed when the Head and Shoulders pattern was established around 1.0500. Since then, evident bullish momentum has been expressed on the chart.

As anticipated, the ongoing bullish momentum allowed the EUR/USD pair to pursue further bullish advance towards 1.1415-1.1520 (Previous Daily Supply-Zone).

The daily supply zone failed to pause the ongoing bullish momentum. Instead, an evident bullish breakout is being witnessed on the chart. The next Supply level to meet the pair is located around 1.2100 (Level of previous multiple bottoms) where bearish rejection and a valid SELL entry were offered (Note the depicted reversal pattern).

On the other hand, If the recent bearish breakout persists below 1.1800 and 1.1700 (Neckline of the reversal pattern), a quick bearish decline should be expected towards the price zone of 1.1415-1.1520 (Bearish targets of the depicted H&S pattern).

Trade Recommendations

Bullish pullback towards the price zone of 1.1835-1.1850 (the backside of the broken uptrend line) should be considered for a valid SELL entry.

Initial T/P level should be placed at 1.1550. S/L should be placed above 1.1950.

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Fundamental Analysis of NZD/USD for October 26, 2017

NZD/USD recently rejected 0.7170 resistance area which leads to impulsive bearish pressure in the market taking the price lower towards 0.6850 support area. NZD has been quite negative with the economic reports recently which helped the USD to gain impulsively on the bearish side towards the support area. Yesterday the market was quite indecisive, and some bullish interference was observed in the market. Today NZD Trade Balance report was published with deficit greater than expected at -1143M was expected to be at -900M which previously was at -1179M. The worse report did affect the gain of NZD today and resulted to further bearish pressure in the pair which is expected to fall for a certain point before it shows any bullish intervention in the process. On the USD side, Today Unemployment Claims report is expected to show an increase to 235k from the previous figure of 222k, Goods Trade Balance report is expected to show a greater deficit at -63.8B from the previous figure of -62.9B, Prelim Wholesale Inventories report is expected to decrease to 0.4% from the previous value of 0.9%, Pending Home Sales report is expected to show a positive shift to 0.2% from the previous negative value of -2.6% and Natural Gas Storage report is expected to published wish an increased figure of 61B from the previous figure of 51B. To sum up, NZDUSD is currently residing at the edge of the support area of 0.6850 whereas we might see some correction around the area before price bounces off the level and shows some bullish pressure or else if NZD keeps weakening against USD in the coming days and USD comes up with high impact positive economic reports or events then we might see further bearish pressure in this pair in the future. As of the current scenario, USD is expected to have an upper hand over NZD in the future.

Now let us look at the technical view, price is currently residing just above the support level of 0.6850 whereas the dynamic level of 20 EMA is quite far away from the current price. Currently it is expected that the price will bounce off the 0.6850 support level towards the dynamic level of 20 EMA and if the dynamic level could hold the price downward as resistance then we will be later looking forward to sell in this pair. As the price remains below 0.7050 level and dynamic level of 20 EMA the bearish bias is expected to continue further.

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Ichimoku indicator analysis of USDX for October 26, 2017

As expected, the US dollar index pulled back off the 94 resistance area towards the short-term support of 93.50 as we mentioned in yesterday's analysis. The trend remains bullish as the price is still above cloud support and inside the bullish channel.

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Black lines - bullish channel

The dollar index is trading inside the bullish channel. The support is found at 93.50 and the resistance lies at 94. Breaking above the resistance will open the way for a move towards 94.30-94.50. As long as the price is above 93.50 the trend is bullish.

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Black lines - bearish channel

On a weekly basis the Dollar index remains inside the bearish channel and shows signs of rejection at the upper channel boundary. Breaking above 94 will probably push the price towards the weekly kijun-sen (yellow line indicator) at 95.45. Short-term trend remains bullish but we could see its end today if we break 93.50. Until then trend is bullish targeting 95.

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EURUSD: Still going up?

EURUSD: Still going up?

Morning review.

So, the euro on Wednesday turned to growth, reaching 1.1830 by the night.

Ahead of the zone of day levels 1.1860 - 1.1880, with the break of their very likely movement at least to 1.2080.

Today, as everyone remembers, I think. The ECB (decision at 12.45 press conference Draghi 13.30 London time). So a strong move is very likely.

Also today, it is expected almost unilateral (against the position of the Spanish authorities) the proclamation of the independence of Catalonia, the Parliament of Catalonia.

What was important and interesting yesterday (Wednesday 25.10)?

There was a very strong report on orders for durable goods in the US. Simply super-strong. The orders are growing at a rate of + 8% per annum. And including the investment. And "without transport."

It seems that the Federal Reserve managed to crack up the US economy with a super-cheap loan.

