Trade Optimism Keeps USD Supported

The US dollar recovered from Monday’s decline, but price action was largely confined to the previous session’s range. Reports that China was willing to buy US agricultural products sent equity markets briefly higher, reflecting the risk sentiment.

However, overall, USD remains rather muted ahead of the ECB meeting. Economic data also picks up with the producer prices and CPI reports coming up later in the week.

Euro Holds Firm as Markets Speculate Easing

The euro held steady on Tuesday. This comes as investors speculate whether the central bank will announce its QE program at the monetary policy meeting this Thursday. Speculation is rife that the central bank could seek more time before committing to a relaunch of QE.

EUR/USD Forms a Minor Double Top

The EURUSD establishes resistance near 1.1059, forming a minor double top pattern on the four-hour time frame. A breakout above this level will see the euro rising to 1.1085 as the minimum target. Further gains could push the common currency closer to the main resistance area of 1.1140. To the downside, the support at 1.1016 will remain key. A close below this support could trigger further declines.

eurusd

 

Sterling Steady as Boris Affirms EU Pullout on October 31st

The pound held near recent highs, even as PM Boris Johnson once again reiterated his commitment to pull out of the EU on October 31st. This comes even as lawmakers passed a last-minute law preventing a no-deal Brexit. The UK parliament is suspended for four weeks with investors waiting for further developments on Brexit.

GBP/USD Likely to Consolidate Near Support

The currency pair retreated from recent highs on a modest pullback. However, price is yet to test the support level at 1.2320. As a result, the GBPUSD downside is limited. But a break down below this support could trigger a sharper correction in the GBPUSD currency pair. To the upside, the resistance area of 1.2533 – 1.2511 remains within reach.

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