New York Forex Report: ECB Lending Sees EURUSD Squeeze

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

Fundamental: EURUSD traded higher over the European morning as expectations of further QE at Thursday’s October ECB meeting waned in the face of the latest ECB lending data which showed Bank’s have been using the extra liquidity to increase lending over the last 6 months. EUR shorts were covered as equities sold off in response to the news. Traders of the American session will be keeping an ear out for Fed’s Dudley & Powell set to speak today.

Technical: Expected further weakness and retest of 1.13 bids is playing out as anticipated. A breach of stops sub 1.13 should see a move back to test pivotal 1.1240 failure here suggests a retest of broader range support towards 1.1140 next

Interbank Flows: Bids 1.13 stops below. Offers 1.1390 Stops above.
Retail Sentiment: Bearish to neutral
Trading Take-away: Sidelines for now

eu2015-10-20 07_28_06-NetDania - NetStation

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

Fundamental:  In the absence of domestic data, GBP has remained range-bound between 1.5430 and 1.5490 since last Thursday. The BOE’s resident Hawk McCafferty was on the wires earlier today commenting on the risks posed by delaying a UK rate-hike stating that the BOE needed to avoid getting “behind the curve”. Markets will focus on BoE Governor Carney’s speech today for further hints on BoE monetary stance.

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

gu2015-10-20 07_28_43-NetDania - NetStation

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

Fundamental: Expectations for further BOJ easing at this month’s rate decision on October 30th continue to keep flows hemmed in with USDJPY remaining tightly confined over European trading despite USD weakness.

Technical: While 119.50 caps upside expect further bearish price action and further exploration of stops sub 118.50, a failure at 118 emboldens bearish spirits and targets 116 next. A close above 119.50 opens a retest of 120.50 next.

Interbank Flows: Bids 118.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

uj2015-10-20 07_29_16-NetDania - NetStation

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

Fundamental: The Euro’s reaction to the latest ECB lending data has seen EURJPY trading sharply higher over the European morning, breaking above Friday’s high. ECB’s Nowotny speaks later on today regarding economic forecasting and traders will be keeping a close ear on him for any clues ahead of Thursday’s ECB meeting.

Technical:  While 136 caps upside reactions expect a retest of yesterdays low at 134.80 a failure here sets bearish tone targeting 133.40 next. A break back above 136.00 eases bearish pressure and sets a retest of 137.

Interbank Flows: Bids 134.80/60 stops below. Offers 137 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

ey2015-10-20 07_29_55-NetDania - NetStation

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

Fundamental: The RBA meeting minutes released overnight noted that the declines in AUD are supportive of the economic re-balancing. The Aussie dollar edged higher on the rather optimistic tone from the central bank but remains capped by softer commodities

Technical: Bids ahead of .7230 continue to support the, 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

au2015-10-20 07_46_16-NetDania - NetStation

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

Fundamental: USDCAD consolidated at yesterday’s session highs after the Canadian Dollar  weakened against USD as voters elected a liberal prime minister who has assured to spend on infrastructure to fuel economic growth. USD weakness over the European morning has tempered the move as traders await the BOC rate decision tomorrow.

Technical: Near term bearish tend remains intact as intraday resistance at 1.3050 contains intraday upside reactions bears target a retest of bids below 1.2850. A breach of 1.3050 opens test of 1.31 offers next.

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

uc2015-10-20 07_46_45-NetDania - NetStation

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