Judging by the lack of movements by the EURUSD pair, the Forex markets aren’t moving anywhere this week. We are now on Wednesday’s session and the pair is trading at the same levels that it closed with last Friday. This means that the EURUSD has been ranging for two days, and chances are this range will hold until the ECB (European Central Bank) meeting this Thursday. The ECB will discuss the monetary policy in the Eurozone, and that is sure to have some effect on the Euro currency.
The one major pair that seems to be on a quest upwards is the USDJPY. It conquered the all-important 120 level yet again when it was threatening to break the 118 level to the downside just five trading days ago. I would say that there is more scope to the upside on the USDJPY. The 121.20 level should be an intermediate target and the 123 level should be a real target for the move forward. However, from those highs in the 123 level, I am bearish and would look to establish some short positions.
The entire week has been light on economic releases but Thursday will see the unemployment numbers released in the United States. This means the markets will focus less on the USD and more on the Euro as the ECB meeting and press conference is looming. While it is unlikely the ECB will announce anything tomorrow. It is very likely that the central bank is going to be cornered by journalists asking why the bank is doing nothing when inflation is below zero, and why there are no signs of a rise in the CPI in the months ahead. That being said, look for any hints of an extension of the current quantitative easing program as this will be met with heavy selling of the Euro.
I am still generally bearish on the Euro. The EURGBP is in pole position for a move lower and based on the correlation between Euro pairs I would say that the EURUSD pair will be dragged lower as well.
Thursday’s ECB meeting will follow the UK’s Retail Sales from the previous month. This release shows the health of the consumer retail sector. It is very important as an economic indicator because if the consumer is not spending, the economy clearly not doing well.
So far October has been a fairly quiet month and many pairs were ranging. Some were in bigger ranges than others but were nevertheless in ranges. The markets seemed to be looking for a reason to move, and that reason could/would normally only come from a central bank such as the ECB or the Federal Reserve.
Draghi is taking center-stage Until the next FOMC meeting and Euro will be in focus this week.
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