EUROPEAN session review: Euro reached $1.3700

The dollar was set for its biggest weekly drop versus the euro in a month as Federal Reserve officials signal a delay in reducing stimulus. 

Chicago Fed President Charles Evans said yesterday the U.S. central bank should not begin reducing the pace of its $85 billion of monthly asset purchases as the data used to gauge the economy’s health stopped during the government shutdown. 

Richmond Fed President Jeffrey Lacker is scheduled to speak today, as is his New York counterpart William Dudley. 

EURO 

ECB’s Nowotny said the European recession ending next year. 

EUR/USD challenges $1.3700 and retreated. Above resistance comes at $1.3714 (January high). Closest support comes around $1.3615/00 and $1.3545. Below recent lows on $1.3480 losses may widen to $1.3400. Initial resistance is around $1.3570 (Tuesday’s high), extending to $1.3600 (Oct 8 and 14 highs). 

POUND 

The pound is rising amid general dollar’s weakness. BOE Dale said BOE's inflation forecast record "not dreadful". He noted that inflation expectations well anchored to BOE's 2% target. Also Dale siad it's 'very unlikely' BOE will raise rates in 2014. 

GBP/USD has tested $1.6220 and finally started the correction move. Above $1.6260 (Oct 1 high) resistance is around $1.6340 (Jan 2 highs). Initial intraday support is at $1.6130, followed by the break-out area around $1.6060. 

YEN 

The dollar still under pressure ve the yen. 

USD/JPY outlook remains bearish below 98.10 resistance zone, for a break through 97.50 support, en route to 96.56 low. Key resistance is 98.40. 

DATA AHEAD: 

At 12:30 GMT Canada brings Sep CPI figures. 

At 14:00 GMT investors will digest Sep American Petroleum Institute Monthly Report. 

US Sep CB Leading Indicator is scheduled to release at 14:00 GMT, while Fed's Evans’ speech comes at 18:00 GMT.

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