London Forex Report: Draghi Drags EUR Lower

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

Fundamental: EUR approached 1.1100 by the end of the US session, without the signs of changing direction on the back of positive US data. Draghi’s announcement yesterday surprised the market, saying that the ECB may add additional stimulus in December, either by expanding its assets purchases or lowering the deposit rate further below zero

Technical:testing key 1.11 support a failure here opens 1.1020, expect further downside while 1.1250 caps intraday upside reactions.

Interbank Flows: Bids 1.1050 stops below. Offers 1.13 Stops above.
Retail Sentiment: Bearish to neutral
Trading Take-away: Sidelines for now

eu2015-10-23 07_25_38-NetDania - NetStation

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

Fundamental: GBP dropped below the 1.54 handle as dollar’s demand hiked. Retails sales were a positive surprise for British traders ahead of ECB announcement, however,
the pair still plunged due to the strong dollar. Traders await the upcoming FOMC meeting to see if the Fed still leave the possibility of rate hike open in December

Technical:  While 1.5380 supports downside reactions expect a grind higher to test 1.56 symmetry objective. A breach of 1.5360 targets a retest of pivotal 1,53 support.

Interbank Flows: Bids 1.5360 stops below. Offers 1.5550 stops above
Retail Sentiment: Bearish to neutral
Trading Take-away: Buy pullback against 1.5380 targeting 1.56

gu2015-10-23 07_26_27-NetDania - NetStation

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

Fundamental: USDJPY broke the range-bounded trading zone and climbed up to 120.76 due to the rekindled risk-on market sentiment. Due to risk-on effect and the markets expectation on BoJ further easing policies, Yen is currently under high pressure, and may see further declines into the BOJ meeting.

Technical: Bulls target a sustained break of 121 to target range highs at 121.85 an intraday failure at 119.50 would suggest return to range.

Interbank Flows: Bids 118.50/30 stops below. Offers 120.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

uj2015-10-23 07_27_08-NetDania - NetStation

EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: the pair was heavily pressured as the ECB held refinancing rate at 0.05% in its monetary policy meeting yesterday. Citing persistent downside risks to inflation, the central bank highlighted the need to “re-examin degree of monetary policy accommodation at December’s meeting, when the new Euro system staff macroeconomic projections will be available”.

Technical:  failure at 134  sets bearish tone targeting 133.40 next. A break back above 134.50 eases bearish pressure.

Interbank Flows: Bids 133.80/60 stops below. Offers 135 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

ey2015-10-23 07_28_20-NetDania - NetStation

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

Fundamental: AUD edged lower in the aftermath of poor NAB Quarterly Business Confidence index and a rise in mortgage rates by the Commonwealth Bank, but found support above 0.72 levels as markets responded to dovish comments from ECB President Mario Draghi, Draghi’s dovish comments prompted a rally across risky currencies as markets expect an expansion of ECB’s QE programme will lead to an influx in liquidity, which is positive for the Aussie.

Technical: Bids ahead of .7200 being tested , while this level holds on an intraday basis expect a retest of offers above .7300. A close back above .7300 targets a .7400 resistance next. Failure at .7200 targets .7160 symmetry objective.

Interbank Flows: Bids .7200 stops below. Offers .7400 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

au2015-10-23 07_29_16-NetDania - NetStation

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

Fundamental: CAD loonie traded within tight range between 1.3080 and 1.3160 yesterday as markets await CPI figures due tonight, which could provide some hints on BoC’s next move. Canadian retail sales grew 0.5% on a monthly basis, beating 0.1% as expected. Despite the strengthening US dollar overnight, USDCAD stood firm below 1.31 levels.

Technical: Near term bearish tend remains intact as intraday resistance at 1.3260 contains intraday upside reactions bears target a retest of bids below 1.2850. A breach of 1.3260 opens test of 1.3450 offers and potential broader bullish trend continuation

Interbank Flows: Bids 1.2850 stops below. Offers 1.3060 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Sidelines for now

uc2015-10-23 07_30_00-NetDania - NetStation