The GBP/USD renewed the three week lows | 03 October 2014

Euro

The ECB monetary policy meeting is in the centre of attention. The US and Europe monetary policy contradictions provoke the yields growth, while the German bonds fell below 1% for the first time in history. The US and German yield spread have reached the highest level since 1999. According to the forecasts, the ECB has to leave the rates unchanged; investors are waiting for ECB comments and hints to the full-scale QE. In the run-up to the European Central Bank meeting release the market activity is again at the low level.

The euro/dollar consolidated in a narrow range and was limited by the support level of 1.2580 and by resistance level of 1.2660. Nevertheless, the pair closed the trading above the level of 1.2660.

The support levels are 1.2640 - 1.2660, and the resistance levels are 1.2730 - 1.2750.

MACD is in a negative territory.

Trading recommendations

The trend looks bearish, but the oversold euro involves the upward correction development. The ECB meeting results and Mario Draghi’s press conference will have a strong impact on the pair dynamics.

Pound

The pair reached the maximum amid the USD weakness, caused by the ISM unfavorable report, but its growth was short-termed. The main Eurozone event will be the ECB meeting without doubt. This event can cause the EUR/USD volatility, which will affect the GBP/USD. The Bank of England Deputy Governor Ben Broadbent said in an ITV interview that despite the fact the UK economy was quite strong and was moving to the normal level, it was early to raise rates. The GBP/USD is trading above the support level of 1.6130 which can give the bulls hope for the pair correction. In turn, the attempts for the increase are limited at the resistance level of 1.6200.

The support levels are 1.6110 - 1.6130, and the resistance levels are 1.6200 - 1.6220.

MACD is in a negative territory.

Trading recommendations

It is necessary to overcome the pound resistance at 1.6200 and 1.6300 to ease the pressure. The ability to consolidate above the last level will signal about the pair prospects improvement.

Yen

The pair managed to decrease from the maximum 6-year rate, previously set at 110.08 amid its correction due to the concerns about the overbought dollar. According to the data, the change in the number of employed people in the US private sector amounted to 213K in September, against the expected 210K. The Markit manufacturing PMI amounted to 57.5 in September against the expected 58.5, and the ISM manufacturing PMI amounted to 56.6 against the expected 58.5. The Tankan quarterly report was published by the Bank of Japan and has not impressed much the traders.

The support levels: 108.00-108.20, and the resistance levels: 108.70-108.90.

The MACD indicator is in a negative territory.

Trading recommendations

We advise to place short orders with the first target 107.80. When the pair consolidates below the first target, we can open deals to the level of 107.20.