Traders are waiting to hear from the Fed on a possible December rate hike

The biggest story in the Forex universe over the past day has been the fresh lows in the Euro that reached a new 7-month low price on the back of the weakness in the European currency. On the back of the attacks in Paris and the growing divergence of monetary policies between the ECB and the Fed the Euro has been under pressure for some time now and even though the decline is a slow-pace one it is driving the currency lower.

In terms of fresh data the ZEW Survey printed mixed yesterday morning but given the recent round of terrorism actions the sentiment is worse than the indicator shows. At the same time the US inflation levels printed strong adding another reason for the Fed to pull the trigger next month, even though the Industrial Production declined. The Manufacturing Production component rose more than expected so one can argue that it offsets the decline in the industrial sector.

For the day ahead the most important event will be the release of the minutes from the last FOMC meeting on monetary policy and also several Fed policymakers delivering speeches. Both types of events will provide a crucial insight on the way the Fed is thinking and could hint us on how determined they are to move forward with raising rates in a couple of weeks. Of course any signs of conviction to go ahead will offer fresh support to the Dollar across the board.

Taking a look at the price action over the past 24 hours, the Euro has printed a new low at the 1.0630 area yesterday but has consolidated sideways over the course of the overnight trading in Asia. As we mentioned above the bias is bearish and any fresh bullish news from the US will refresh the pressures on the Single currency and push it lower. There is little support between the level that the Euro is trading right now and the 1.0500 level so we could see fresh losses for the Euro given the right stimulus.

The Cable has been something of a weird story in recent sessions, the UK currency has been trading sideways for some time inside a narrow range and that didn’t change yesterday even though the inflation level printed better than expected. It can be argued that the improvement in the inflation report came only on the year-on-year component but again it looks weird to see the Cable trading in such a non-volatile manner for so long. The bias here remains bearish as well and given the lack of reaction on the positive inflation news the Cable will be vulnerable to losses towards 1.51000.