Trading plan for Oct. 3

EUR/USD rose to $1.2690, but then returned down to $1.2650. The ECB kept rates unchanged. The most important piece of information from Mario Draghi’s press conference is that purchases of covered bonds will start in the middle of October, while ABS will be bought from Q4, 2014. The ECB gave no estimates of the size of the programs, but said that they will last 2 years. The market will be now digesting this information. The main question is: has the ECB done enough or it will have to do a full-blown QE in future? As the central bank has stressed that the medium-term inflation forecast has declined, expectations of more from the ECB may remain. Technically watch for support at $1.2600 – a slide below this level will confirm the continuation of the downtrend. Resistance is at $1.2700, $1.2715 and $1.2760. Today’s data from the US was mixed. Tomorrow watch the NFP and American unemployment rate at 12:30 GMT – traditional source of volatility.

GBP/USD extends the downside in the early US trade, approaching the $1.6100 support. Intraday rallies were capped at $1.6175. The cable kept on falling despite the outstandingly strong UK construction PMI release (8 month high of 64.2). Tomorrow will bring us probably the most awaited release – Service sector PMI at 8:30 GMT. The index is expected to have declined from 60.5 to 59.1. However, even is the figure comes out stronger, we doubt that the current bearish trend could be paused. Hold a short position with a target of $1.6070.

USD/JPY extends the decline from the 110 mark, hitting 108.30 in Europe. The pair found some support in this area, but we expect the short-term sales to continue. Break below 108.20 will open the way to 107.30 and 106.80. The picture remains bearish below 109.00 yen. On Friday all eyes will be glued to the US NFP release – strong figures will clearly push the pair higher.