Daily Forex Market Preview, 19/10/2016
The US dollar is seen easing from its strong bullish momentum over the past few days with price action stalling above the 98.00 handle. A rather soft print on the CPI numbers released yesterday did little to dent the sentiment in the dollar. Earlier this morning, China's GDP numbers matched expectations with growth seen expanding at a pace of 6.7% which is likely to keep the risk appetite supported. Later this evening the third and final US presidential debate will kick off which could be the main event risk for the US dollar.
EURUSD (1.0983): EURUSD slipped back below the 1.1000 handle yesterday and is likely to wait for more clues from the ECB meeting tomorrow. The downside head and shoulders target of 1.0950 remains within reach although price action has so far printed a higher low with a bullish divergence on the Stochastics. Further gains can be seen coming only on a close above 1.1000 handle with a breakout from the falling median line. Resistance at 1.1100 remains the key level that could be tested to the upside, while the downside remains limited towards 1.0950 - 1.0900.
GBPUSD (1.2281): GBPUSD closed bullish following the reversal off 1.2200. As noted yesterday, further upside could be seen with the price likely to challenge the resistance level at 1.2400. In the near term, GBPUSD could be seen pulling back to test 1.2200 support which is validated by the fact that the Stochastics shows a hidden bearish divergence. As long as the downside is limited to 1.2200, GBPUSD remains poised for a test to 1.2400. To the downside, a breakdown below 1.2200 could see GBPUSD likely to test the previous lows and potentially consolidate between 1.2200 and 1.2000.
USDJPY (103.88): USDJPY remains stuck near the 104.00 resistance level with price action now into a fourth consecutive day of staying range bound within 104.63 high and 103.33 low. Near-term breakout from this range is likely with the upside seen limited. On the 4-hour chart, USDJPY is seen bouncing off the lower median line, and the upside could send USDJPY retest 104.34 - 104.20 resistance level being challenged once again. Expect further gains only on a close above 104.20. To the downside, USDJPY remains poised for a decline towards 103.00 and 102.00 support levels.