EUR/USD Rebound in Focus as Retail FX Crowd Turns Net-Short
Talking Points:
- EUR/USD Risks Larger Rebound as Retail FX Turns Net-Short; RSI in Focus.
- AUD/USD Oversold Ahead of RBA Amid Growing Bets for Rate Cut.
- USDOLLAR to Face Advance 4Q Gross Domestic Product (GDP) Report.
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EUR/USD
Chart - Created Using FXCM Marketscope 2.0
- Even though the long-term outlook for EUR/USD remains bearish, the pair may face a larger rebound as the Relative Strength Index (RSI) comes off of oversold territory.
- However, the Euro-Zone’s Consumer Price Index (CPI) may dampen the appeal of the single currency as the headline reading for inflation is expected to contract 0.5% in January.
- DailyFX Speculative Sentiment Index (SSI) appears to be showing a more dynamic shift in FX positioning as the retail crowd is net-short EUR/USD, with the ratio currently sitting at -1.94.
AUD/USD
- AUD/USD remains at risk for a further decline ahead of the Reserve Bank of Australia (RBA) policy meeting on February 2 as the RSI pushes deeper into oversold territory.
- Seeing growing expectations for a RBA rate cut amid the global easing cycle; according to a Bloomberg survey, 20 of the 23 economists polled see Governor Glenn Stevens keeping the benchmark interest rate on hold at 2.50%.
- Next downside target comes in around 0.7680 (161.8% expansion) to 0.7720 (161.8% expansion).
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USDOLLAR(Ticker: USDollar):
|
Index |
Last |
High |
Low |
Daily Change (%) |
Daily Range (% of ATR) |
|
DJ-FXCM Dollar Index |
11873.06 |
11874.09 |
11799.3 |
0.57 |
110.36% |
Chart - Created Using FXCM Marketscope 2.0
- Despite the limited market reaction to the U.S. data prints from earlier this morning, Dow Jones-FXCM U.S. Dollar may appreciate further as the RSI pushes back above 70.
- The advance 4Q Gross Domestic Product (GDP) report may set the tone for the February trade as the growth rate is expected to advance an annualized 3.0% after expanding 5.0% during the three-months through September.
- As USDOLLAR tests the monthly opening range, the next topside objective comes in around 11,901 (78.6% expansion).
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|
Release |
GMT |
Expected |
Actual |
|
Initial Jobless Claims (JAN 24) |
13:30 |
300K |
265K |
|
Continuing Claims (JAN 17) |
13:30 |
2405K |
2385K |
|
Pending Home Sales (MoM) (DEC) |
15:00 |
0.5% |
-3.7% |
|
Pending Home Sales n.s.a. (YoY) (DEC) |
15:00 |
10.8% |
8.5% |
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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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