Morning Report: Quiet Start To Holiday Week

KEY DATA RELEASES TODAY:

0900GMT EUR German IFO Business Climate exp 103 v 103.2

OVERNIGHT:

A very quiet start to the week in Asia as far as G10 FX is concerned. EURUSD, while some 40pips higher than Friday’s NY close, still trades with a bearish sentiment following Draghi’s pledge to boost inflation back to 2% target as quickly as possible and hinted that he’s open to additional easing. Near term, 1.2350 remains critical support, a break of which would suggests the long-term bear trend is close to resuming. For now, the market will likely look towards this morning’s IFO release for near term direction. The IFO business climate index is expected to drop to 103.0 in November, while the current situation gauge is expected to drop to 108.0 and the expectation is forecast to drop to 95.5. If data comes in in line with expectations, then all three gauges would have recorded the seventh straight month of decline.

Elsewhere, a survey showed 37% of the population to vote for Japan Prime Minister Abe’s LDP party during Parliament (lower house) election, and 11% to support DPJ, 5% to support Komeito coalition party. Meanwhile, Abenomics disapproval rate at 43%, exceeded approval rate of 38%. USDJPY was little changed by recent standards as the Tokyo holiday ensured activity was light with standing exporter offers capping the topside around 118.

Looking ahead, we have a number important data releases to watch this week, including GDP revision from US, UK and Germany. Also, US will release consumer confidence, durable goods and PCE while CPI from Japan, Germany and Eurozone will also be closely watched.

OVERNIGHT PRICE ACTION:

EUR: Sharp decline Friday, testing YTD double bottom
GBP: Downside momentum fades, double bottom supports for now
JPY: Retreats from new year to date highs
CAD: Erodes trendline support
AUD: Retesting trendline resistance

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDNeutral Await new signal
USDJPYBullishAwait new signal
USDCADNeutralAwait new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

EURUSD Short Term (1-3 Days): Neutral  – Medium Term (1-3 Weeks) Bearish

  • Price broke to the downside from the contracting range, now testing YTD potential double bottom support
  • Order Flow indicators; OBV bearish, Linear Regression and Psychology testing midpoints from above
  • Watching double bottom for new trade set up

EU2411

GBPUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

  • Price has broken descending trendline support but range continues to contract downside momentum fading no follow through
  • Order Flow indicators; OBV bearish, Linear Regression and Psychology ticking up testing midpoints from below
  • Potential double bottom acting as support for now, will set longs on upside break

GU2411

USDJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish

  • Price pulls back from new year to date highs
  • Order Flow indicators; OBV bullish, Linear Regression and Psychology bullish, retreating from elevated levels
  • Monitoring trendline resistance now as support, Fridays close was inconclusive, watching today’s close for a potential new set up

UJ2411

USDCAD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish

  • Price breaks trendline support Friday, watching for snap back today, or secondary trendline support
  • Daily Order Flow indicators; OBV bullish but retreating form extreme levels, Linear Regression and Psychology testing midpoints from below
  • Watching potential snap back at primary trendline or secondary trendline support for new set up

UC2411

AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

  • Recovery Friday on retesting trendline resistance
  • Order Flow indicators; OBV ticking up, Regression and Psychology re-testing midpoint from above
  • Monitoring trendline resistance to reset shorts

AU2411

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