Trading plan for 16/10/2017:
The first trading hours this week bring little traffic to the currency market. Data from China have gone unnoticed; nervous reactions also are not seen after the election results in Austria. Crude Oil goes up for fear of new sanctions for Iran. EUR/USD is trading around the level of 1.1800, USD/JOY around the level of 111.70 and GBP/USD around the level of 1.3300.
On Monday 16th of October, the event calendar is light in important economic data releases, but the market participants will keep an eye on Wholesale Price Index data from Germany, Trade Balance data from the Eurozone, Empire State Manufacturing Index data from the US and Foreign Securities Purchases data from Canada.
EUR/USD analysis for 16/10/2017:
The Wholesale Price Index data from Germany were released early this morning and beat the market expectations of 0.4% with a number delivered at the level of 0.6%. On the yearly basis, the prices increased from 3.2% to 3.4% as well. Growth in wholesale prices usually precedes increases in retail prices, thus changes in Wholesale Prices can be used as an early indicator of inflationary pressures. While the CPI records price changes for retail goods, the WPI might pick up inflationary pressures before they reach the headline retail CPI report. The European Central Bank inflation target is at the level of 2.0% and only when this projected target exceeded, ECB might decide on interest rate hike or quantitative easing program roll-over or tapper. In the result, this situation would strengthen the Euro currency across the board.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The 61% Fibo at the level of 1.1876 was declined two times already, so now the down cycle in progress. Currently, the market is trading at the technical support at the level of 1.1790 and in a case of a further decrease, the next support is seen at the level of 1.1755 and 1.1700. The down-pointing stochastic and momentum indicators are supporting the view.
Market Snapshot: Gold about to test 50% Fibo?
The price of Gold has broken above the 38% Fibo at the level of $1,297 and currently is heading towards the next Fibo at the level of $1,308. There is a clear, visible bearish divergence forming between the price and momentum oscillator, so the downward correction can occur any time now.
Market Snapshot: USD/JPY slowly descending towards support
The price of USD/JPY is trading under the black trend line resistance around the level of 111.98 in oversold market conditions. The next technical support is seen at the level of 111.45, but the key support is still the area between the levels of 111.04 - 110.61. Please notice the bullish divergence starts to form between the price and momentum oscillator.
