Yesterday's ECB decision to keep interest rates unchanged and extend the QE program for another nine months was a predictable choice, so EUR/USD dipped towards the 1.1662 and GBP/USD towards 1.3082. USD/JPY went as high as 114.37. On commodity market Gold made a new local low at $1,267. The German DAX made a new high at 13,244.
On Friday 27th of October, the event calendar is light in important data releases. During the US session, Preliminary GDP and Revised University of Michigan Consumer Sentiment data will be released. No speeches are planned either.
EUR/USD analysis for 27/10/2017:
Predictable choice and exceptionally boring conference - it can be described as the envelope around yesterday's ECB decision to keep interest rates unchanged at the level of 0.0% and extend the QE program for another nine months. As expected by the market participants, the purchase of assets will slow down to EUR 30 billion per month, starting from January 2018 at half the current rate of release. Traditionally, the ECB has left its door open not only to increase monetary stimulus but also to extend it.
The ECB's decision was euphorically accepted by stock market participants. Madrid's IBEX 35 (1.9%), which covered the rise of the Milan FTSE MIB (1.6%) and the Parisian CAC 40 (1.5%), topped the major indexes in Western Europe. German DAX made an advance higher as well (1.4%) and currently is at the new all-time highs at 13, 244.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The Head and Shoulder technical pattern seems to be working as the neckline around the level of 1.1662 was violated and the market is currently trading at the level of 1.1610. The trading conditions are starting to look oversold, but the downward momentum is still strong. The nearest technical resistance is seen at the level of 1.1662 and 1.1715.
Market Snapshot: DAX at the new all-time highs
The price of German DAX index has broken up to the level of 13, 244 which is the new all-time high for this market. Nevertheless, the momentum is very weak on this up move and there is a clear, visible bearish multi-divergence between the price and the momentum oscillator, so a test to at least 13,143 points is possible.
Market Snapshot: Gold dips to $1,267
The price of Gold has made another local low at the level of $1,267 and now trades very close to the technical support at the level of $1,260 Any attempt to rally is being sold and the RSI indicator cannot break out above its fifty level. The nearest resistance is seen at the level of $1,269.
