This week will be busy, as several banks will reveal fresh decisions on monetary policy, including the US Federal Reserve that will be due on Wednesday. By the end of this week, market traders will have a better image of global inflation concerns, since the Reserve Bank of Australia and the Bank of England will also announce their decision, following the announcement from the Bank of Japan and European Central Bank.
EURUSD:
From data views, Germany September Retail sales was lower than the expected number, a fall of 2.5% while an expectation of a hike of 0.6%. In addition, the US will publish the official ISM Manufacturing PMI, an expectation at 60.5 in October, which is lower than the previous month’s score at 61.1. The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) provides a reliable outlook on the state of the US manufacturing sector. A reading above 50 suggests that the business activity expanded during the survey period and vice versa. PMIs are leading indicators and could signal a shift in the economic cycle. Stronger-than-expected prints usually have a positive impact on the USD. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are watched closely as they shine a light on the labor market and inflation.
On Monday, the EURUSD pair is higher. In a quiet European session, as most local market is closed due to the All-Saints’ Day, heading into Wall Street’s opening, the greenback is losing some steam. According to the 4-hour chart, despite the ongoing recovery, the bearish case is still in place.
If this pair breaks below 1.1523, the year low, this descending trend will be directed to 1.1470 level. In the long term a break below 1.1470 will direct this pair to trade near 1.1430 level. However, if this pair keep trading above 1.1570 a bullish movement may occur and direct this pair to the following resistance levels: 1.1615, 1.1670, 1.1710.
GBPUSD:
Looking ahead to the rest of the week; the Fed monetary policy meeting and labor markets reports, as well as the ISM PMI surveys, will be key to watch as indicators of broader USD direction. But for the pound sterling, all eyes will be on how Brexit-related events unfold and Thursday’s Bank of England meeting will be key. Now money market pricing expects an increase on the rate from the bank by 0.25%.
With the beginning of the week, the pair GBPUSD is trading above its support level at 1.3675. If this pair keeps trading above 1.365, this pair will be bullish and move towards its 21-day moving average at 1.3694. A break above this level will direct this pair to 18 and 27 October lows which is the next psychological level at 1.3700/10. A break above the 18 October lows will lead this pair to its next resistance levels: 1.3734; 1.3754. however, if this pair fail to break above 1.3700, fresh bearish signal will be generated and will lead this pair to its support level at 1.3672 a break below this level will strengthen bears for extension through 1.3623. in the long term a break below the last level will leads this pair to its following support levels at: 1.3600; 1.3570.
