The Swiss National Bank surprised the markets by unexpectedly lowering the 3-month LIBOR target rate for the third time over the last two months as they expect inflation to fall below the 2% target by the end of the year.
The Pound continued to fall leading up to the U.K. retail sales report, before it pared some of its losses when the reading was better than expected. However, the bullish momentum was short lived as the Sterling ran into resistance at the 1.4900 price level.
The US Dollar looks likely to challenge key resistance levels against the Euro, British Pound, Canadian Dollar, and Australian Dollar through upcoming currency trade. Yesterday's false break lower against the Euro and British Pound proved short-lived, and we maintain our bearish bias on the EUR/USD and GBP/USD.
The Reserve Bank of Australia spent a record-breaking 3.15 billion to intervene in the forex market and support the value of its currency. Japanese exports dropped by the largest amount in nearly seven years, pushing the Trade Balance into deficit. Switzerland’s Trade Balance could surprise to the upside if imports follow the sharp uptick in October’s retail sales.
U.K. retail sales are expected to have declined for the second month in a row in October. Economists are predicting that consumer consumption drop 0.9% following a 0.4% decline the month prior.
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