The euro came out of the narrow price range. Yesterday we saw the euro exceeded 1.30 and followed quickly up to 1.3130. Now it is trading at this level. We believe the upward movement will extend at least to the level of 1.3250 as strong resistance.
Germany is open to Spain looking for a precautionary credit line from the European rescue fund. German Chancellor Angela Merkel gave a pro-euro speech, saying that progress has been made against the debt crisis, but it will take years of "systematic work" to resolve the crisis. She also noted that Greece is changing its "way of thinking" and she is against a split EU into euro/non-euro.
While, the U.S. retail sales and CPI in September again exceeded the expectations of analysts.
Retail sales rose 1.1% last month, up from 0.6% expected, confirming the recovery in consumption in the United States. In its turn, the consumer price index increased by 1.1%. It was also higher than expected as well as the Wholesale Price Index which was released on Friday. A Labor Department report also showed that the cost of living in the U.S. increased in September for the second consecutive month, reflecting an increase in energy costs.
We expect a rebound of leading currencies in the short term as it is trading around weekly resistance.
Meanwhile, the yen which acts as a refuge from uncertainty reversed from the highs of last week and again is about the level of 79 units.
Gold hits lows, the current price is $ 1,744 and it has a very strong support zone. It seems unlikely that the breakdown of it could extend the bearish mood.