Dollar Gains on PBoC Rate Cut

The US Dollar gained on Friday led by a weaker Euro which fell on Draghi's dovish comments during the ECB's press conference held Thursday following the interest rate decision. Expectations of further easing and potential for another deposit rate cut have seen the Euro tumble lower versus peers. When combined with a surprise rate cut from the PBoC which delivered rate cuts across the board. The Dollar was trending stronger by late Friday on the heels of these developments. EURUSD continued to fall, closing Friday at 1.1010 after having broken the major trend line, with further decline expected towards support at 1.0950 through 1.0880. The Euro failed to recover despite better than expected flash PMI numbers on Friday. On a weekly basis, EURUSD has confirmed a bearish reversal and looks poised for a further decline early into this week.

The S&P 500 index closed the prior week on a bullish note, marking a fourth straight week of gains after prices tested the lows of 1865 around the week of September 27^th. Market expectations for the direction of the trend are upwards for the S&P 500, which managed to close above the 200-day moving average for the first time since August 19^th. As the US earnings season gets into full swing, major technology companies including Twitter and Apple are among the notably publicly traded entities due to report their earnings over the week. The S&P 500 touched a record high at 2132 during May of this year, but based on the outlook for the Federal Reserve, equity markets could come under pressure in advance of the upcoming FOMC meeting October 28^th.