Forex trading plan for October 16

The market’s sentiment is very changeable as it swings by the influence of data releases. US inflation data for September came in line with expectations with the core figures slightly exceeding forecast. All in all, traders were preparing for worse, so US dollar performed better after the figures came out. American unemployment claims turned out to be better than expected, though Empire State manufacturing index disappointed. On Friday, the United States will release industrial production and consumer sentiment data.

EUR/USD has almost reached 1.1500, but then was aggressively sold off. The euro was hit by comments of the European Central Bank’s Governing Council member Ewald Nowotny that the ECB is missing its inflation target and additional instruments are needed. Such talk increased the speculation of additional easing from the central bank. A close below 1.1400 will open the way for further declines. Support is at 1.1350 and 1.1315/00. Resistance is at 1.1460, 1.1500 and 1.1540.  

GBP/USD was correcting after big gains on Wednesday and as it reached resistance in the 1.5500 zone (100-day MA). Support is at 1.5380 and 1.5320 (200-day MA). Above this point the pound retains potential for more upside. Resistance is at 1.5540 and 1.5600. MPC member Forbes will speak at 10:30 GMT.

USD/JPY fell to the 118.05 area. A close above 118.50 will allow the pair to recover to 119.50/70. Further resistance is at 120.35/50. On the downside, support is at 117.00. The Bank of Japan’s Governor Kuroda will speak at 06:35 GMT.

AUD/USD made another test of the 100-day MA at 0.7360. Australian dollar was supported by the better risk sentiment on the expectations that the US Fed won’t raise rates this year. However, Australian employment declined in September. Resistance of the 2014-2015 trend in the 0.7400 area will be hard for the bulls to break. The pair may retest strong support in the 0.7200/7180 zone which guards the way to 0.7100. The Reserve Bank of Australian will release Financial Stability Review early on Friday. 

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