Citi summarizes its current bias on EUR/USD and USD/JPY.

"CitiFX Strategy's medium-term bullish bias for EURUSD remains, but we see little near-term direction, and concerns around covid, growth and positioning. This week’s main event is the October ECB – we expect the ECB to point to persistent stimulus including an extension of PEPP asset purchases in December," Citi notes. 

"USDJPY continues to see risk/reward favouring USDJPY shorts per the team. We expect no changes but a slightly dovish BoJ meeting on October 29," Citi adds. 

TD Research discusses its expectations for this week's ECB policy meeting on Thursday.

"We don't look for any new policy announcements at the October meeting. We do, however, expect the ECB to acknowledge the growing risks to the growth and inflation outlook on the back of rising Covid cases and regional lockdown measures. We look for Lagarde to leave the door wide open to augmenting the PEPP in December, which most analysts are now expecting," TD notes. 

"With the US election coming hot on the heels of the October ECB meeting, we do not expect to see a significant directional move in EURUSD. We expect spot to remain anchored within familiar ranges through Nov 3 but for EURUSD to resume its grind higher after amid broader USD weakness if our base case is confirmed," TD adds. 

• Equities ESv1, copper HGV1, iron-ore DCIOc2 all lower on the day

• AU-US 3-year yield spreads widen, US$ yield advantage increases again

• USD/CNH puts in big gains, rallies near 6.7000 with no pull backs

• AUD/USD rallies sharply away from Oct 23 low, 10-DMA though; nears 0.7150

• Daily bull hammer forms despite risk-off sentiment, should concern shorts

• 0.7165/95 is a big impediment for bulls to overcome though

• Oct 14 high, daily cloud base, t-l off Sep 1 high 55-DMA sit in that zone

• For more click on FXBUZ

FX options thrive on volatility, regardless of direction, and current conditions before impending event risk suggest this could prove a winning trade for EUR/USD.

Dealers say current FX trading conditions are thin before a European Central Bank policy announcement on Thursday and especially next week's U.S election -- and less participation will increase volatility potential.

Implied volatility gauges actual volatility expectations, and it's already much higher, as dealers sought value from longer-term lows amid last weeks EUR/USD's renewed gains toward 1.1900, and any setbacks are likely to be limited now.

Consider a two-week expiry FX option - implied volatility up from 6.2 to 8.6 since capturing the U.S election, to flag the perceived event risk, and demands a premium for a simple vanilla straddle of 160 USD pips.

Traded in conjunction with a constantly adjusted cash hedge to offset any EUR/USD directional exposure and monetise actual volatility, the owner hopes actual volatility will outperform implied, banking more than 160 pips before expiry.

Related nL1N2HH0HVnL1N2HH0DM

For more click on FXBUZ

• EUR/USD could hit a major Fibo above nL1N2HG0NL

• GBP/USD's "bull trap", "cloud twist" are negative nL1N2HH0C9

• EUR/GBP bulls need a daily close above 30-day moving average, now at 0.9104

• That would accelerate gains towards 30-day upper bolli-band now at 0.9194

• Layers of support below ahead of 100, 55-DMAs at 0.9049, 0.9065 respectively

• We are long at 0.9150 for an adjusted 0.9190 obj. EUR/GBP Trader TGM2343

• EUR/USD bulls should tread carefully as ECB and US election loom

• ECB may signal dovish intent Thurs, given the downside economic risk

• Uncertainty over U.S election keeping many on sidelines for now, too

• USD/CNH, U.S yields and broader USD off recent lows - caps EUR/USD

• Options weren't betting on sustained gains, despite higher implied vol

• Vol gains were consistent with increased event volatility, short covering

• Cheap implied volatility fuelled demand pre U.S election nL1N2HC0HX

  
  

  
  

• FX options expire at 10-am New York - can often influence FX price action

• EUR/USD: 1.1800 (523M), 1.1835-40 (1BLN),

• EUR/GBP: 0.8900 (880M),0.9000 (2.2BLN), 0.9020 (895M), 0.9100 (565M)

• AUD/USD: 0.7040-45 (460M), 0.7085 (273M), 0.7100 (667M) , 0.7205-15 (600M)

• NZD/USD: 0.6550-55 (360M)0.6700 (201M)

