Euro finishes lower ahead of ECB today while Australian dollar outperforms
Canadian dollar lags on plummet in oil prices while high-beta Australian dollar outperforms of trade exemptions, euro now in focus ahead of ECB.

EUR/USD: All about the ECB today as euro weakens ahead of the event
With risk appetite improving in the financial markets on the latest goodwill gestures offered by both US and China ahead of October talks, attention will now shift towards the European Central Bank which will announce its monetary policy whereby investors are expecting significant stimulus to aid what has clearly been a slew of bad data out of the Eurozone, and with its manufacturing powerhouse Germany possibly on the brink of recession. Technicals are less relevant in the face of significant fundamental events like these, and with market-makers withdrawing liquidity it’ll mean pivot points hold less significance as the session gets volatile. Breakout strategies for limited take profit usually bear more fruit, followed by reversals but only after a signicant retreat, and with fading strategies near guaranteed to get stopped out countering any significant move. Going into the event retail traders are majority long at 60%, with institutional bias majority short 56%.

GBP/USD: Finishing lower but still enjoying short-term positive bias
With the US dollar the second-best performer yesterday in the FX market, the pound failed to finish higher in what was a mostly consolidatory session with movement primarily range-bound on a lack of fresh Brexit news that had previously infused the pair’s price with significant volatility. The technical outlook on the weekly remains bearish, but on the daily more positive technical bias has been forming even if it oscillates at current levels. Keep in mind that any rumor/news could easily cause a significant breakout (in either direction). Significant data for this pair will come out of the US with CPI figures this evening, effecting the USD aspect of this pair.

USD/JPY: Risk appetite and US yields continue to improve, keeping yen at bay
The yen lagged against most of the FX majors yesterday, with only the euro and Canadian dollar underperforming due to the ECB’s announcement and oil’s price plummet respectively. And with US yields rising further aiding the USD aspect of this pair, its technical bias continues to show more positive bias. Furthermore, Japanese investors with a lack of yield at home are pushing further into foreign investments – unhedged – especially pension funds and the like who have increased obligations as demographic shifts and a lack of yield force them into taking more risk to get returns. The pair’s price is on the verge of crossing its 100-day moving average, and in the process aid retail traders who are majority long while hurting majority short institutional traders who were betting on increased risks.

USD/CAD: CAD lags the most due to energy price plummet
As always, technicals for this pair remain less relevant due to CAD’s energy underlying which was volatile yesterday and ended heavily in the red (se US Oil slide for more details on the reasons why). The net result was that the Canadian dollar lagged the most following the price plummet in energy, and gave this pair’s price a leg to stand on that dented its initializing bull trend that was built on momentum from what had been positive technical bias in oil as well as recent better than expcted Canadian data. Its price briefly crossed but failed to hold above the 50-day moving average and is in retracement this morning. As for retail bias, its in the middle and not that far off from slight majority short institutional bias.

AUD/USD: Finishing higher and up this morning as trade talk turns more positive
With the trade mood getting more and more positive following goodwill gestures and news this morning that China may extend exemptions to agricultural products, the proxy and high-beta currency is on the rise this morning in a case where fundamentals are (for now) matching the technical overview of an initializing bull trend, taking the price back above its 50-day moving average. Good news thus far for retail traders then who are majority long at 57% but starting to test the patience of institutional traders holding a heavy short 73% (albeit the bulk were initiated higher price levels). With the gains made on positive trade sentiment, that makes next month’s trade talks all the more important in terms of translating that into an agreement.

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