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U.S. Dollar Trading (USD) markets entered into a quiet range bound consolidation on Friday as traders digested Thursday Rally and the EU bailout. US Data showed Consumer sentiment improving throughout October is a promising sign for the struggling US economy. In US stocks, DJIA +22 points closing at 12231, S&P +1 points closing at 1285 and NASDAQ -1 points closing at 2737. Looking ahead, Chicago PMI forecast at 59 vs. 60.4 previously.

The Euro (EUR) the EUR/USD was under profit taking pressure for most of Friday trade galling back 1.4150 form highs of 1.4250 on Thursday. Concerns about the EU debt plan implementation are still evident and a new high for Italian Yields add caution to the bulls. Overall sentiment is still positive and the market is now looking forward to the ECB rate meeting on Thursday and new President Draghi’s first press conference.

The Japanese Yen (JPY) the market is on intervention watch as the USD/JPY continues to edge lower despite constant verbal protestations from BOJ/MOF officials. Some traders suggest Y75 might be the trigger level for some real intervention but others caution that Japan is not Switzerland and it is best to slow not reverse the Yen appreciation.

The Sterling (GBP) consolidated with the rest of the markets around the 1.6100 level on Cable and 0.8800 on the EUR/GBP. The outlook is bullish technically but as always will follow the sentiment from day to day which has been fickle in recent months. Looking ahead, September Mortgage data forecast at 0.6bn vs. 0.6bn previously.

The Australian Dollar (AUD) the Aussie came under profit taking in the Asian session but closed at the 1.0700 level in the US session as trader still had appetite to but the commodity/risk currency. The RBA meets tomorrow and still pricing a better than 50-50 chance of a rate cut. The statement will be closely scrutinized in any event see if a new easing cycle has begun.

Oil & Gold (XAU) Gold moved in a $20 range form $1750-1730 but is well supported on dips and looking higher. Oil fell back to $92 a barrel before finding support and ending relatively unchanged on the day at $93.50.

Pairs to watch

EUR/USD Downside to test for support?

XAU/USD to break $1750 on QE3 talk?

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3704

1.3970

1.4140

1.4288

1.4386

USD/JPY

74.44

75.00

75.80

76.49

77.49

GBP/USD

1.5891

1.5955

1.6110

1.6203

1.6261

AUD/USD

1.0102

1.0382

1.0670

1.0765

1.1007

XAU/USD

1635.00

1695

1745

1754

1786

OIL/USD

90.00

92.00

93.50

95.00

97.00

Euro – 1.4140

Initial support at 1.3970 (61.8% retrace of 1.3799-1.4247) followed by 1.3704 (Oct 21 low). Initial resistance is now located at 1.4288 (Sep 2 high) followed by 1.4386 (Sept 1 high)

Yen – 75.80

Initial support is located at 75.00 (big figure Support) followed by 74.44 (77.86 minus 0.618 of 81.48-75.95). Initial resistance is now at 77.09 (Oct 20 high) followed by 77.49 (Oct 12 high).

Pound – 1.6110

Initial support at 1.5955 (Oct 27 low) followed by 1.5891 (Oct 26 low). Initial resistance is now at 1.6203 (Sept 5 high) followed by 1.6261 (Sep 1 high).

Australian Dollar – 1.0670

Initial support at 1.0382 (Oct 27 low) followed by the 1.0203 (Oct 21 low). Initial resistance is now at 1.0765 (Sept 1 high) followed by 1.1007 (Aug 2 high).

Gold – 1745

Initial support at 1695 (Oct 26 low) followed by 1635 (Oct 24 low). Initial resistance is now at 1754 (Sept 23) followed by 1786 (Sept 22 high).

Oil – 93.50

Initial support at 92.00 (Intraday Support) followed by 90.00 (Intraday Support). Initial resistance is now at 95.00 (Intraday resistance) followed by 97.00 (Intraday Resistance).

Written by Anthony Darvall