EURO FALLS AFTER GERMAN COALITION TALKS HIT A ROADBLOCK
The US dollar fell sharply against its counterparts on reports that special counsel Robert Mueller's team had subpoenaed Donald Trump's presidential campaign for documents. Even positive housing data released on Friday failed to boost the USD. October building permits rose to 1.30 million as compared to 1.25 million forecasted. Housing starts in October also rose to 1.29 million making it highest starts since last year.
Earlier today in Asian trade the euro fell after news that Angela Merkel's efforts to form a government in Germany has collapsed, which leaves the Eurozone's largest economy in uncertainty for almost two months after the general election. Angela Merkel's conservative alliance won the general election held in September but failed to gain the majority with its worst result since 1949, which leaves German leaders no option other than to make a coalition to gain majority in Parliament. Efforts to form a coalition ground to a halt after the chairman of the Free Democratic party ended talks with Merkel's Conservative camp. The euro fell almost 0.6% against the US dollar but managed to recover some of its losses throughout the day. The euro also slipped 0.6% against the yen and 0.4% against the British pound.
EUR/USD is expected to trade with a bearish outlook. The pair retraced back from Yesterday's high at 1.18212. The pair broke below its lower boundary of the Bollinger Bands, which indicated a continuation of the bearish trend. The relative strength index is also giving a bearish signal as it broke through its oversold level. As long as the pair is below 1.1859 (last week's high), the pair is expected to hit 1.17217 (today's low) and 1.1695. Alternatively, above 1.1859 (last week's high) look for 1.1879 (last month’s high) and 1.1905.
USD/CAD is trading with a bullish outlook and is expected to continue its upside movement. The pair is trading above its key resistance of 1.2712 (yesterday's low). Both 20 day moving average and 50 day moving average are heading upward and expected to push the prices higher. As long as the price is above 1.2712 look for the first target at 1.12822 (yesterday's high) and 1.2915 (last month's high). Alternatively, below 1.2712 look for 1.26703 (last week's low) and 1.2645.
GBP/USD is expected to continue its upside movement above its key support at 1.31694 (yesterday's low). Both 50 day moving average and 20 day moving averages are bullish and the relative strength index lacks downward momentum. So, as long as the price remains above 1.31694 (yesterday's low) look for 1.32785 and 1.3310. Alternatively, below 1.31694 look for 13125 and 1.3061 (last week's low).