Talking Forex Daily Wrap: October 30, 2013

EUR/USD
The looming risk event (FOMC) failed to dent investor appetite for risk, which when combined with a weaker USD following another round of weaker than expected US macroeconomic data ensured that the pair finished the session higher. Yet again, the release of macroeconomic data from the US which failed to meet consensus estimates prompted market participants to speculate when the Fed will in fact finally announce that it is begin to taper asset purchases. In terms of EU related commentary, EU's Rehn said that he sees a quite broad-based economy recovery in Europe, adding that rapid initial fiscal tightening was essential in crisis and that Europe can now afford slower fiscal consolidation. Elsewhere, Eurogroup head Dijsselbloem said that he sees a clean exit for Spain from it's banking bailout program, with no credit line needed. He further added that it is unlikely that banks will ever need direct ESM aid. Technically, support levels are seen at 1.3700, 1.3651 and then at the psychologically important 1.3600 level. On the other hand, resistance levels are seen at 1.3818, 1.3833 which is also 2013 high and then at 1.3859.

GBP/USD
The pair also benefited from a weaker USD to settle the session in positive territory ahead of the key FOMC meeting. There was little in terms of UK related news flow, but BoE’s governor Carney said that a 7% unemployment threshold is right time to adjust policy. The governor also said that the central bank won't tighten policy until recovery is sustained. In terms of technical levels, support levels are seen at 1.6022/00 and then at 1.5980, which is also the 76.4% retracement of the 1.5894 to 1.6258 move. On the other hand, resistance levels are seen at the 30DMA line at 1.6086 and then at the 10DMA line at 1.6146.

USD/JPY
The pair finished the session little changed as market participants positioned for the FOMC rate decision which was due to take place later the same day. In terms of Japan specific commentary, it was reported that Japan's government raised its assessment on industrial output which was the first upgrade in 7 months, stating that industrial output is picking up. At the same time, other press reports indicated that the BoJ is likely to raise FY 2014 Japan GDP forecast from 1.3% on government stimulus measures.