Last week's overview, this week key events

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Government shutdown. Postponed job reports. Optimistic Draghi's comments and strong fundamental data from Britain were the main drivers last week, and even though currencies have not risen or fallen significantly, important highs and lows were reached. The greenback was mostly under pressure due to the worrying news from the White House, where Republicans and Democrats struggle to reach the budget deal and avoid a default. The United States Dollar lost  0.84% against its major peers during the week, while on Thursday October 3, EUR/USD hit 1.3646– the highest since February. In contrast, the single currency advanced 0.35% over week on optimistic signs from Draghi, saying the ECB is ready to use any tools, including the widely-discussed LTRO, to act according to money market's needs. The single currency soared to the highest level in seven months on Wednesday, hitting 1.3590 against the greenback after ECB's Draghi provided additional information on economic situation in the region, while Enrico Letta's confident win boosted the currency even higher. Moreover, shared currency advanced 0.19% versus the Pound, reaching 0.8365. Furthermore, EUR/USD has penetrated the strong resistance line of 1.362, represented by rising wedge pattern's resistance. The pattern was formed on July 19, and was 408 bars long, indicating strong bullish momentum. An upside breakout means higher prices to come, hence bulls can focus on 1.3655– weekly and daily resistance. 

Another pair driven by fundamental data last week was GBP/USD. On October 1 the pair hit 1.6261– the highest level since January, however, later the Pound fell against the greenback, declining to 1.608 on Friday, amid speculations Britain's economy is not strong enough to guarantee an increase in borrowing costs. Nevertheless, all pillars of economy posted strong growth in September, suggesting government measures are working and the economy will build up steam in the coming months, reinforcing a view bulls will try to test the nine-month high once again. 

The top gainer last week was the Japanese Yen, which advanced 1.27% versus a basket of other currencies, while the Dollar weakened for the fourth day against the Yen on Friday, as postponement of job report clouds the outlook for when the Federal Reserve will start tapering its stimulus programme. The pair has been moving in a strong downtrend since September 11, when the pair touched strong psychological level above 100. In case bears continue pushing the pair lower, the next key level is located at 96.633, represented by a weekly support. 

Regarding the next five trading days, as always main events are scheduled in the second part of the week. Hence, on Wednesday EUR/USD is likely to be extremely volatile, due to release of U.S. unemployment rate, payroll, FOMC minutes as well as Draghi speech. A day later, the Pound will be driven by BoE's meeting, where Mark Carney will decide whether to expand its stimulus programme or make any adjustments to interest rates. However, taking into account recent data, he is likely to stay pat on the policy.



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