The Brexit uncertainty sparked a flight to safety on Friday. Safe haven currencies, the yen, and the Swiss franc were bid higher. Dovish comments from Fed officials, Clarida, and Harker who expressed some doubt about the December rate hike kept the U.S. Dollar's rally in check.
Gold prices also advanced strongly on the day as investors' risk appetite waned on renewed concerns that the UK and the EU could part with no Brexit deal in hand.
The uncertainty of a no-confidence vote alongside the possibility of a second referendum also drove risk appetite lower. On the economic front, The ECB President spoke earlier in the day. He cautioned that inflation could dip in the coming months. However, the final inflation figures for October showed that headline CPI rose 2.2% annually while core inflation rose 1.1%.
Canada's manufacturing sales was seen rising 0.2%, beating estimates of a 0.1% increase.
A slow start to the week, this Monday will see the release of the Eurozone's current account data. This is later followed by the Eurogroup meetings. Brexit will remain in the headlines amid lack of any further economic reports on the day.
Following last week's resignations from the cabinet on the EU and the UK Brexit draft deal, the Eurogroup meeting starts today. We can expect further headlines on Brexit to dominate the newswires.
EURUSD intraday analysis
EURUSD (1.1400): The EURUSD currency pair posted strong gains on Friday and price action eventually closed above the falling trend line. The Euro currency is seen still trading below the resistance level of 1.1435 - 1.1460. Clearing this resistance level is essential for the common currency to target the next resistance level of 1.1547 - 1.1525. To the downside, failure to break the resistance level could keep the Euro trading in a range. The lower support at 1.1315 - 1.1300 is likely to be tested. However, as long as this support holds, the common currency could be looking to push higher.
GBPUSD intraday analysis
GBPUSD (1.2827): The volatility in the GBPUSD currency pair continues. After price action posted strong declines off the resistance area of 1.3132 - 1.1308, the sterling plunged back to the support area. The rebound off the 1.2828 level is however expected to keep the currency pair in the range. As long as the above resistance and support levels hold, GBPUSD could remain volatile within these levels. To the downside, a close below 1.2828 could expose the downside target of 1.2683 which is pending a retest of support.
XAUUSD intraday analysis
XAUUSD (1220.00): Gold prices advanced strongly on Friday. After breaking the local high of 1213.50, gold prices closed near the resistance area of 1223.50. This resulted in a brief pullback. As long as the pullback is limited, we expect gold prices to clear the resistance level. To the downside, the recently breached local highs near 1213.50 will likely act as support. This could potentially keep gold prices biased to the downside. But a break down below this level could push the price of precious metal down to 1204.08 level.
This market forecast is for general information only. It is not an investment advice or a solution to buy or sell securities.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. There is a possibility that you may sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.