New York Forex Report: Euro Down After Dovish Draghi

US Dollar is off yesterday’s highs as we head into the American cross-over. Positive data out of China overnight has seen a better risk sentiment so far today with equities firmer, so too Oil. Comments from ECB’s Draghi yesterday returned to a more Dovish theme than comments made at the weekend, leaning on the Euro. Attention now turns to key risk events by way of the BOE tomorrow and the NFP’s on Friday.

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

Fundamental: EURUSD remained weak over the European morning, extending losses on the back of yesterday’s comments by ECB chairman Draghi that a range of instruments is available to be undertaken if needed since Euro zone inflation is still far below target level.  US ADP employment data at 13.15 GMT is the headline data for the American session with ISM Non-Manufacturing following at 1500GMT expected to contract to 56.5 56.9

Technical: Failure at 1.0950 sets up a retest of last weeks lows en route to 1.0860. Only a close above 1.10 eases immediate bearish pressure

Interbank Flows: Bids 1.09 stops below. Offers 1.1o Stops above.
Retail Sentiment: Bullish
Trading Take-away: Long against 1.0950 targeting 1.1130, exit longs below last week’s low

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

Fundamental: Following on from Monday’s positive manufacturing MPI, today we saw the UK services PMI beating expectations of 54.5 to print 54.9. Recent positive data suggests that the UK economy might be gathering steam, supporting BoE’s optimistic view of the economy. Attention now turns to the BoE rate decision meeting and the accompanying reports due this Thursday

Technical:  The upside rotation back through 1.5330 resets bullish expectations for a test of the 1.56 symmetry objective. Another failure at 1.53 targets stops sub 1.52 next.

Interbank Flows: Bids 1.53 stops below. Offers 1.55 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Long from 1.5330 targeting 1.56

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

Fundamental: JPY has been weaker so far today over early European trading with equities slightly firmer following positive data out of China overnight creating better risk sentiment. Traders will be keeping an eye on the BOJ October 6th/7th minutes release later today.

Technical: Bulls target a sustained break of 121.30 to target range highs at 121.85 next an intraday failure at 120.00 would suggest return to range.

Interbank Flows: Bids 119.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Longs from 120.50 targeting upside range break

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

Fundamental: Japan Post IPO very successful, shares surge on debut, with Japanese automakers breaking new car sales records in the US during October. The risk on sentiment in asset markets has weighed on the EUR with cross flows keeping the this pair under pressure over early European trading, though JPY weaker also so moves are stemmed.

Technical:  Bears now target equality corrective objective at 131.20, only a close above 133.50 eases immediate bearish pressure.

Interbank Flows: Bids 131.00 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

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

Fundamental: The Aussie has been fairly flat over the European morning, retracing some of the losses posted overnight on the back of the weak Retail Sales ex-inflation number which printed 0.6% vs 0.7% expected. Commodities have softened slightly from early strength, also keeping the Aussie flat.

Technical: Buyers emerge at retest of pivotal .7030/50 next, a close above .7230 eases bearish pressure a refocuses bulls to test offers towards .7350. While .7230 caps the upside expect rotation lower targeting year to date lows next

Interbank Flows: Bids .7150 stops below. Offers .7230 stops above
Retail Sentiment: Neutral
Trading Take-away: Shorts against .7230 targeting .7030

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

Fundamental: Oil prices have been firmer over the European morning leading the Canadian Dollar higher so far today. Attention now will be on key US data over the American session.

Technical:1.3260 provides decent resistance as anticipated as this area contains upside potential for another leg of corrective downside. A close above 1.3280 eases bearish pressure and resets focus on the 2015 highs and stops above. While 1.3130 caps intraday upside reactions focus remains on the downside.

Interbank Flows: Bids 1.3030 stops below. Offers 1.32 stops above
Retail Sentiment: Bearish
Trading Take-away: If short from failed retest of 1.3260, move positions to risk free

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