Talking Points:
– EUR/USD Risks Larger Rebound on Sticky European CPI Inflation.
– USD/JPY Threatens Bullish Formation Ahead of FOMC, BoJ Policy Meetings.
– USDOLLAR to Face Slowing 3Q GDP & Subdued PCE Inflation.

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EUR/USD

Chart – Created Using FXCM Marketscope 2.0
Despite the bearish break in the Relative Strength Index (RSI), the lack of momentum to push & close below the 1.2600 handle may continue to produce range bound-prices in EUR/USD.
A close above 1.2710 (200% expansion) to 1.2725 (23.6% retracement) may open up a larger range along with a move back towards the monthly high (1.2886).
Retail crowd remains net-long EUR/USD as the DailyFX Speculative Sentiment Index (SSI) currently stands at +1.01.

USD/JPY

USD/JPY appears to be holding channel support, but a downside break in the bullish RSI momentum may highlight a lower-high in the exchange rate, especially as it struggles to push back above former support around 108.20 (61.8% retracement) to 108.30 (1.618% expansion).
Even though the Federal Open Market Committee (FOMC) is widely expected to halt its quantitative easing (QE) program, USD/JPY may remain capped over the near-term should the Bank of Japan (BoJ) fail to further expand its asset-purchase program.
Failure to maintain ascending channel would bring 106.80 (38.2% retracement) to 106.85(100% expansion) back on the radar.

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Read More:
Price & Time: Looking For USD To Reassert
Weekly Trading Forecast: FX Traders Prepare for Heavy Volatility on FOMC, GDP and ECB Stimulus

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11018.1

11051.53

11003.85

-0.27

68.22%

Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar Index may face a narrowing rate ahead of the Federal Open Market Committee’s (FOMC) October 29 meeting amid the recent series of lower-highs & higher-lows.
The Fed’s forward-guidance for monetary policy is likely to dictate USDOLLAR price action as the central bank halts its QE program but, the 3Q GDP report may drag on interest rate expectations should the advance report highlight a marked slowdown in growth & inflation.
Will be mindful of the string of closes above 10,950 (38.2% retracement) as a wedge/triangle formation appears to be taking shape, but the continuation pattern continues to favor the topside targets with 11,120 (1.618) to 11,138 (0.618%) on the radar.

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Release

GMT

Expected

Actual

Markit Purchasing Manager Index Services (OCT P)