EUR/USD

Manufacturing Pick Up In The Euro Zone: According to today's release of the Purchasing Managers Index, manufacturing activity rose better than expected and above the 50 expansionary level.  Compared to consensus expectations of 50 showing, the index rose to 51.7 for  the month of September.  Driven by increasing new orders, global demand has visibly shifted as economies pickup.

Greenback Favortism: In light of the positive figures, traders still sided with a higher ISM figure in the early morning as the U.S. data indicated that the world's largest economy remained resilient after two hurricanes rocked the Gulf Coast region.  As a result, further speculation has arisen on near term interest rate increases by the Federal Reserve in conjunction with the increasing yield spread between both countries.  Currently, the spread has widened to 175 basis points.

Technically Speaking: Plunging through the underpinned support at 1.2000, the currency pair looks ripe for a momentary retracement as the move has been overextended.  Confirming the notion looks to be the golden rising cross in the Stochastic oscillators.  Additionally, upside resistance tests look to be in the 1.1950 region initially with more formidably tests at 1.1989 in the near term.

EUR/CAD

Oil Attention As Always: Disregarding the CDU's increasing political victories in Germany and the improvement on the PMI data, traders bid the EURCAD cross lower as oil initially rose in the morning session.  With the northeast winter season approaching, supply concerns may run higher than ever.  However, crude oil prices were taken aback slightly later on in the day as emergency stockpiles were revealed to be released in accommodating to the speculated shortage.

Interest Rate Spreads: In addition to the major EURUSD currency pair, traders are looking to a potentially increasing interest rate spread between both Canadian and Euro denominated assets.  Currently separated by 75 basis points, further increases are expected in the world's eighth largest economy as expansion prospects run high.  Contributing to the notion is a rising equity benchmark, rising inflation and higher crude oil prices.  Commodities constitute 30 percent of output for Canada.

Technically Speaking: Set for a temporary bounce higher, the EURCAD cross consolidates directionless.  However, with the golden cross in the Stochastic and slight bullish convergence in the MACD, one could surmise a directional bias in the very near term.  Upside resistance resides at 1.3920/25 region with a more formidable test above at the 1.4000 figure.

EUR/AUD

Commodity Prices Soar: Traders elected to short sell the EURAUD cross currency pair as copper commodity prices soared to highs as inventories plunged in conjunction with a strike in Canada's biggest mining company.  Copper futures for December delivery rose 3.15 cents to $1.759 a pound on the Comex division of the New York Mercantile Exchange.  As a result, with future demand expected to rise across all commodities, traders bid the AUD interest higher.

Interest Rates Yet Again Garner Attention: In addition, ahead of the Reserve Bank of Australia's decision, traders are attempting to further capture the rate disparity between the two economies.  Currently the spread is standing at 350 basis points, although it is widely expected that the central bank will not further increase rates at this current time.  As a result, with the underlying major hitting multiyear highs against the euro, swissie and yen, further upside interest looks to be in the cards, if not a temporary retracement first.

Technically Speaking: Consolidating after the session's move, the cross looks ripe for upside potential.  However, the continued pressure on EUR major could place the spot price lower on the pair.  Adding to the notion of upside potential seems to be a bullish convergence in the MACD with a potential golden cross in both MACD and Stochastic.  However, a peak above the 20 overextension would be best before claiming any test of the 23.6 percent fib level at 1.5694.  

Richard Lee is a Currency Strategist at FXCM.