Surprising reversals in asset prices remain a key theme for this week. The sudden drop of the Nikkei 225 was followed by USD/JPY and other Dollar caresses. EUR/USD jumped to 1.1610. Reserve Bank of New Zealand gave a positive boost to NZD when it left the interest rates unchanged at 1.75%. Risk aversion led USD/CHF down to 0.9973, Gold rose to $1,283.
On Thursday 9th of November, the event calendar is light in important economic data releases, but market participants will keep an eye on ECB Economic Bulletin, European Commission Economic Forecasts data, NIESR GDP Estimate from the UK, New Housing Price Index data from Canada and Unemployment Claims, and Continuing Claims data from the US.
EUR/USD analysis for 09/11/2017:
The EU Commission releases the Autumn 2017 Economic Forecasts today, which will be used as the basis for the detailed assessment of the 2018 Draft Budgetary Plans (DBP) submitted on 15 October. In particular, the EC will assess the fiscal measures announced by the EU governments in the draft budget bill. Any shortcomings or potential drift between the EC estimate and the 2018 government commitment might push the EC to require corrective action. Regarding the 2018 public finances figures, the EC applies the 2018 DBP with its own forecasts and assessment of the efficiency of the measures, which will give an idea of the required fiscal tightening to meet the 2018 targets. In terms of growth, compared to the last report published in April, the EC is set to significantly revise upward its 2017 growth forecasts. Indeed, the EC had a 2017 figure of 1.7% compared with 2.2% for the consensus. Only limited downward revision to inflation is expected for 2017 (EC: 1.6%, consensus: 1.5%). Market participants should also expect minor changes in the 2018 outlook, with growth at slightly below 2.0% (April forecasts, consensus: 1.8%) and inflation at below 1.5% (April forecasts and consensus: 1.3%).
Let’s now take a look at the EUR/USD technical picture on the H4 time frame. The market jumped towards the level of 1.1610 from the oversold trading conditions. The momentum is not dramatically improving so far, and the move upwards is so far looking as corrective. In case of a further breakout, the next technical resistance is seen at the level of 1.1662 and 1.1690.
Market Snapshot: USD/JPY reverses again
The price of USD/JPY has reversed from the top at the level of 114.72 and is trading closer to the key near-term support at the level of 113.25. Any breakout lower will directly expose the level of 112.94 for a test. Until this event, the market remains closed in a narrow horizontal zone between those two levels.
Market Snapshot: Gold moves higher after the test
The price of Gold has moved towards the next technical resistance at the level of $1,289 after a successful test of the golden trend line from below. The 200-period moving average has been broken as well and the momentum is slowly increasing too. The key zone for bulls is the gray area between the levels of $1,298 — $1,306.