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Forex pairs in this Article » EUR/USD (San Francisco) - A cocktail of factors are helping the USD comeback: 1. The less dovish comments from the Fed with a remote possibility of starting QE cuts as soon as December; 2. The ECB downplaying the Euro as market it now pricing further stimulus from Draghi; And 3. Not bad economic data in China and the since April 2011 ISM manufacturing index.

The euro closed its worst week against the US Dollar since June 2012 after losing around 310 pips or 2.3% from the 1.3800 level to end the week at 1.3490. So, as chief analyst Valeria Bednarik asked in a recent report: What happened to the chance of testing 1.4000?

On the technical field, "the daily chart shows a strong bearish tone, with price having been steadily losing ground practically with no corrective movements in the middle, and price dangerously close to 1.3450 support area that contained bearish attempts since mid September," comments Bednarik. "A sustained break below the level will expose the 1.3300 level, next strong support area, while once below this last 1.3100 is exposed."

On the fundamental side, Kathy Lien, Managing Director of FX Strategy for BK Asset Management, comments that "if Mario Draghi suggests that lower rates are possible, the EUR/USD could drop through 1.34 and head towards 1.32 next week." However "if the central bank President downplays ECB member Nowotny's comments or suggests that the drop in inflation will be temporary, the EUR/USD could recover quickly," Lien points.

The EUR/USD closed the week just below the 1.3500 area at 1.3490 with the pair consolidating levels following the latest bearish movement. With indicators pointing to the south, Bednarik believes that any recovery needs to take position above the 1.3580 before attempting to buy positions towards 1.3660/1.3710 price zone.

The GBP/USD collapsed in the day from 1.6060 to close at 1.5920. However, the Cable maintains the last week range in between 1.5900 and 1.6250. The USD/JPY extended recovery from 200 hours MA at the 97.15 area reached on October 25 and now the pair closed the week at 98.70. However, keep in mind that robust sized barriers are noted at 99.00 and 100.00.

Main headlines in the American session:

US Markit Manufacturing PMI declines to 51.8 in October.

US: ISM Manufacturing PMI rises to 56.4 in October

Fitch confirms Spain’s BBB rating, outlook stable

The FXBeat Weekend Read: What tools does the ECB have in its belt?

Economic data gives extra oxygen to Wall Street and stocks opens the month with gains
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