ECB, BoJ expected to remain hawkishly on hold

Peter Iosif, ACA, MBA IronFX

ECB expected to remain on hold

With the Fed’s interest rate decision out, we focus on ECB’s decision later today. The bank is expected to remain on hold with the market expecting a rate hike in December. High inflationary pressures in the Euro Zone indicate the necessity of further monetary policy tightening while low growth in the Zone tends to suggest caution in hiking rates. Should the bank remain on hold as expected and accompany its decision with a hawkish forward guidance, we may see the EUR getting some support.

BoJ to keep rates unchanged

In tomorrow’s Asian session, we highlight from Japan the release of BoJ’s interest rate decision. The bank is widely expected to keep rates unchanged yet is also marginally expected to proceed with a rate hike in December. Should the bank remain on hold as expected and accompany its decision with a possibly hawkish forward guidance, we may see JPY getting some support.

Alphabet disappoints, Amazon, Intel are next

Microsoft’s earnings report seemed to go well, yet Alphabet’s report disappointed traders some even at both the revenue and the EPS figure as well as the negative cash flow for a second quarter in a row. Today we highlight the release of Amazon’s and Intel’s earnings reports in the aftermarket hours. Better-than-expected figures, possibly accompanied by robust forward guidance, could lift market sentiment.

Oil prices show signs of stabilisation

Oil prices seem to display some signs of a relative stabilisation. On a fundamental level, we note hopes for a diplomatic breakthrough in the US-Iran conflict intensified after US Vice President Vance sent a letter to Iranian officials, thus weighing on oil prices. Yet the Houthi attacks are still ongoing and the situation in the Gulf region is still tense, pushing oil prices higher. We view the stabilisation of oil prices as temporary and prevailing fundamentals may dictate the direction of oil prices.

Other highlights for today

In today’s American session, we get from the US, the PCE rates for September, and the preliminary GDP advance rate for Q3 and the ECB’s interest rate decision. In tomorrow’s Asian session, we get Japan’s October Tokyo CPI rates, September’s preliminary industrial output and Australia’s Q3 PPI rates. In tomorrow’s European session, we get Euro Zone’s preliminary GDP rates for Q3, France’s and Germany’s October HICP rates, Switzerland’s October KOF indicator and the Czech preliminary GDP rate for Q3.

Charts to keep an eye out

EUR/USD bounced on the 1.1115 (S1) support line yesterday and remained there. We note the stabilisation of the pair’s price action, yet the low level of the RSI indicator tends to show a bearishly predisposed market for EUR/USD. Also the continuation of the downward direction of the 20 moving average signals the continuance of a possible bearish direction. Should the bears regain control over EUR/USD could break the 1.1115 (S1) support line and start aiming for the 1.0.955 (S2) support level. Should the bulls take the lead, EUR/USD may aim if not breach the 1.1260 (R1) resistance line.

WTI’s price action, remained near the 101.00 (R1) resistance line. Given that the upward trendline guiding the commodity’s price seems to be broken, we switch our bullish outlook in favour of a sideways motion bias. Yet the RSI indicator remains above 50 implying a bullish market predisposition, hence we issue a warning for any possible bullish market tendencies. Should the bulls regain control, we may see WTI’s price action breaking the 101.00 (R1) resistance line clearly and start aiming for the 108.85 (R2) resistance level. Should the bears take over, we may see WTI aiming for the 94.30 (S1) support line.

EUR/USD daily chart

Support: 1.1115 (S1), 1.0955 (S2), 1.0820 (S3).
Resistance: 1.1260 (R1), 1.1350 (R2), 1.1475 (R3).

WTI daily chart

Support: 94.30 (S1), 87.55 (S2), 82.00 (S3).
Resistance: 101.00 (R1), 108.85 (R2), 114.00 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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