But more interesting: This news is a strong support for the dollar, it would seem? And the euro and pound go up.

Further. By night, the Catalonia again said that it would declare independence from Spain. A strong blow to the euro.

And the euro closed the day at the maximum, and the week (current, unclosed) looks strongly upward.

Conclusion? The market wants to buy the euro.

We stand in purchases from 1.1795, stop 1.1750.

We will buy for a breakthrough to the top of 1.1860.

The alternative is to sell for breakthrough 1.1723 down.

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Ichimoku indicator analysis of gold for October 26, 2017

Gold is bouncing as expected. However, the price remains below the 4hour Kumo (cloud) while testing the first important short-term resistance by the kijun-sen at $1,283. The short-term trend remains bearish but we have several indications that the low could already be in.

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Red lines - bullish wedge pattern

Gold price has broken out of the Wedge pattern as expected. The precious metal is now back testing the broken upper Wedge boundary. Resistance is at $1,283 and the next one lies at $1,290. Gold bulls will need to break these levels in order to have a chance to test the important medium-term resistance area at $1,307-15. Support is at $1,270 and the next one is at $1,250.

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On a weekly basis gold price is trying to retake the kijun-sen (yellow line indicator). The trend remains bullish as price is still above the weekly Kumo (cloud). The next important resistance on a weekly basis is at $1,308. Breaking and closing above it will be a bullish sign.The material has been provided by InstaForex Company - www.instaforex.com

Bitcoin analysis for 26/10/2017

Bitcoin analysis for 26/10/2017:

Cointelegraph reported yesterday that the largest US digital currency stock exchange Coinbase will continue to refer to BTC as "real" Bitcoin, while SegWit2x as "B2X" will be treated equally with the altcoins. This decision triggered widespread support from the cryptocurrency community, and many claimed it was a nail in the coffin of the 2x version. However, both Coinbase and CEO Brian Armstrong have confirmed that they will in fact "call the Bitcoin chain with the most accumulated difficulty." After all, the 2x fork can gain Coinbase's support as a "true Bitcoin". The stock exchange point of view is similar to XAPO, which was one of the first companies to introduce a formal 2x position and confirmed the potential change of the 2x chain to "BTC" in case it had "more difficulty." Not surprisingly, cryptocurrency community reacted with frustration because they thought Coinbase would turn away from the fork.

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The market is trading around the weekly pivot at the level of $5,737. The price remains inside of the dashed black channel as the corrective cycle of the wave 4 is in progress. The first downward wave that terminated at the level of $5,400 was labeled as wave (a) and now wave (b) is in progress. To complete the wave 4, at least one more wave to the downside is needed. The projected target is still at the level of $5,092.

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Daily analysis of major pairs for October 26, 2017

EUR/USD: The pair has gone upwards this week which has resulted in a bullish signal. Now it is above the support line at 1.1800, going towards the resistance line at 1.1850 (the first target), After that, another resistance line at 1.1900 would be targeted. Some fundamental figures are expected today and they may have an impact on the market.

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USD/CHF: This currency trading instrument went briefly above the resistance level at 0.9900 and then dropped below it (owing to the showcase of stamina on EUR/USD). The market could continue going downwards towards the support level at 0.9850, which would be breached to the downside this week.

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GBP/USD: There is essentially a bullish signal on the GBP/USD. The EMA 11 has crossed the EMA 56 to the upside and the RSI with the period 14 has crossed the 50 level to the upside as well. This is a Bullish Confirmation Pattern in the 4-hour chart, and despite the current seeming consolidation in the market, the price is expected to go upwards when volatility arises.

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USD/JPY: This currency pair tested the supply level at 114.00 and then dropped lower. It is still possible for the price to go upwards from here, unless it drops below the demand level at 112.50, which would require a strong selling pressure. Should the market go upwards from here, the supply level at 114.00 would be tested again, and possibly overcome.

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EUR/JPY: This pair has been bullish so far this week. Price has rallied after the bearish movement that was witnessed on Monday and now it is close to the supply zone at 134.50 (which has been tested already). The supply zone would be breached to the upside as price journeys further northwards.

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Last minute burning forecast 26.10.2017

Last minute burning forecast 26.10.2017

GBPUSD: the way to the top.

On Wednesday, our assumptions were confirmed: the pound chose the path to the top.

The reason: the release of a strong data on the economy of Britain. The GDP grew at the level of +1.5% per annum, above the forecast of +1.4%. Inflation is above the forecast of +3%.

The Bank of England has no other choice but to raise the rate - this will increase the yield on government bonds - and this pushes the pound upward.

Buy the GBPUSD pair on declines from 1.3200 or lower.

The level of cancellation of the forecast is a consolidation below 1.3050 for the pound.

