Today can be described as ‘central bank Thursday’ with key ramifications for sterling, the euro and the US dollar. 

People walking past the Bank of England
Source: Bloomberg

GBP/USD RSI still bullish

The Bank of England decision and accompanying statement today will make life interesting for traders. Understandably momentum has stalled here after a strong two-day move that has taken the pair back above $1.53 for the first time since 24 September. The pair now sits right below the 200-day SMA at $1.5321, and while bullish RSI and MACD are still in place, it may be difficult for cable to push on unless the BoE is firmly hawkish in its assessments.

Upside targets lie around $1.5409 and then on to $1.5478, while support is likely around $1.5247 and then $1.5131. 

EUR/USD eyes close above $1.13

Having built a base earlier in the week euro bulls have slowly pushed EUR/USD higher, but the $1.13 level is still proving tricky. If the ECB news fails to reveal anything particularly dramatic, then a daily close above $1.13 will signal that a fresh leg higher is underway, with a target of the mid-September high at $1.14 and then towards $1.16. Dips back towards support at $1.11 and the 50-day SMA may bring out buyers once again. Until the index breaks the lows of September at $1.11 then the upside case should be regarded as the stronger. 

USD/JPY testing rising trendline

The steady retreat here goes on, with the price testing the rising trendline that was present throughout September. For now ¥119.70 and then ¥119.42 are areas to watch for buyers. The bearish crossover of the 50-hour SMA with the 200-hour is in the offing, and it will take a move back above ¥120.60 to invalidate the bearish case. 

AUD/USD targets $0.7250

The Aussie pulled back from yesterday’s highs, but has found support around $0.7175 and has moved higher. The strong October trend remains intact, and so dip buyers may ride the bounce back towards the $0.7250 level. A move through $0.7158 would likely signal that more downside is on the way, with $0.7110 being support, followed by the 200-hour SMA at $0.7066. 

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