Euro zone inflation could stay low for months: Bank of Italy official

The Fed was all set to start raising rates in September. Two EUR-crosses stood out in particular this week, given their reaction to the European Central Bank and their respective ensuing significant responses: EUR/USD declined sharply by -3.00% to $1.1011, breaking its uptrend from the March, April, and July lows in the process (perhaps the beginning of a longer-term bear flag); and EUR/AUD dropped by -2.31% to A$1.5258 (losing its uptrend from the April, May, and June lows).

In other company news, United Kingdom broadband provider TalkTalk (London Stock Exchange: TALK-GB) said on Sunday it had hired defense company BAE Systems to investigate a cyber attack that may have led to the theft of personal data from its more than four million customers, Reuters reported. Under this logic and the statement made by the FOMC in September, it has become very hard to argue for a United States rate rise in 2015. Although a small bounce higher is possible after such a heavy round of selling, technical traders will be looking at the charts and wondering whether they can now begin targeting the 1.51 area which traders found confidence to be a potential "bottom" after multiple touches over the past month. Futures prices aren't necessarily reflected in moves after the opening bell.

Inside your free report, you'll discover an easy-to-use guide to three technical indicators with the power to seriously improve your trading and change the way you make money from forex.

Newsletter has been successfully subscribed.

I respect your privacy and will never pass on your email address to anyone else.

The Fed also indicated that when the tightening does come, it will likely be more gradual than expected. The latest round of monetary easing from China occurred just a couple of days following confirmation of GDP growth falling below the government target at 7%.

"President Draghi has kept an open-door policy to expanding QE even further than the €1.1 trillion originally planned", Mr Hayes said.

Asian stocks, meanwhile, extended their rally on Monday after the rate cut in China fueled risk appetite.

And it's not only China that's trying to juice its economy. European Central Bank President Mario Draghi said that rate cuts are being considered to stimulate the eurozone economy. Hints that the ECB's ¤1 trillion quantitative easing programme might be extended, possibly coupled with another deposit rate cut, scored a big hit with markets last week. And that will have the same effect.

With no signs of any imminent U.S. rate rises, it looks like stocks could have a lot further to run this side of Christmas.

Sterling gained 0.1 percent to 71.88 pence per euro after reaching 71.69 pence on October. 23, its strongest level since August. 21.

Let's see what happens next week. "Unlike the last two quarterly results season, when the markets approached with an optimistic stance, this time around there was caution and anxiety", Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

European stocks were especially supercharged by last week's news, with Germany's benchmark share index finishing the week nearly 8 per cent higher.