EUR/USD: Expectations For Dovish ECB Are Exaggerated

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EUR/CHF: (Full Content - VIP Subscription Only)

AUD/JPY: long at 86.80, target 89.80, stop-loss at 86.10, risk factor **

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Pending Orders:

EUR/USD: buy at 1.1345, target 1.1550, stop-loss 1.1285, risk factor *

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EUR/USD: Expectations For Dovish ECB Are Exaggerated

(buy at 1.1345)

• San Francisco Fed President John Williams said the Federal Reserve should start raising interest rates in the near future despite strong headwinds from overseas that are holding down inflation. The decision on timing, he said, is a “close call,” with good arguments on both sides.

• Three other speeches of Fed policymakers are scheduled for today. President of the New York Federal Reserve William Dudley and Federal Reserve Governor Jerome Powell will speak at 13:00 GMT and Fed Chair Janet Yellen’s speech is scheduled for 15:00 GMT.

• ECB governing council member Christian Noyer said late on Monday the European Central Bank's quantitative easing programme was well calibrated and did not need to be adjusted, following similar words from Austrian central bank chief Ewald Nowotny. On the other hand, Bank of Spain Governor Luis Maria Linde said the ECB could extend and modify its asset purchase programme aimed at boosting inflation and growth in the Eurozone.

• The EUR recovered from a 10-day low against the USD on Tuesday after opinion from Noyer and Nowotny. Any signs that an extension of the bank's existing programme of quantitative easing, or of a further cut in some of its key interest rates that are all already at or around zero, would act against the EUR. But in our opinion expectations for such a sign are too strong now. It is too early to discuss the extension of current quantitative easing programme, as current programme expires in Septmber 2016. A disappointment in case of lack of dovish hints from the ECB on Thursday may support the EUR. That is why we have placed our EUR/USD bid at 1.1345. If the order is filled our target will be 1.1550.

Significant technical analysis' levels:

Resistance: 1.1420 (high Oct 16), 1.1495 (high Oct 15), 1.1561 (high Aug 26)

Support: 1.1300 (psychological level), 1.1268 (low Oct 9), 1.1233 (low Oct 8)