Talking Forex Daily Wrap: October 29, 2013

EUR/USD
The pair finished the session in minor negative territory as market participants positioned for the upcoming FOMC rate decision, as well as a slew of other macroeconomic releases. In terms of EU related commentary, Eurogroup head Dijsselbloem has proposed an adjustment to the stability pact, in which a country receives more time to correct excessive deficits on the condition that the country is bound to particular reforms within the time period in question. Ahead of the next week’s ECB rate decision, analysts at Commerzbank suggested that the ECB could make verbal intervention on declining excess liquidity and halt SMP sterilisation to boost liquidity. Separately, concerns over bank deleveraging ahead of ECB's asset quality review could undermine European stocks according to analysts at Citigroup. Finally, technical support levels are seen at the 10DMA line at 1.3731 and then at the psychologically important 1.3700 level. On the other hand, resistance levels are seen at the 2013 high at 1.3833 and then at 1.3859, which is also November 11th 2011 high.

GBP/USD
Similarly to EUR/USD, the pair failed to benefit from another encouraging round of housing data and settled the session in minor positive territory as market participants positioned for the release of the upcoming FOMC rate decision. Of note, the latest UK mortgage approvals data came in at its highest level since February 2008, while as recorded by the Land Registry, for UK as a whole saw property prices rise 1.5% M/M and 3.4% Y/Y. In terms of technical levels, supports are seen at the 61.8% Fibonacci retracement of the 1.5894 to 1.6258 move at 1.6033 and then at the 76.4% retracement of the 1.5894 to 1.6258 move at 1.5980. On the other hand, resistance levels are seen at 1.6207 and 1.6248.

USD/JPY
Unlike other major pairs which settled lower on the back of a firmer USD, the pair benefited from interest rate differential flows and settled the session with modest gains. The release of less than impressive US Retail Sales data failed to weigh on the Greenback, which instead advanced as market participants positioned for the upcoming risk events. In terms of Japan specific commentary, IMF's Japan mission chief Schiff said that Japan probably needs a further sales tax rise above 10% and that Japan needs a steady growth path not just stimulus. Schiff added that the BoJ needn't change policy right now and that further easing depends on how close BoJ is to target. Technically, support levels are seen at the 200DMA line at 97.43, 96.94 and then at 96.50. On the other hand, resistance levels are seen at the Ichimoku Cloud Base at 98.43 and then at 98.48.