Forex-Metal Daily Analysis – 20/10/2011

As the rumours around the agreement between France and Germany on increasing the size of EFSF reinforced, the euro strengthened.

Asian and European trading sessions:
Euro: During Asian and European trading sessions the euro strengthened against the background of publication of the report regarding the fact that France and Germany have agreed to increase European financial stability Fund up to 2 trillion euros. As a results, the EUR/USD pair showed its daily maximum at around $1.3868 but then retreated.

US Dollar: The dollar stepped back against its competitors amid the falling demand for safe haven assets due to the strengthening of the major stock markets in Europe and Asia and the futures growth on major U.S. stock indices.

British Pound: The pound briefly fell against major currencies after the publication of the protocol of the last meeting of the Bank of England, the GBP/USD pair set its daily lows at $1.5709. The sterling was pressured due to the fact that monetary policy committee members were unanimous in voting for the increase in QE at 75 billion Stg. However, the GBP/USD pair grew today to the area of $1.5746.

American trading session:
Euro: Euro decreased to $1.3731 when lawmakers rejected direct guarantees to EFSF fund.
Gold: Gold fell today amid reports that France and Germany are close to agreement on increasing the size of EFSF 2 trillion euros, which resulted in lower demand for gold as a way to protect capital.

Oil: The closing price for the WTI futures was at $86.2 for a barrel.

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Technical analysis for 20/10

The pair has tested Fibonacci level 61% at 1.38871 and rolled back to 1.37486. The pair may continue declining to 1.35984.
Resistance: 1.38554, 1.39600, 1.40690
Support: 1.37486, 1.35984, 1.34882
The pair has worked out Double Bottom. If the pair stays above support 1.56722 the pair will rise to 1.58543.
Resistance: 1.58543, 1.60322, 1.62050
Support: 1.56722, 1.54842, 1.53482
The pair’s resistance is 0.91079, if this level is broken the pair will rise to 0.92026. The pair’s support is 0.89635, if this level is broken the pair will decline to 0.88418.
Resistance: 0.91079, 0.92026, 0.93069
Support: 0.89635, 0.88418, 0.87214
If the pair stays below 76.463 the pair will decline to 75.425. If the pair stays above 76.463 the pair will rise to 77.539.
Resistance: 77.539, 78.345, 79.070
Support: 76.463, 75.425, 74.414
The pair is testing daily channel at 1.02558. If the pair stays below this level the pair will decline to Fibonacci 23% at 0.98766.
Resistance: 1.02558, 1.03535, 1.04407
Support: 1.01744, 1.00907, 1.00067