Following a rather slow week as far as the economic data is concerned, the Fed meeting today will be one to watch. Investors are likely to remain on the sidelines in the run-up to the release of the FOMC minutes today.
The data comes as the Boston Fed president, Rosengren said that there was no need to lower interest rates. Rosengren was one of the two voting members who dissented against the rate cuts.
Euro Bounces as Italy PM Resigns
The euro ignored the news from Italy that Prime Minister Giuseppe Conte announced his resignation. The news came on Tuesday after weeks of speculation following discord with the Interior Minister. Conte blamed the minister for undermining the government’s efforts to pass its budget. The developments could potentially lead to fresh elections in Italy.
Will the EURUSD Maintain the Upside Bounce?
The currency pair initially slipped to lows of 1.1064 before posting a strong rebound. The gains could be limited to 1.1100. However, a close above this level could see the resistance failing. This would potentially invalidate the bearish flag pattern and could put the euro on track to continue the upside. There is also a possibility of a double bottom that has formed near 1.1064. A breakout above 1.1112 could trigger the double bottom pattern.
Sterling Jumps as PM Attempts to Negotiate With EU
The pound posted gains on Tuesday after PM Johnson called upon the EU. Talking about the Brexit deal, Johnson called for EU officials to remove the Irish backstop. Johnson said that the backstop was unviable but said that a deal could still be reached by October 31st. The EU has so far maintained that the Irish backstop was not up for negotiation.
GBPUSD Holds Support at 1.2082
Sterling briefly retested the support area of 1.2082 before posting gains. With the support level being established, the descending wedge pattern is likely to take shape. This will put the minimum upside to 1.2210 initially. A close above this level will see the GBPUSD likely to push higher towards the main resistance area of 1.2533 – 1.2511.
Gold Attempts to Retrace Losses
The precious metal attempted to post some modest gains on Tuesday. Price action was seen largely trading within Monday’s range that was set. Investors could remain on the sidelines ahead of the FOMC meeting minutes due for release later today. The initial panic following the 10 and 2-year yield curve inversion is also starting to fade as well, giving rise to risk appetite.
XAUUSD Rally Looks Done, For Now
Price action in the precious metal looks to be easing to the upside. XAUUSD briefly retested the resistance area at 1508. As long as this resistance holds, we could anticipate a downside with the lower support at 1485.70. While there is a possibility that price will remain within the said range, a breakout to the downside is quite likely to build up.