Alpari - Analytics


861.25 6.25/10
73% of positive reviews

Euro awaits ECB meeting

FX market highlights:

- The FCC revoked China Telecom’s US operating license.

- Fitch downgraded another Chinese developer, Kaisa Group.

- Chinese authorities asked Evergrande Chairman Hui Ka Yan, to sell his personal assets to settle debts with creditors.

- Tensions ae on the rise between the UK and France.

- The Bank of Canada is ending QE and looks set to raise rates.

- The 10-year UST yield narrowed to 1.52%.

The EURUSD pair rose 0.06% to 1.1603 on Wednesday, October 27. Yesterday’s trading session saw heightened volatility, with the key pair oscillating in the range of 1.1585-1.1626.

The dynamic of the common currency was impacted by news from the US and China, US macro data, tensions between the UK and France over fishing rights, and fresh conflict over the Northern Ireland protocol, while the market awaited the ECB's rate decision.

Durable goods orders declined in September as the manufacturing sector is being held back by supply chain disruptions that result in shortages.

The USDCAD pair fell sharply after the Bank of Canada announced the end of QE. The loonie firmed across the board, pulling up other currencies. The euro closed at 1.1603.

Today’s macro agenda (GMT 3)

  • 10:55 Germany: employment report (October)
  • 14:45 ECB: interest rate decision
  • 15:30 Europe: ECB President Christine Lagarde speech
  • 15:30 US: 3Q GDP, initial jobless claims (October)
  • 17:00 US: pending home sales (September)

Current outlook

By the time of writing, major currencies were showing mixed performance. The euro was trading a tad below $1.1600. Low volatility is expected before the North American session, as two important events are scheduled for today: Lagarde's press conference and the US Q3 GDP report. Given that the first GDP estimate is due out stateside, heightened volatility can be expected after 12:30 GMT. The market will first react to the GDP print, then to Christine Lagarde’s comments.

Technical analysis

Ahead of the ECB meeting, EURUSD is trading near the 55-day SMA (balance line). The technical picture implies an upside bias. The US10Y yield fell to 1.52%. When yields go down, the dollar comes under pressure, so buyers now have a good chance to retrace to 1.1626.

Today, there are three resistance levels for buyers: 1.1616, 1.1633 and 1.1660. Supports are located at 1.1591 and 1.1575.

To leave a comment you must or Join us

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree