Trading Setups / Chart in Focus:

AUDUSD

The AUDUSD sold off heavily today after the RBA cut interest rates. The pair rotated down to fresh 3-day lows and is currently sitting between the 8 / 21 day EMA support levels. We are seeing a clear bearish bias from overhead resistance near 1.0750, and so we could easily see selling pressure on rallies higher.

We are looking to sell rallies on the 4hr and daily charts on price action confirmation, 1.0500 is a near-term resistance to keep a close eye on. Note also the strong containment level of resistance at 1.0750 and how perfectly this horizontal level held.

EURUSD

The EURUSD held the line of support near 1.3650 today. We could see a push higher off this support in the near term, if this happens we would watch for selling opportunities on the 4hr or daily charts around the near-term resistance at 1.3900 – 1.3950 area. Whilst price is below the key resistance at 1.4250 we see potential to sell rallies into resistance.

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Forex Commentary:

In the currency markets today, the EURUSD lost significant ground again and closed the day near $1.3700, down from $1.3856 at yesterday’s close, this move lower came on the back of news that Greece will hold a referendum on the EU bailout plan.

The U.S. dollar index gained about 1 percent today, moving to 77.298 from 76.243 late yesterday.

The greenback was up significantly against the Australian dollar as the RBA moved to cut interest rates. The New Zealand dollar and Canadian dollar also lost significant ground to the greenback today. The yen was down modestly against the dollar after yesterday’s intervention to weaken the surging Japanese currency.

Other Markets:

In the U.S. markets today, stocks lost significant ground as investors were surprised by a call for a Greek referendum on the euro-zone bailout plan, this worked to infuse fear and doubt into investors’ minds about the strength of the recent rally in stocks.

The Dow lost 297.05 points, or 2.48 percent, the S&P 500 dropped 35.02 points, or 2.79 percent, and the Nasdaq lost 77.45 points, or 2.89 percent.

Upcoming important economic announcements: 11/2/2011

5:30am EST: Britain – Construction PMI
8:15am EST: United States – ADP Non-Farm Employment Change
12:30pm EST: United States – FOMC Statement
2:15pm EST: United States – FOMC Press Conference
4:15pm EST: Canada – BOC Gov Carney Speaks
5:45pm EST: New Zealand – Employment Change q/q
5:45pm EST: New Zealand – Unemployment Rate
8:30pm EST: Australia – Retails Sales m/m