• USD/CAD: 1.3130 (209M), 1.3150 (230M)

• USD/JPY: 104.00 (2BLN), 104.20 (481M), 105.00 (918M), 105.30-35 (1.3BLN)

• EUR/JPY: 122.80 (1.2BLN), 123.10 (717M)

• EUR/USD could be on the cusp of bigger gains to the 1.1919 Fibo

• 1.1919 Fibo, a 76.4% retrace of the 1.2014 to 1.1613 September drop

• Bulls need to completely clear the daily cloud, that spans 1.1635-1.1849

• That would enable them to tighten their grip on this market

• We are looking to get long on dips to 1.1805, ahead of Fri's 1.1787 low

• EUR/USD Trader TGM2334. Previous nL1N2HD06I

• Storm clouds gather over a fragile dollar nL1N2HC0AC

• AUD/USD slithered straight down to 0.7116 from open 0.7145

• Weakness in Asia stocks, particularly China, weigh AUD

• Break of 0.7092 support may cue further long capitulation

• Mon close below will confirm Bollinger downtrend channel

• China's upcoming 5-year plan may involve slower growth nL4N2HE221

• Some optimism lingers for US stimulus before election nL1N2HG0EW

• For more click on FXBUZ

  
  

• AUD/USD traded 0.7145 early before slipping lower with E-mini futures

• E-minis down around 0.50%, as coronavirus infections accelerate globally nL1N2HH042nL1N2HG0D6nL1N2HG0I7

• AUD/USD traded as low as 0.7115 before settling around 0.7120

• USD and JPY firmer across the board in risk-off session

• AUD/USD support at 10-day MA at 0.7112 and break increases downward pressure

• Resistance at 0.7158 where Friday's high and 61.8 fibo converge

• US political uncertainty ahead of Nov 3 US election likely to weigh on risk

• For more click on FXBUZ

• -0.15% with EUR/GBP up 0.2% on optimistic Irish Brexit comments nS8N2GR0FM

• Germany agrees inflation beating public sector unions pay deal nL1N2HG0KU

• S&P gave a surprise upgrade to the Italy rating outlook nL4N2HE4CA

• Charts; 5, 10 & 21 DMAs and momentum studies head higher - bullish setup

• Close above 1.1860, 61.8% of the September fall would target 1.2014 Sep top

• NY 1.1825-1.1865 range is initial support-resistance

• 1.1830/40 1.238BLN close strikes likely a base in Asia

For more click on FXBUZ

• Risk-off tone at the start of Asian session with E-minis down 0.45%

• USD and JPY firmer with EUR/USD off 0.16% and EUR/JPY down 0.20%

• EUR/USD resistance at 1.1915/20 where 76.4 fibo and Sept 10 high converge

• Support at 55-day MA at 1.1798 and Friday's low at 1.1787

• EUR/USD likely to stay in broad range while risk assets remain choppy

• For more click on FXBUZ

• AUD/USD is steady around the NY close at 0.7136 in a quiet start

• AUD/USD was resilient last week - rising 0.83% despite sluggish equities

• US political uncertainty and rising COVID infections will continue to weigh on risk assets nL1N2HG0D6nL1N2HE0ZNnL1N2HE0RW

• Resistance at 0.7158 where Friday's high and 61.8 of 0.7243/0.7021 converge

• Support at 10-day MA at 0.7112 and break shifts pressure to downside

• For more click on FXBUZ

• USD IMM net spec position slips in Oct 14-20 period nL1N2HE1HZ

• EUR +0.66% in period; specs sell 2,694 contracts now long now 165,943

• JPY flat in period, specs sell 5,793 contracts now long 14,183

• GBP specs shrug off Brexit angst buy 7,802 contracts short reduced to 2k

• AUD & Kiwi specs add to longs as CNH gained 1.12% on upbeat recovery vibe

• MXN carry traders lighten long sell 2,636 contracts now long 19,842

The dollar eased late on Friday, tracking Treasury yields lower and relinquishing gains scored when optimism over a pre-election relief bill faded nL1N2HE0ZNnW1N2G500I.

In a mixed day for risk sentiment, progress toward a Brexit deal nL8N2HC5HN was overshadowed by troubling pandemic news nL8N2HD65TnL8N2HD4J9.

