ECB decision day

The ECB’s interest rate decision is set to occur later on today, with the majority of market participants currently anticipating the bank to cut by 25 basis point. In particular, EUR OIS currently implies a 99.6% probability for such a scenario, and thus attention may turn to the accompanying statement and ECB President Lagarde’s press conference following the decision. As such, should ECB President Lagarde imply that the ECB will continue on its rate-cutting cycle, it may weigh on the EUR. Whereas any hesitancy to commit to future rate cuts, could be perceived as hawkish in nature which in turn may aid the EUR.Japan’s CPI rate for September is due out in tomorrow’s Asian session. The CPI rate is expected to showcase easing inflationary pressures in the Japanese economy by coming in at 2.3% year on year at a core level. Should the core and headline CPI rates slow down, they could amplify the narrative that the BOJ is on track to sustainably achieve its 2% inflation goal and thus may ease calls for further rate hikes, which could weigh on the JPY. On the flip side, should the CPI rates fail to slow down as expected, it may have the opposite effect and thus may provide support for the JPY.Over in Australia, the nation’s unemployment rate for September came in lower than expected at 4.1% versus the expected rate of 4.2%, which may imply a resilient labour market. In turn, the resilient labour market may edge the RBA towards a more restrictive monetary policy approach, which may aid the AUD.

USD/JPY appears to be moving in an upwards fashion, with the pair currently taking aim for our 150.00 (R1) resistance level. We opt for a bullish outlook for the pair and supporting our case is the RSI indicator below our chart which registers a figure just above 60, implying a bullish market sentiment, in addition to the upwards moving trendline which was incepted on the 9^th of October. For our bullish outlook to continue, we would require a clear break above the 150.00 (R1) resistance line, with the next possible target for the bulls being the 152.95 (R2) resistance level. On the flip side, for a bearish outlook we would require a clear break below the 147.40 (S1) support line with the next possible target for the bears being the 144.80 (S2) support level. Lastly, for a sideways bias we would require the pair to remain confined between the 147.40 (S1) support level and the 150.00 (R1) resistance line.

WTICash appears to be moving in a downwards fashion. We maintain our bearish outlook for the commodity and supporting our case is the RSI indicator which currently registers a figure near 40, implying a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 64.75 (S1) support level, with the next possible target for the bears being the 57.30 (S2) support line. On the flip side, for a sideways bias we would require the commodity to remain confined between the 64.75 (S1) support level and the 71.50 (R1) resistance line. Lastly, for a bullish outlook we would require a clear break above the 71.50 (R1) resistance line with the next possible target for the bulls being the 78.00 (R2) resistance level.

Other highlights for the day:

Today in the European session, we get the Eurozone’s final HICP rate for September, whereas during the American session we get the US weekly initial jobless claims figure, followed by the US Philly Fed business index figure for October, US retail sales and industrial production rates both for September and the US EIA weekly crude oil inventories figure. In tomorrow’s Asian session we get Japan’s Core CPI rate, China’s urban investment, industrial output and retail sales rates all for September followed by China’s GDP rate for Q3. On a monetary level we note the speech by ECB board member McCaul, Turkey’s interest rate decision and we highlight the ECB’s interest rate decision which is followed by ECB President Lagarde’s press conference,  and then the speech by Norway’s Central Bank Governor Bache and ending off the day is the speech by Chicago Fed President Goolsbee.

USD/JPY Daily Chart

• Support:  147.40 (S1), 144.80 (S2), 142.25 (S3)
• Resistance: 150.00 (R1), 152.95 (R2),  156.05 (R3)

WTICash Daily Chart

• Support: 64.75 (S1), 57.20 (S2), 49.30 (S3)
• Resistance: 71.50 (R1),  78.00 (R2),  83.45 (R3)

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Disclaimer:
This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

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