HOLIDAYS IN AMERICA AND JAPAN LED TO LOWER MARKET ACTIVITY
The EUR/USD gained some positions despite tensions in Spain that threaten stability in the European Union. The bulls pushed the price higher on the background of positive macro data. German industrial production increased in August by 2.6% versus the 0.9% forecasted and the Sentix investor confidence index in the Eurozone has grown to 29.7 in October compared to 28.6 expected. The greenback is getting support from positive news on the decline in unemployment to 4.2% in the US. At the same time, economic activity is likely to increase due to rebuilding in the regions that were affected by hurricanes Harvey and Irma.
The British pound demonstrated a confident increase on the back of the news regarding the Minister of Foreign Affairs, Boris Johnson, leaving his office. Prime Minister Theresa May is showing unity within the government and that is vital in the ongoing negotiations on the Brexit terms with Europe. The growth potential is likely to be limited, but tomorrow’s publication on industrial production and trade balance in the UK may significantly impact trader sentiment.
The volatility of the USD/JPY decreased because of holidays in Japan and the US. At the same time investors are waiting for the outcome of the Catalan crisis in Europe and in case of easing tensions, the demand for the Japanese yen as a safe haven asset is likely to fall. Some impact on the price may come from the news on the current account balance in Japan that will be released at 23:50 GMT tonight.
The common currency is testing resistance at 1.1750 and in case of its overcoming we may see the trend reverse to positive with the closest targets at 1.1825 and 1.1925. On the other hand, the next goal within the current downtrend is located at 1.1620 and after breaking through it the quotes may reach into the 1.1500-1.1550 range.
The GBP/USD price was not able to fix under the support line at 1.3050 and rebounded within the channel. In case of breaking through the upper limit of the descending corridor quotes may rise up to 1.3200 and higher. On the other side, the fall resumption inside the channel is likely to lead to the price declining to psychologically important level of 1.3000.
The USD/JPY is moving along the lower boundary of the ascending band. In order to continue the upward movement, quotations need to gain a foothold above the resistance at 113.00. After a long consolidation below 113.00 we may see a sharp movement in either direction. For the trend change to negative with potential targets at 111.00 and 110.30 the price needs to fix beyond the limits of the channel.