GBP/USD CONTINUES FALLING FOLLOWING CARNEY’S SPEECH
The price of EUR/USD continued to fall due to disappointing statistics from the ZEW Economic sentiment index. The index for Germany came in at 17.6 for October against the 20.1 forecast, while for the Eurozone it hit 26.7 versus the 34.2 forecasted. Growth in industrial production in the US of 0.3% in September against the 0.7% decline in the previous period gave a further downward push to the pair. Investors are waiting for tomorrow’s speech by ECB President Mario Draghi where he may give some insights on the plans and timing of cuts to the asset purchasing program.
The British pound got a boost today from consumer inflation which grew to 3.0% in September compared to 2.9% in August. This increases the chance of an interest rate hike by the Bank of England happening sooner rather than later which is good news for the pound. Though an interest rate increase by 0.25% will only compensate the monetary easing from the previous year. However, the Bank of England’s Governor, Mark Carney, didn’t mention tightening monetary policy during his speech in parliament today. Volatility may remain high tomorrow due to the labour market data release in the UK.
The aussie dollar may see some action later today from the release of the MI leading index due out at 23:30 GMT. Earlier today the minutes of the Reserve Bank of Australia meeting were released with an optimistic forecast on the state of the Australian economy. AUD bulls’ positive reaction however was short lived.
The EUR/USD kept falling within the limits of the local descending channel and as a result is testing the support line at 1.1750. Breaking through 1.1750 may become a stimulus for continued price drops with the closest targets at 1.1700 and 1.1620. The growth potential is limited by the upper limit of the local descending channel.
After some consolidation near 1.3250 the pound has shown a sharp descending move and is approaching the support level at 1.3150. Breaking through this mark is likely to stimulate the bears to pull the quotes down to the 1.3000-1.3050 range. On the other side, the RSI on the 15-minute chart is near the oversold zone which is the basis for a possible price rebound to 1.3250. Volatility is likely to remain high.
The AUD/USD price resumed falling after some upward correction. The immediate goals in case of maintaining the current descending dynamics will be 0.7800 and 0.7740. If the quotes fix above the resistance at 0.7870 it may become a strong signal to buy with potentials to increase up to 0.8000 and above. Though today we’re more likely to see a bearish sentiment.