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Trading plan for 26/10/2017

Trading plan for 26/10/2017:

The currency market drifted during the Asian session, but a fall on Wall Street is sustained by the temporary weakness of the USD. EUR is slightly higher before the ECB interest rate decision. Nothing interesting happens on the oil market, while gold uses the dollar's weakness and extends the bounce.

On Thursday 26th of October, the main event of the day is the anticipated ECB interest rate decision and press conference. Moreover, market participants will pay attention to the Eurozone Money Supply data and during the US session to Unemployment Claims, Goods Trade Balance and Pending Home Sales data from the US.

EUR/USD analysis for 26/10/2017:

The ECB interest rate decision is scheduled at 11:45 am GMT and the press conference will be held at 12:30 pm GMT. Market participants expect the ECB to leave the interest rate unchanged at the level of 0.00% and the Asset Purchase Target is expected to remain at the level of 60 bln euro. Nevertheless, at the September's ECB Governing Council meeting, President Mario Draghi said that "probably the bulk of these decisions will be taken in October" when asked about the pace of quantitative easing. Currently, the ECB is buying bonds with what has effectively printed money at a monthly pace of mentioned earlier 60 bln euro, a program "intended to run until the end of December 2017, or beyond, if necessary." As of the end of September, such purchases totaled 2.1 trillion euro. Many months ago, Draghi said he didn't think there would be an "abrupt" end to the program. So the debate has been not over whether QE will continue in 2018 but at what pace. Newswire ECB "source" stories claim an internal debate around a considerable slowdown in the pace of QE, from 60bn to 25-40bn euro starting January 2018. A decision along these lines should be largely factored in, but still could undermine the euro, as the ECB confirms that policy will remain very loose deep into next year. Moreover, interest rates will not be raised until "well past the horizon of our net asset purchases".

In conclusion, the likely scenario for today's ECB event is no interest rate hike and an announcement of slowdown for QE from 60 bln to 30 bln euro.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market is about to test the golden trend resistance line again, around the level of 1.1837. Nevertheless, the price is still trading inside of the narrow horizontal zone between the levels of 1.1729 - 1.1880 as it awaits the ECB interest rate decision. Any breakout below the level of 1.1880 opens the road towards the level of 1.1936 and any breakout below 1.1729 opens the road towards the level of 1.1662.

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Market Snapshot: DAX bulls losing momentum?

The price of German DAX index has been in a horizontal move in some time now and so far the swing high at the level of 13,095 has not been challenged yet. Moreover, the price is slowly getting closer to the important technical support at the level of 12,908. Any breakout lower would directly expose the next technical support at 12,711 for a test and, in a case of extension, 12,500.

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Market Snapshot: GBP/JPY breaks out of the channel

The price of GBP/JPY has broken out of the dashed black channel and now is trading just above it around the level of 150.46. This is the key level for this pair, as the upward momentum is decreasing and the market is in overbought conditions. Only a sustained breakout above the technical resistance at the level of 151.59 would expose the recent swing high at the level of 152.82 for a test.

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Fundamental Analysis of AUD/USD for October 26, 2017

AUD/USD has been impulsively bearish recently breaking below the support level of 0.7750. AUD has been quite negative with the economic reports recently which lead to a drastic fall of the currency against USD. Yesterday AUD CPI report was published with worse than expected value of 0.6% was expected to be at 0.8% which previously was at 0.2% and Trimmed Mean CPI report was published with a decreased value of 0.4% which was expected to be unchanged at 0.5%. On the other hand, USD was quite positive with the economic reports recently which lead to further gains against AUD. Today AUD Import Prices was published with greater deficit at -1.6% from the previous value of -0.1% which was expected to be at -1.5% and RBA Assistant Governor Debelle is going to speak about the nation's key interest rate decisions and future policy shifts which is expected to be quite neutral in nature. On the USD side, today Unemployment Claims report is expected to show an increase to 235k from the previous figure of 222k, Goods Trade Balance report is expected to show a greater deficit at -63.8B from the previous figure of -62.9B, Prelim Wholesale Inventories report is expected to decrease to 0.4% from the previous value of 0.9%, Pending Home Sales report is expected to show a positive shift to 0.2% from the previous negative value of -2.6% and Natural Gas Storage report is expected to published wish an increased figure of 61B from the previous figure of 51B. As of the current scenario, USD is expected to gain further over AUD in the coming days until AUD comes up with a positive high impact based economic reports or events.

Now let us look at the technical view, the price is currently residing below the resistance level of 20 EMA which was formerly a strong support level which was broken yesterday with a daily close. Price is currently expected to show the further bearish move towards 0.7500 support area in the coming days. As the price remains below the resistance area between 0.7750 to 0.7850 the bearish bias is expected to continue further in future.

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