Trading plan for 31/10/2017:
Tuesday’s Asian session did not bring any change in volatility. USD/JPY is trading around 113.00 after the Bank of Japan maintained its policy stance unchanged while revising downward inflation projections for 2017 and 2018. EUR/USD is closed in a range between 1.1625 and 1.1650. GBP/USD is trading near 1.32. The two days of correction were again under moderate pressure, especially on the weaker NZD today.
On Tuesday 31st of October, the event calendar is quite busy with important news releases. During the London session, France will post Preliminary GDP and CPI figures (the same applies to the Eurozone) and Italy will release CPI and Unemployment Rate data. During the US session, Canada will post Gross Domestic Product data and the US will present CB Consumer Confidence and Chicago Purchasing Manager Index data. There are speeches from BOC Governor Stephen Poloz and BOC Senior Deputy Governor Carolyn Wilkins scheduled later during the day as well.
EUR/USD analysis for 31/10/2017:
The Consumer Price Index, Unemployment Rate, and Preliminary GDP data from the Eurozone are scheduled for release at 10:00 am GMT. Market participants expect the unemployment rate to decrease from 9.1% to 9.0%, while the CPI is expected to stay at the same level of 1.1%. At the same time, the Preliminary GDP is expected to decrease slightly from 0.6% to 0.5% (the yearly basis should stay unchanged at 2.3%). The CPI is the key gauge for inflation in the Eurozone. This index tracks changes in the price of goods and services that a typical household might purchase. When the CPI is high, it indicates that significant inflationary pressures exist in Eurozone economies. This puts pressure on the European Central Bank to raise interest rates. In a case of a better than expected data, especially the inflation data, the market volatility may increase.
Let’s now take a look at the EUR/USD technical picture on the H4 time frame. The price had tested the technical resistance at the level of 1.1662, but got rejected. The dip was not deep and the market still trades between the levels of 1.1662 — 1.1574. The momentum indicator stays below its fifty level, so not much bullish pressure is building. The near-term bias is still bearish.
Market Snapshot: Crude Oil extends gains
Crude oil prices extended gains to the level of $54.45 and establishes a short-term support at the level of $53.73. Nevertheless, the market conditions are overbought and if the support at $53.73 is violated, then the price will test the next important support at the level of $52.86.
Market Snapshot: NZD/USD reverses again
The price of NZD/USD has managed to retrace barely 38% of the last swing down and was rejected at the level of 0.6889. Currently, the price is getting closer to the technical support at the level of 0.6814, which is the important daily support. Any breakout lower will extend the slide towards the next daily technical support at the level of 0.6672.