Forex trading plan for October 27
US dollar significantly strengthened during the last week as the ECB gave dovish comments, while the People’s Bank of China reduced interest rates. This week traders are waiting for the results of the Federal Reserve’s meeting on Wednesday (though the rate hike is not expected) and American GDP on Thursday. Demand for USD will likely temper. New home sales released on Monday were a negative surprise. The US will release durable goods orders figures at 12:30 GMT on Tuesday (some improvement after the poor previous release is expected) and consumer confidence index at 14:00 GMT (the forecast is that of a small decline).
EUR/USD rose to 1.1050 on Monday, but found resistance there. The markets now expect that the ECB will step up monetary stimulus in December, so any advance in the euro will be limited. German Ifo business climate didn’t impress the market. Resistance is at 1.1100, 1.1140 and 1.1170. Support is at 1.1000, 1.0950 and 1.0900.
GBP/USD lowered to support line since the beginning of October. The pair’s trying to fix above the 200-day MA in the 1.5335 area and return to 1.5410/30. Next strong resistance is at 1.5500. Below 1.5300 the sellers will pull the pair down to 1.5200. Next support is at 1.5165. The UK will release preliminary Q3 GDP data at 09:30 GMT. British economic growth is expected to slow down from 0.7% to 0.6%. After a very good retail sales report released last week there’s a chance of positive surprise in British GDP. In this case the pound will strengthen versus other currencies.
USD/JPY rose to 121.50. Support is at 120.70 and 120.35. Resistance is at 121.67/80. USD/JPY is supported by the expectations that the Bank of Japan will ease its policy at the end of the week, but before it actually happens, the idea probably won’t be able to drive the pair much above the resistance of September-October range. Short-term outlook is neutral/negative.
AUD/USD is still trying to hold above 0.7200 and raise higher. Friday’s high close to 0.7300 remains a resistance: Chinese easing didn’t get an extremely positive effect on the Aussie. Next resistance is the 100-day MA at 0.7320. Next support is at 0.7167 (55-day MA). The next big risk for Australian dollar is Australia’s inflation data on Wednesday.