The lower political risks could bring back the risk appetite to the US equities investors, after knee-jerk correction last Wednesday. As the prospects of having considerable tax cuts can bolster economic activities in US could easily contain the market sentiment following the US congress the way for tax overhaul by its resolution to pass the budget blueprint. It seems that we are close to reach a new tax cuts deal by the end of this year as Treasury Secretary Steve Munchin was expecting to be in coincidence with awaited Fed's hiking decision by 0.25% by the end of this year. The risk-on sentiment sent Dow Jones and S&P 500 up again to be close to their new unprecedented levels weighing down on the demand for safe haven options such as the low yielding Japanese yen, Gold and US Treasuries which could have higher yields boosting demand for the Greenback which become much more attractive. While the single currency is still undermined following ECB's announcement yesterday to cut its monthly scale of assets buying to the half in the beginning of the new year to be only Eur 30b, but it has declared in the same time that this new scale is to hold until next September. The ECB has indicated in its economic analyses that all options will be on the table during the period and the ECB can take the decision to raise the QE monthly scale of buying again or extend it longer, if needed. The ECB president has clarified yesterday that the rates can continue to be at the current low levels with no change till ending the working of the QE. The ECB as expected kept yesterday the main refinancing rate at 0, the marginal lending rate at 0.25% and the deposit rate unchanged at -0.4% respectively. The ECB targets raising the inflation to be near but below 2% and it expected that target to be reached in 2019 and that was longer than what most market participants were expecting, after EU CPI had shown yearly rising by 1.5% last August and September. The low cost funding Japanese yen is not in better situation versus the greenback, as the BOJ is still looking eager to keep its Ultra easing policy for propping up the inflation to reach its 2% yearly inflation target.
Japan National CPI ex fresh foods which is the favorite gauge of inflation to BOJ has shown in the beginning of today Asian session yearly rising by only 0.7% in September to be as the same as August, while the consensus was referring to increasing by 0.8%.
While the situation in Japan following the strong winning of Abe's party is putting the Japanese yen under pressure, as he can easily go longer with his current named "Abenomics" stimulating policy. God willing, The markets will be waiting today for the release of US GDP preliminary figure of the third quarter which is expected to show annualized growth by 2.5% following 3.1% expansion in the second quarter.

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After repeated failure to surpass 1.1880 resistance, EURUSD extended its retreating to be now near 1.1630 above but close to its supporting level at 1.1612 which has been formed on last Jul. 26. EURUSD is trading in its fifth day below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading now 1.1861. EURUSD could bounce up last Friday from 1.1669 to keep its supporting level which has been formed at 1.1662 on last Aug. 17 unbroken. EURUSD is now below 23.6% Fibonacci retracement level of its rising this year from 1.0340 to 1.2092. After the recent increasing of the downside momentum following failing to keep a place of it above its daily SMA50, EURUSD extended its falling to be now below its daily SMA100 in another dovish sign. But it is still underpinned over longer range by continued being above its daily SMA200, After forming a series of higher lows had started with its formed bottom at 1.0340 on the third day of this year to be the lowest level of the pair since December 2002. EURUSD daily RSI-14 is referring now to existence in a lower place inside the neutral region reading 36.888.
EURUSD daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line in its oversold area below 20 at 17.695 leading to the upside its signal line which is still in the neutral region at 27.127 lower.

Important levels: Daily SMA50 @ 1.1842, Daily SMA100 @ 1.1677 and Daily SMA200 @ 1.1243
S1: 1.1612
S2: 1.1479
S3: 1.1366
R1: 1.1880
R2: 1.2032
R3: 1.2092
Have a good day Global Market Strategist Walid Salah El Din Mob: +20 12 2465 9143 E-Mail: