Many analysts and traders believed the single currency was overbought already and it would be extremely difficult for bulls to push EUR/USD above 1.37. Nevertheless, Tuesday's spike of volatility sent the pair to 1.379, while on Friday the pair hit 1.383– the highest level since November 2011. Currently the pair is facing a strong resistance at 1.3849/58, represented by weekly R2, daily R2 and a Bollinger band. However, in case it is breached, the pair can easily advance towards strong psychological level at 1.40. By the way, a penetration of 1.371 means the pair is already trading not within the boundaries of a rising wedge pattern formed in June.
While the U.S. Dollar lost 0.11% during the week, the single currency, in contrast, advanced 0.96%. EUR/JPY is also reaching new highs, as on October 22 the pair reached 135.50, which is the highest level since November 2009. Meanwhile, the pair is still moving in boundaries of a channel up pattern, which is already 100 days long. Regarding last week's biggest looser, it is the New Zealand Dollar that fell more than 2% against the major peers and posted the longest run of weekly declines against the Aussie in more than a year as the Reserve Bank of New Zealand signalled its hesitation to increase borrowing costs.
This week markets can be as volatile as the last week, as there is a bunch of crucial fundamental data and central banks all over the world will be hosting their policy meetings. While RBNZ gathering on October 30 is unlikely to provide any surprises, the Bank of Japan can upgrade its growth outlook on October 31. Furthermore, on Wednesday Federal Reserve meeting is scheduled, which is always widely anticipated by market participants. Taking into account recent fiscal and political problems in the United States, analysts believe there will be no adjustments to QE until March 2014; however, some economists claimed the Fed can even increase the pace of monthly bond purchases, meaning the U.S. Dollar can continue losing ground against other currencies.