Talking Forex: EUR/USD Moves Lower

EUR/USD
The pair finished the session lower as market participants positioned for a raft of risk events which are due to take place this week, which includes the delayed jobs report from the BLS for the month of September. In terms of notable EU related stories, Germany's SPD party plans to enter coalition talks with Chancellor Merkel's CDU/CSU with 10 demands including a minimum wage of EUR 8.50, a financial transaction tax and a growth strategy for Europe. In other German related news, the German finance ministry said the German economy is likely to grow above potential in H2 and that German companies are likely to expand production capacity. On a more sombre note, ECB President Draghi has warned the European Commission that imposing losses on banks' bondholders in order to plug capital shortfalls could be destabilizing for many Eurozone economies. Technically, support levels are seen at 1.3600, the 10DMA line at 1.3582 and then at 1.3550. On the other hand, resistance levels are seen at 1.3711 (2013 high), the 30-day upper Bollinger level at 1.3720 and then at the psychologically important 1.3800 level.

GBP/USD
The release of another solid housing data, together with optimistic comments from various BoE members ahead of this week’s release of the most recent BoE meeting minutes, failed to ensure a positive close as market participants positioned for a slew of key macroeconomic releases from the US. In particular the focus will be on the jobs report from the BLS for the month of September which will be released on Tuesday. In terms of comments made by the MPC over the weekend, BoE's Broadbent said the BoE has room to raise interest rates as they would not hit borrowers and the primary objective is still inflation. However he also stated that the central bank will only raise rates once the recovery is secure and it is more likely that they will consider raising interest rates once unemployment has fallen to 7%. Elsewhere, the outgoing deputy governor of the BoE Paul Tucker has said the UK’s economic recovery is evidence that quantitative easing is finally working. Although Tucker said it was still too early to say whether the economy had reached “escape velocity”. Technically, support levels are seen at the 10DMA line at 1.6039, 1.5940 and then at 1.5894. On the other hand, resistance levels are seen at 1.6252/60 and then at 1.6270.

USD/JPY
The pair settled the session higher after the release of the latest Trade Balance data prompted speculation that the BoJ may have to turn more aggressive to meet its inflation goals. As a guide, Japan has now posted a trade deficit for the 15th month in a row in September as a weak JPY pushed up import costs, while Japan's imports have grown at a faster rate than its exports in all but one of the past 11 months. Technical studies indicate that support levels are located at the 61.8% Fibonacci retracement of the 96.55 to 99.01 level at 97.49 and then at the 200DMA line at 97.18. On the other hand, resistance levels are seen at the 61.8% Fibonacci retracement of the 99.01 to 97.55 move at 98.46 and then at 99.01, followed by the psychologically important 100.00 level.