EUR/USD managed modest gains, mostly on the sizeable EUR/GBP rise following the UK's downside PMI miss nL8N2HE2RD versus a roughly on-forecast euro zone PMI composite nL8N2HE2KA, even though Britain's reading remained in expansion above 50 while Europe contracted.

EUR/USD found good technical support in its earlier dip to the 10-day moving average nL1N2HE0R5, but hasn't been able to clear this week's high due to some risk aversion demand for the dollar, despite the above-forecast U.S. Markit PMI composite reading of 55.5 versus 54.3 in September nZON000NXF.

Ten-year Treasury yields were on track to end a six-session rise, a move that has become overbought with pandemic relief still uncertain.

Sterling was whipped around by the UK PMI miss then a fleeting spike to the 1.3122 session high on a report of potential compromise on EU-UK fishing rights nL8N2HE1RB, a key Brexit issue.

That was followed by a rapid slide to session lows nL1N2HE0QW by the 55-day moving average at 1.3018, which it had vaulted above during Wednesday's wild advance.

Wednesday's 1.3177 high and October peak completed a 61.8% Fibo of September's slide at 1.3173 before beginning a retreat before the weekend.

USD/JPY was a shade lower, but the two havens -- dollar and yen -- seem to have found some stability in the 104.00s yet again.
Early losses were reduced by the risk-off dollar demand in U.S. trade nL1N2HE0XX.
The 104.93 high on EBS retraced 50% of Wednesday's tumble, but the bigger hurdles are by 105.05.
September's 104 low is now key support.

High beta currencies were little changed after a flat finish for USD/CNY.
AUD/USD's overnight rally after decent PMI data nZRN00099D was roundly rejected by the falling 30-day moving average, tucked below the cloud base and downtrend line from September.

Oil fell under the weight of rebounding Libyan oil supply after a truce between warring factions and general unease about demand during the ongoing pandemic and with doubts about when more U.S. fiscal relief might arrive.

The BOJ and ECB meet next week, but neither is expected to change policy, though hints at future easing will be watched.
Q3 GDP estimates for Europe and the U.S. come out on Friday.

For more click on FXBUZ

• GBP/USD soft into the weekend -0.43% at 1.3025; NorAm range 1.3122-1.3017

• US aid, Brexit uncertainties weigh on GBP, despite upbeat fishing headlines

• Sterling flash fisheries rally the one that got away nL1N2HE0QW

• Bulls wary above 1.3100, res at upper 30-d Bolli 1.3122, Wed high 1.3177

• Cloud twist attracts 1.2980 Oct 27, supt 1.2948 21DMA, 1.2867 61.8% Fib of 1.2676-1.3177 rise

• EUR/GBP +0.67% at 0.9095, Fri range 0.9097-23; Brexit, BoE neg rate tones weigh on GBP

Danske Research discusses its expectations for next week's ECB meeting.

"At next week’s ECB policy meeting, we do not expect any new measures to be announced. However, with the COVID-19 spreading increasing, we expect the ECB to send its usual dovish signals, which could raise further market expectations for a December decision to increase/extend PEPP due to its open interpretation of the language. Our baseline is for the ECB to signal a readiness to act subject to incoming data in the coming 6 weeks and not a pre-commitment to expand already next week," Danske notes.

"We do not expect markets to react strongly to the press conference. We expect European fixed income will continue to trade in its tight range (Bunds range between -65bp and -40bp), while ECB is not a game changer for the EURUSD.

We expect Lagarde to be questioned on the economic and inflation uncertainty and upcoming December staff projections, the content of the toolbox, effectiveness of the tools the divergence of views in the governing council," Danske adds. 

• EUR/USD rallies capped near 61.8% Fibo of 1.2014-1.16125 but dips get bought

• Pair dips below the 55-DMA overnight but the 10-DMA stems the slide

• The ensuing rally leads to the cloud top getting pierced again

• Slight pull back from high but daily, monthly RSIs imply upside risks

• Cloud top falls next week, might provide another dip buying opportunity

• 1.1890/1.1900, 1.1915/30 zones are impediments for EUR/USD bulls

• Break of the latter likely leads to test of September's monthly high

• For more click on FXBUZ

Societe Generale Research maintains a buy-on-dip bias for AUD/UD, looking to go long on a dip into 0.70.

