Intraday Technical Analysis 25 October

The Bank of Canada hiked interest rates by a quarter point yesterday. This brought the interest rates to 1.75%, the highest in a decade. The central bank also took a more hawkish stance indicating that rates might have to rise faster than expected.

Data from the Eurozone showed that the flash manufacturing and services PMI came out slightly weaker than forecast. Flash manufacturing fell to 52.1 missing estimates of 53.3 while flash services PMI fell to 53.3 from 54.5 which was forecast.

In the U.S. flash, PMI’s by Markit indicated an increase in activity on both manufacturing and services sectors. New home sales data, however, failed to match the forecasts, rising at a slower pace of just 553k during the month.

The economic calendar for the day will see the European session standing out with the ECB’s monetary policy meeting. The central bank is forecast to keep interest rates unchanged at today’s meeting. With the ECB now into the final stretch of its QE program, the ECB President Mario Draghi is expected to take a cautious stance in the statement.

The NY trading session will see the release of the durable goods orders report. Core durable goods are forecast to rise 0.5% on the month following a flat print the month before. The headline for durable goods orders is forecast to fall 1.3% after rising 4.4% the month before. Later in the evening, the U.S. pending home sales report is due.

EURUSD intraday analysis

EURUSD (1.1404): The EURUSD currency pair extended declines quite a bit on Wednesday. The common currency fell to a two month low at 1.1379 as it broke past the previously held support level. On the 4-hour chart, we see the Stochastics pointing to a bullish divergence. Against this backdrop, the Euro could be seen attempting to recover. A close above the recently breached support level of 1.1435 – 1.462 could potentially signal a turnaround in the short term.

GBPUSD intraday analysis

GBPUSD (1.2886): The British pound continued to fall with price action falling to a fresh one-month low. The declines could be expected as the currency pair will be seen testing the lower support level at 1.2808 region. Any short-term rebounds in decline to the support level could be limited. The resistance level at 1.3054 – 1.3028 will keep any gains in check.

XAUUSD intraday analysis

XAUUSD (1236.94): Gold prices were seen attempting to rally back to the resistance level. However, price action is expected to see the end of the upside as the resistance level of 1238 holds for the moment. A close below 1225.35 support is, however, needed to confirm a decline. We expect gold prices to eventually test the lower support at 1207 which could mark a correction to the rally.