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Hello everyone, today XM Forex will bring you "[XM Group]: As the dust settles from the central bank, the US dollar holds on to weekly gains". Hope this helps you! Original content is as follows:
On October 31, the U.S. dollar index remained resilient against other currencies early on Friday after rising for two consecutive days, with the U.S. dollar index climbing to its highest level since early August. The European Economic Calendar will release preliminary inflation data for October, and several Federal Reserve (Fed) policymakers will give speeches in the second half of the day.
The European Central Bank (ECB) announced on Thursday that, as expected, it would keep its key interest rate unchanged after its October policy meeting. In the policy statement, the ECB reiterated that they will not "pre-commit" to a specific interest rate path. ECB President Christine Lagarde noted in response to media questions that they were in a period of great uncertainty, adding that a stronger euro could lower inflation further than expected. After falling more than 0.4% on Wednesday, EUR/USD extended losses on Thursday, falling about 0.3% on the day. Earlier on Friday, the pair was trading in a tight channel above 1.1550. On an annual basis, the Eurozone Harmonized Index of Consumer Prices (HICP) in October is expected to be 2.1%.
Japanese data earlier on Friday showed that Tokyo's annual inflation rate, measured by changes in the consumer price index (CPI), rose to 2.8% in October from 2.5% in September. USD/JPY rose about 1% on Thursday and climbed to around 154.50, its highest level since early February, and appears to have entered a consolidation phase. At press time, the pair was little changed on the day, trading at 154.20. In response to the excessive weakness of the yen, Japanese Finance Minister Satsuki Katayama verbally intervened on Friday, pointing out that "it is important for the stable currency trend to reflect fundamentals." He reiterated that the government is "paying close attention to foreign exchange trends with a high sense of urgency."
The U.S. dollar continues to outperform its peers as the CME Group's FedWatch Tool shows the odds of a 25 basis point (bps) interest rate cut by the Federal Reserve in December have fallen below 70% from around 90% before the Fed meeting earlier this week. Earlier on Friday, the U.S. dollar index was holding steady above 99.50, while U.S. stock futures were trading in positive territory.
Under pressure from the overall strength of the US dollar, GBP/USD closed in negative territory for the third consecutive day on Wednesday. The pair remained relatively calm in early European trading on Friday, trading below 1.3150, with a weekly loss of around 1.3%.
Early on Friday, gold traded sideways above $4,000, but was still expected to end in negative territory for the second consecutive week.
Euro: The focus remains on the EUR/USD support level of 1.1540. A firm break above this support would resume the decline from 1.1917 and target the 1.1390 support, or even further back to the 38.2% retracement of 1.0176 to 1.1917 at 1.1252. On the bright side, though, a break above the 1.1727 resistance will see the uptrend back towards 1.1778 and then a retest of the 1.1917 high.
A decisive breakout of this pattern would www.centrdom.infoplete the double top pattern (1.3787/3725) and make the near-term outlook bearish. This should be followed by a deeper decline back to the 61.8% retracement of 1.2744. On the bright side, above the 1.3247 support-turned-resistance level will first turn towards neutral on the day.
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