BoE Gov Carney Against Further Rate Cuts and Stimulus; AUD Rises While Oil Slides

Another quiet day in the forex market with volatility limited in the majors, expect in the GBP and AUD cross pairs. BoE Carney's speech was bold and clear regarding the U.K. economy and the monetary policy, bolstering the British pound. The Australian dollar was the best-performing currency of the day due to the better than expected inflation data, while WTI Crude Oil recorded a fresh two-week low on new concerns over global fuel glut.

U.S. Dollar Quiet In Front of Fed Meeting and Presidential Elections
The greenback remains in a sideways trading mode ahead of the Federal Reserve policy meeting next week and U.S. presidential elections two weeks ahead. Fed is widely expected to keep the current monetary policy unchanged, however, many investors still have their reservations that the central bank may deliver hawkish statements and give the timing of the next possible rate hike last year, when Fed Chair Janet Yellen stated that would raise rates in the "next meeting" given the right conditions.

However, following that last dovish signals from Fed members, we wouldn't expect things to develop similar to last years' changes. It would be very bold from Fed to make such statements a week before the presidential elections.

Euro Remains Firmed Once Again
Euro has remained once more near its opening levels against the majority of the G10 currencies on the lack of important events to shake the currency. The German IFO survey released yesterday and it was better than expected showing that the business climate and the current assessment remained high in October, however, the survey was not enough to bolster the single currency.

EUR/USD – Technical Outlook
The EUR/USD pair dropped to its lowest since March and challenged the 1.0850 support level while it ended the day near the 1.0900 psychological level. The world's most traded currency is recording a negative month, bringing the monthly performance to -3.14%, so far.

From the technical point of view, the pair failed to surpass the aforementioned psychological level and is still developing in the 1.0850 – 1.0900 strong area. The bearish attitude still holds as the three SMAs (50-SMA, 100-SMA and 200-SMA) are sloping downwards whilst the technical indicators are following a negative path on the 4-hour chart. The MACD oscillator is moving above its trigger line and the RSI indicator is flattening below the 50 level. The next levels to watch are the 1.0850 – 1.0825 support zone, and further down, the 1.0750 barrier. On the other hand, a penetration of the 1.0900 obstacle will open the way for a retest of the 1.0950 resistance level.

EUR/JPY – Technical Outlook
The single currency is trading slightly higher the last couple of days against the Japanese yen, as it looks to make its way back towards the 116.20 area. Nonetheless, there is important economic data from Japan and Europe coming up, which is likely to have a significant impact on the direction of the EUR/JPY pair, including the Japanese CPI and the unemployment rate on Thursday and the Eurozone business climate and consumer confidence for October on Friday.

Therefore, we should prepare for more pressure on the psychological level of 116.20 in the coming days. Around there, the 50-SMA and the 100-SMA are ready to provide some resistance to the price action inside the pattern, but we believe it will be limited as the next key stands at 116.20, which includes the upper boundary of the triangle. On the other hand, if the bulls fail to push the price above the aforementioned barrier, I would expect the sellers to take control around the 112.00 area and to push the price further down towards 110.80 and then to 109.38, a significant level over the short and medium terms. The MACD and Stochastic support this notion, since the former is falling in a bearish territory below its trigger line, while the Stochastic is falling alongside with the RSI, both testing their oversold levels.

BoE Carney Against Further Rate Cuts and Stimulus
The British pound was falling versus its major peers on Tuesday, ahead of BoE Governor Mark Carney's testimony before the House of Lords Economic Committee. The pound rebounded during the speech, as the Governor stated the market is "mistaken" to be so doom and gloom around Brexit. He also stated that the pound fell more than 20% against the U.S. dollar since its prereferendum levels and the inflationary impact of that rapid fall could encourage him to vote against any further rate cuts or other monetary stimulus. The domestic currency rebounded after these statements but didn't manage to cover its previous losses of the day.

GBP/USD – Technical Outlook
The GBP/USD pair plunged to a fresh 2-week low and retested the 1.2100 significant psychological support level. The pair fell more than 1%, over the last six sessions, following the strong rebound on the 1.2330 resistance level which overlaps with the 100-SMA on the 4-hour chart and the first resistance level of the pivot points. Also, the pair is recording the sixth negative month in a row and the only economic report worth watching these days will be both the U.K. and U.S. GDP growths tomorrow and on Friday, respectively.

