Forex Investment and Currency Trading

Sterling is a the major under-performer overall after some extremely disappointing GDP data renewed speculation that the BoE could extend its QE program aggressively; GBP will trade with a generally more defensive tone through to the early November BoE policy meeting; traders are forecasting EUR/GBP at 93 pence at year-end. The slide in the pound has helped fluff up the USD’s broader performance to a degree but EUR/USD traded to a new cycle high overnight and is starting to look a little more comfortable above the 1.50 level. Traders remain bullish on EUR/USD and continue to look for a push up to 1.5150 in fairly quick order; technically, the underlying trend higher remains well entrenched in the market and oscillator studies continue to suggest that the EUR is liable to see only modest corrections lower at the moment. The firm support in the short term is seen in the upper 1.49 area.

The EUR is getting some decent support from the crosses, with the GBP and JPY trading softly this morning. EUR/JPY can grind higher to test 140 in the near term and USD/JPY will nudge up towards the low/mid 92 area to complete the measured move implication of the recent double bottom on the charts. Japanese media reports reiterated that the BoJ will forecast a further three years of deflation in its semi-annual report next week which will make the BoJ a very late-arriving member to the global tightening party and shift the JPY towards the top of the list of preferred funding currencies for carry trades.