EUR at Risk on Slowing CPI- USDOLLAR Gaps Into Former Support
Talking Points:
- EUR/USD Vulnerable Ahead of ECB Meeting Amid Growing Risk for Deflation
- GBP/USD Rebounds From Channel Support; RSI Holds in Overbought Territory
- USDOLLAR Remains Overbought; Fails to Clear Former Support
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EUR/USD
- Struggles to fill the opening weekly gap as German IFO Business Confidence survey disappoints; Euro-Zone Consumer Price Index (CPI) in focus ahead of the next European Central Bank (ECB) meeting on September 4.
- Next key topside region to watch comes in around 105.20 (50.0% expansion) to 105.50 (61.8% retracement), which includes the 2014 high of 105.43.
- The DailyFX Speculative Sentiment Index (SSI) suggests retail crowd is buying into the opening week gap as the ratio climbs to +2.01.
GBP/USD
- GBP/USD covers the gap as it rebounds from channel support; need the Relative Strength Index (RSI) to come back from overbought territory to favor a larger correction.
- Despite the dissent within the Bank of England (BoE), we may not see a larger rift at the September 4 meeting as Ben Broadbent retains a rather dovish tone for monetary policy.
- Nevertheless, Credit Suisse Overnight Index Swaps (OIS) show market participants are pricing a 50bp rise in the benchmark interest rate over the next 12-months.
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Read More:
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USDOLLAR
|
Index |
Last |
High |
Low |
Daily Change (%) |
Daily Range (% of ATR) |
|
DJ-FXCM Dollar Index |
10646.6 |
10660.12 |
10637.87 |
0.10 |
75.71% |
Chart - Created Using FXCM Marketscope 2.0
USDOLLAR(Ticker: USDollar):
- Dow Jones-FXCM U.S. Dollar Index gaps higher as the Fed Economic Symposium spurs speculation for a rate hike sooner rather than later.
- May fail to push back above support from earlier this year as the RSI remains capped by the 78.
- Will look for a larger correction once RSI falls back from overbought territory & breaks the bullish trend carried over from July.
- Interim Resistance: 10,657 (61.8% expansion) to 10,661 (23.6% retracement)
- Interim Support: 10,555 (50.0% retracement) to 10,561 (100% expansion)
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|
Release |
GMT |
Expected |
Actual |
|
Chicago Fed National Activity Index (JUL) |
12:30 |
0.20 |
0.39 |
|
Markit Purchasing Manager Index Services (AUG P) |
13:45 |
58.0 |
58.5 |
|
Markit Purchasing Manager Index Composite (AUG P) |
13:45 |
58.8 |
|
|
New Home Sales (JUL) |
14:00 |
426K |
412K |
|
New Home Sales (MoM) (JUL) |
14:00 |
5.8% |
-2.4% |
|
Dallas Fed Manufacturing Activity (AUG) |
14:30 |
12.8 |
7.1 |
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--- Written by David Song, Currency Analyst
To contact David, e-mail [email protected]. Follow me on Twitter at @DavidJSong.
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