"Yuan stability will affect market sentiment on a day-to-day basis and eventually limit how far EUR/USD can go. But we're a long way from that being an issue in 2018/2019 when EURUSD average 1.15, the 10-year real yield differential between TIPS and Bunds averaged 180bp. Now its 50bp. That's the move which underpins a stronger euro and because the spread move has stalled, the euro too, has settled into this annoying range," SocGen notes. 

"We have considerably more confidence that the AUD's next big move will be above 0.8, not below 0.6, and is probably best traded by waiting for a slip closer to 0.70 to go long with a stop just below that level," SocGen adds. 

EUR/USD rose modestly on Friday after a euro zone PMI nL8N2HE2KA report that was just strong enough to leave bulls confident that influences from spreads, Brexit and safe-haven flows can support the euro.

The composite euro zone PMI contracted less than expected, featuring a surprisingly strong manufacturing expansion that offset a disappointing services sector performance.
Overall the data tempered some investor concerns about the economy contracting, buoying the euro.

EUR/USD was also boosted by tightening 2-year German-U.S.
yield spreads tightened and the halt in 10-year spread widening.
Data has also driven investors out of the safe-haven dollar and yen, further supporting EUR/USD.

Reports of "real progress" on Brexit nS8N2GK08C alleviated some market uncertainty, lifting risk sentiment which in turn underpinned EUR/USD.

Technicals highlight EUR/USD's upside risks.
The 10-day moving average acted as a springboard for EUR/USD, a daily bull hammer has formed, RSIs are rising and the daily cloud top has been pierced.

Should risk sentiment remain upbeat, EUR/USD could break the Oct.
21 daily high and test 1.1915/30 resistance.
A break above that zone would target September's monthly high.

For more click on FXBUZ

Credit Suisse likes selling GBP against the USD and the EUR in the near-term.

"We still see no reason to change our view that EURGBP should gravitate to 0.9200 while Brexit talks proceed, with GBPUSD still a sell above 1.3000. Given the government’s general approach to emotive talks, the odds of talks being concluded in a manner that rules out more apprehension and misunderstandings before a conclusion seem slim still," CS notes. 

"We note that the EU parliament, which would need to vote through any agreed deal, does not next month till 23-26 Nov, suggesting that the level of urgency to reach a conclusion will stay relatively low for some weeks to come," CS adds. 

Credit Agricole CIB Research notes an overbought reading in EUR/USD from its short-term fair vlaue models.

"The recent appreciation of EUR/USD does not seem supported by the recent evolution of drivers like the relative central bank outlook or the credit quality of EUR-denominated assets. Indeed, more recently, we saw the UST yield curve steepening relative to the EGB curve as investors assessed the impact of future US fiscal stimulus on the long-term USTyields. Moreover, the BTP-Bund yield spread, which has been tightening aggressively since the deal on the EU recovery fund and the introduction of the ECB PEPP programme over the summer, has been re-widening more recently," CACIB notes. 

"As a result of these developments, our estimated short-term fair value for EUR/USD has dropped so that the currency pair is starting to look overvalued at current levels," CACIB adds. 

• Price again knocking on the door of its daily cloud top, 1.1851

• A 1.1760-1.1776 Nov 5 cloud twist could drag on further gains

• Wed-Thurs failures to hold a cloud break spoiling bullish potential

• Risk remains high for a deeper adjustment of the 1.1688-1.1880 rise

• Weekly action bullish but big level here is a way off at 1.2014, Sept high

• Near-term bearish risk but longer-term argues for a buy on dips strategy

  
  

• Cable retreats to test 1.3082 (Asia high) after weaker than expected UK PMIs

• See: nL8N2HE2RD. 1.3111 was high before UK PMIs vs 1.3051 early Ldn low

• 1.3051 is the low water-mark since Wednesday's six-week peak of 1.3177

• Wednesday's peak was scaled on news EU and UK trade talks to resume

• Back at the Brexit table, UK and EU try to tackle fish nL8N2HE1RB

• There is a big 1.3100 option expiry for the 10am ET NY cut, GBP 933mn strike