The price is still establishing within a trading range roughly around the key level of 1.2200. Currently, the price is moving below the 50-SMA, on the same chart, which was a strong resistance level for the bears, while the technical indicators hold below its mid-levels. The MACD oscillator is moving below its trigger line endorsing the bearish scenario while the RSI indicator is falling. A break below the referred psychological level will slip the price to the 31-year low at 1.1978 support level. Otherwise, if the price surpasses the 1.2330 barrier will open the door for the 1.2500 obstacle.

Australian dollar Rises as CPI Picked Up
The Australian dollar is rising for the third consecutive day against the U.S. dollar and pushed up 0.6% overnight following the better than expected inflation report came out. Consumer prices rose 1.3% yoy the third quarter of 2016 from 1% yoy the previous quarter. Compared with the quarter prior, the consumer prices picked up 0.7% posting a 5-quarter high, since Q3 2015. The trimmed CPI rose 1.7% yoy in the three months to September, the same pace as the two previous quarters. The effect was directly visible on the currency, as reaching inflation target is among the priorities of Reserve Bank of Australia and the reason for many rate cuts. This year, the central bank lowered its benchmark interest rate twice, in May and August, and a pick-up in the inflation rate would justify their moves and show that their decision worked out.

AUD/USD – Technical Outlook
The AUD/USD pair surged more than 1.2% since Monday and surpassed above the 0.7650 – 0.7660 strong barrier which was a significant level for the traders. Also, the commodity pair is developing in an ascending move since January and failed several times to break the uptrend line to the downside.

Currently, the price is moving towards the previous 2-month high at 0.7735 and is establishing above the three SMAs on the short and medium-term charts. From a technical point of view, the technical indicators seem to be in agreement with the bullish thought, since both, are moving near the overbought areas. The RSI indicator lies slightly below the 70 level while the MACD oscillator holds above its zero and trigger lines.

EUR/AUD - Technical Outlook
The Australian dollar set-off with a 200-pip rally against the euro after it break below the key support level at 1.4400, and remained bearish below the weekly 200-SMA. Technically, the risk remains towards the downside, given that the price is settling below the psychological level at 1.4400. Therefore, we should see the AUD moving further down under the 1.4400 major level, with the weekly 200-SMA now acting as the nearest resistance. Short-term technical indicators are still unable to provide any clear sense of direction, whereas the longer timeframe ones still suggest the bearish momentum is to prevail. The next level to watch over the short-term will be the 1.3960 barrier, where we will expect a pullback from there, before going more south, towards 1.3650.

USD/JPY – Technical Outlook
The USD/JPY pair traded higher during yesterday but failed to test the 105.00 strong resistance level. Currently, the price is developing near the 104.30 price level and is moving towards the fresh 3- month high at 104.90. An alternative scenario is a penetration of the 104.00 psychological level which coincides with the 50-SMA on the 4-hour chart, where the price will meet the 103.15 support level. The technical structure remains to the upside since both the MACD and the Relative Strength Index (RSI) showing some bullish momentum over the daily and the weekly timeframes. The price is moving above both the 100-SMA and the 200-SMA, as the 50-SMA remains above both of the SMAs.

WTI Plunges as Worries for Over Supply Return
The West Texas Intermediate (WTI) recorded a fresh 2-week low at $49.37 following the strong pullback from the $51.10 resistance level. The oil is creating the first negative week after five consecutive green weekly sessions as the worries for global supply glut fired following a report showing a surge in U.S. crude stocks. API Weekly Crude Oil stock jumped to 4.8M from a deficit of 3.8M before.

WTI Crude Oil – Technical Outlook
On the short-term timeframe, the price was moving within a rising channel which was violated to the downside during yesterday's session. The technical structure suggests bearish move as it is developing below the strong resistance level at $49.75. The price is moving towards the $48.60 support level and there are no obstacles until the latter barrier. In addition, the oil is developing below the 50-SMA and the 100-SMA while the technical indicators hold near the oversold areas. The MACD oscillator lies below the zero line with strong momentum whilst the RSI indicator lies near the 30 level.

What to watch today
During the morning, the German Gfk consumer confidence survey will be published. We have a quiet economic calendar in U.K. with only the BBA mortgage approvals for September coming out. In U.S., the Markit services PMI estimate will complete the composite index for September and is forecasted to tick marginally higher at 52.4 from 52.3 before.