Talking Forex Daily Wrap: October 28, 2013

EUR/USD
The pair settled the session in minor negative territory as market participants were seen booking profits following last week’s gains and also took advantage of light trading conditions after a storm raged through most of the UK and affected transport systems. There was little in terms of EU related commentary, but ECB's Noyer said that Europe's plans for a financial tax must be revised. Noyer added that Europe’s planned financial transaction tax poses “an enormous risk” to the countries involved and could threaten financial stability. Separately, French Finance Minister Moscovici said we are not out of the range where we can say the EUR is overvalued. In terms of technical levels, support levels are seen at 1.3764/41 and then at the 10DMA line at 1.3707. On the other hand, resistance levels are seen at 1.3859/71 and then at the psychologically important level of 1.3900.

GBP/USD
The pair mimicked its major counterpart EUR/USD for much of the session, and thus also settled in minor negative territory. Much of the attention this week will be on the US, where the Fed is to announce the outcome of the latest monetary policy decision. Overall, there was little in terms of UK related commentary today but over the weekend, David Smith wrote that the UK could notch growth of as much as 3% next year as the economic recovery picks up in the country. Furthermore, Allan Monks of JP Morgan said the bank’s forecast suggested the economy was expanding at 3.4% at an annualised rate which would see Q4 GDP print at 0.9%. Separately, the latest UK Hometrack Housing survey for the month of October came in line with prev and at 3.1% vs. Prev. 2.4%. Technically, support levels are seen at the 10DMA line at 1.6138 and then the 30DMA line at 1.6086. On the other hand, resistance levels are seen at 1.6248/60 and then at the 30-day upper Bollinger level at 1.6237.

USD/JPY
The pair finished the session in minor positive territory, however the price action was relatively muted given the light trade volumes as a result of a huge storm that raged through the UK and disrupted travel systems. Going forward, market participants will be awaiting the outcome of the upcoming FOMC meeting where the Fed is again expected to refrain from announcing plans to taper QE. Ahead of the BoJ’s policy decision due later in the week, board member Iwata reaffirmed the BoJ’s 2.0% price stability target.