Trading plan for 25/10/2017:
The Australian Dollar heavily loses after surprisingly weak CPI reading. President Trump's mini-poll on the future Fed chief was positively received by the USD. EUR/USD is trading above 1.1750, USD/JPY cannot go above 114.00. Despite the uptrend on Wall Street, the Nikkei is finally breaking its uptrend and falls 0.6%. Hang Seng is today gaining 0.2%.
On Wednesday 25th of October, the event calendar is busy with important news releases. During the London session, the German Ifo Business Climate, Ifo Current Assessment, and Ifo Expectations data will be released. the UK will post Preliminary GDP data. During the US session, Bank of Canada will decide on interest rate and will publish Rate Statement. The US will present Durable Goods Orders and New Home Sales data.
EUR/USD analysis for 25/10/2017:
The German Ifo Business Climate, Ifo Current Assessment, and Ifo Expectations data are scheduled for release at 08:00 am GMT. The market participants expect the data to continue the uptrend as the German economy is still the power horse of the whole Eurozone. Nevertheless, the second biggest economy, France, had delivered very good figures yesterday. According to latest flash data, the resurgence in the French private sector showed no sign of abating at the start of the fourth quarter. Indeed, the rate of growth accelerated from September with the IHS Markit Flash France Composite Output Index posting 57.5, up from 57.1 in September and a near-six-and-a-half-year high. Output growth was broad-based across each monitored sub-sector. Building on a strong performance in September, service sector activity rose to the greatest extent since March 2017. A similar trend was evident at goods-producers, with manufacturing production quickening to a six-and-a-half year high.Buoyed by strong client demand, private sector firms continued to take on additional staff members in October, extending the latest period of job creation to 12 months. Moreover, the rate of growth was the most marked in just shy of ten-and-a-half years (May 2007).
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market did not react too much to the French data release as the majority of investors is still waiting for the event of the week (ECB interest rate decision) to participate in the market. So fat the price is still being kept within a narrow range between the levels of 1.1880 - 1.1729. The momentum indicator stays around its fifty mark, which means the market will likely move sideways until a breakout in either direction occurs.
Market Snapshot: USD/JPY bounces from support
The price of USD/JPY had bounced from support at the level of 113.25 and is about to make a new local high above the level of 114.10. The next target for bulls is at the level of 114.47, which is a technical resistance on a daily time frame. Please notice the growing bearish divergence between the price and the momentum oscillator, indicating the incoming correction.
Market Snapshot: GBP/USD awaits the breakout
The price of GBP/USD is still trading in a narrow range between the levels of 1.3087 - 1.3220 as it awaits the breakout in either direction. The larger time frame trend remains bullish, so the incoming data from the UK economy might increase the volatility on this pair and a breakout can occur. Please watch the level of 1.3030 for further extension to the downside.
