Yesterday, the euro fell throughout the session. Asian trading, protests in France, and developments in commodity markets briefly gave the euro and the pound some support, as many traders and analysts had anticipated more severe shocks. But euro demand gradually faded, and the dollar began to strengthen.

Falling oil prices did little for European currencies. The approaching Federal Reserve meeting — at which the committee is almost certain to leave rates unchanged — also favors dollar buyers more than it supports the euro and the pound.

German data were mixed. The Ifo business-climate index rose to 90.2 in October from 89.9 in September, but the current-conditions component fell from 89.5 to 88.8. That suggests German firms and consumers are struggling, mainly because of high energy prices. Those prices hit both business activity and production, forcing more negative assessments of the present. The expectations component did rise to 91.6 from 90.4 in October, but overall the reports did little to help the euro.

The pound fared better. The CBI retail-sales balance for October was -10 versus -55 previously, with a -47 forecast. That allowed sterling to hold above 1.3330, which was a decent entry point for long positions, and in the second half of the day the pound recovered noticeably.

No major U.S. data were released yesterday, so attention focused on the Middle East, where mostly positive news arrived. That helped push oil prices down. At around $100, oil is still at a high level. Any flare-up of aggression — unlikely before the U.S. midterms on November 3 but possible afterward — could lift oil, strengthen the dollar and hit the euro and the pound.

Looking at the economic calendar, euro-area private-sector lending for September is due (consensus 3.1%), as is M3 money supply (forecast 3.6% in September versus 3.5% previously). Nothing else is of interest, so the spotlight will be on U.S. data.

In the U.S., the durable-goods orders report will be released. After a 0.1% decline in August, September is forecast to rise 0.6%. The S&P/Case-Shiller 20-city house-price index and the consumer-confidence indicator are also due and will attract the most market attention. The Conference Board's confidence index is forecast to rise to 85 in October from 81.9 previously — a reading tied to high energy prices (oil, gas, gasoline, diesel). A weakening of this indicator could materially damage the dollar's upside potential.

Additionally, reports will include new-home sales data and the Richmond Fed manufacturing index. Plenty of reports are out, but no single release is likely to seriously affect tomorrow's Fed decision. Expect the rate to remain unchanged; today's data will likely produce intraday volatility spikes and some repositioning, while the main focus remains tomorrow.

EUR/USD — for buying, I highlight 1.1155 on a false breakout. From there, long positions can be considered targeting a return to 1.1176. A break and hold above that zone would open the way to 1.1195, with a further target at 1.1211, where I would look to sell on a retracement for 15–20 pips. Short positions from 1.1176 and 1.1195 are possible on false breakouts, with the nearest bear target at 1.1155. A break and hold below that will push the euro to 1.1136, and the farther target would be around 1.1117, where I would look to buy the rebound for 15–20 pips. I will only buy from 1.1136 or 1.1155 if a false breakout is confirmed.

GBP/USD — focus remains on support at 1.3330. A false break there, or even a new weekly low followed by a return to 1.3330, would be a reason to add longs. With no UK data today, expect a bounce toward 1.3361, where I expect the bears to show up; I'd sell on a false breakout. If buyers fail at 1.3330, price may move to 1.3299, where longs are relevant on a failed hold below. Alternatively, buy a rebound from 1.3267 targeting 25–30 pips. Conversely, if sellers fail at 1.3361, I'd postpone shorts to 1.3390 on a false breakout or to 1.3416 for a 20–25-pip move.

My view: ahead of the Fed decision, the euro will likely remain under pressure — it has neither supporting data nor political catalysts. The pound's position is slightly better, but it will probably still have to fend off dollar strength. Today may be quiet, with sharp spikes on U.S. releases, while the main directional moves are likely still ahead.