EUR/USD remains in a short-term triangle: on Thursday the price pushed higher to 1.2470. In our view, the triangle will likely be broken to the downside. The market setup remains bearish as long as the 1.2500 resistance holds. Next resistance lies in the 1.2650/2700 area, but for now we don’t see any fundamental reasons for a sustainable growth. Euro zone is scheduled to release preliminary Q3 GDP data on Friday (6:30-10:00 GMT) and final October CPI at 10:00 GMT.
GBP/USD is now close to our target in the area of 1.5720 (61.8% Fibo retracement of the move from 2013). This is the key technical level to watch. A break lower will make the pair target 1.5600 and 1.5370 (76.8% Fibo). The market’s now expecting the Bank of England’s rate hike further in the future. A weekly close below 1.5980 will confirm the bearish scenario. Resistance is at 1.5905 (bottom of the weekly Ichimoku Cloud). On Friday the main news event will be US retail sales and consumer sentiment.
USD/JPY has been consolidative between 116 and 115. The pair has already priced in some of the potential delay in the sales tax hike and no decision on this issue is expected this week. The bulls need more drivers to push the pair above 116.10 and 116.50. US data tomorrow may more the pair a bit, but taking into account its overbought nature, something as strong as the delay in tax hike is needed to trigger another leg higher.
AUD/USD has been trading in a short-term bullish channel since late last week. The pair dipped to 0.8670 in Asia as the RBA Assistant Governor Kent said the regulator could intervene to the FX market if needed. However, the effect wasn’t really long-playing: the pair pushed higher to 0.8760 later in the day. The 0.8770 area could become a new resistance: this is 61.8% Fibo from the recent decline. Support is now seen at 0.8730 and 0.8680. All eyes on the US data releases in the coming days.