October (WK4) Forex Market Update

This week ECB President Mario Draghi did it again – after a very slow couple of weeks with the US Dollar seeming to be losing its strength, the markets read the speech from ECB as an even weaker European economy. The charts were very clear in showing the EUR weakness as all the crosses dropped to levels of previous weeks on Wednesday and Thursday.

On the currency market, the Australian Dollar and the New Zealand Dollar continue to show a renewed strength against the main currencies after the lows in September.

On the Indices side, both Europe and the US showed an unexpected strength as the highs of September and October were broken and the value surpassed the levels of late August. In Asia, Nikkei also retesting the levels from the end of August and Hang Seng breaking the range from previous weeks and moving another 200 points.

On the Commodities side, Crude price still holding the range between 49 and 43 while Gold retested the 1180 level from last years before pulling back for the rest of the week.]

Best Trades this week

  1. NZDCAD (Daily Chart) – Continuation Long – 21.10.2015 – A pullback to the moving avaerages proved to be the perfect entry for this trade following the long trend. With higher highs and higher lows and the moving averages spreading apart price kept pushing to the upside and is now around +1,5% in profit.    

EFFECT OF THE NEWS LOOKING FORWARD

Certainly, this week every major investor will be keeping a close eye on the Federal Reserve Statement regarding the Interest Rates in US. This has been moving the markets lately and any unexpected dovish or hawkish tone might trigger some action on the currency (and stock) market.
On Friday more speeches from the US as well as the press conference from the BoJ (Bank of Japan) might help investors figuring out the next steps for the Japanese crosses as the typical ranges are still on and no clear price action has triggered yet.
On the Indices side we are looking forward to the next pullbacks as the intensity of these will definitely help us analyze the overall direction as small moves will indicate that the buyers are now in control… On the commodities side, Crude is starting to present downtrend moves once again but the key moment will be the break of the 43 level as a lower price will certainly trigger more entries and extra selling pressure. As for Gold, we are now eager to see if the 1180 level will act as resistance or if the investors are finally considering this safe haven as history usually states. Reading the cyclicity after the break to the upside will be the key.