Retail FX Remains Net-Short EUR/USD Ahead of ECB Meeting
Talking Points:
- EUR/USD Clears Weekly Opening Range Ahead of European Central Bank (ECB) Meeting.
- USD/CAD Spikes to Fresh Monthly High as Bank of Canada (BoC) Cuts Benchmark Interest Rate.
- Bullish USDOLLAR Sentiment to Benefit on Global Monetary Easing?
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EUR/USD
Chart - Created Using FXCM Marketscope 2.0
- EUR/USD clears the weekly opening range and rallies to 1.1678 amid headlines the European Central Bank (ECB) will implement a EUR50B/month asset-purchase program, which will start in March.
- Nevertheless, EUR/USD remains at a risk for further loss as the Relative Strength Index (RSI) holds in oversold territory; need oscillator to move back above 30 to favor a larger rebound.
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short EUR/USD since January 20, with the ratio currently holding at -1.24, but may see increased volatility in positioning as there appears to be some profit-taking ahead of the ECB meeting.
USD/CAD
- USD/CAD rallies to a fresh monthly high of 1.2323 as the Bank of Canada (BoC) unexpectedly cuts the benchmark interest rate to 0.75% from 1.00%.
- Looks as though BoC Governor Stephen Poloz is keeping the door open for a further reduction in borrowing costs as the central bank still has room to maneuver.
- AS the RSI continues to push deeper into overbought territory, topside targets remain favored with the next region of interest coming in around 1.2390 (161.8% expansion) to 1.2420 (161.8% expansion).
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Read More:
Price & Time: Kiwi To Fall In Line?
T-Minus 1: Setting EUR Expectations for Tomorrow’s ECB Meeting
USDOLLAR(Ticker: USDollar):
|
Index |
Last |
High |
Low |
Daily Change (%) |
Daily Range (% of ATR) |
|
DJ-FXCM Dollar Index |
11703.47 |
11709.81 |
11645.63 |
-0.01 |
116.82% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar may consolidate going into the end of the week as it retains the monthly opening range; will keep a close eye on interest rate expectations as the Federal Open Market Committee (FOMC) holds its interest rate decision on January 28.
- With the 2015 rotation within the FOMC, will play very close attention to the forward-guidance for monetary policy especially as its major counterparts adopt a more dovish tone for monetary policy.
- With the bullish RSI momentum in play, topside targets remain in focus with the next level of interest around 11,774 (50% expansion).
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|
Release |
GMT |
Expected |
Actual |
|
MBA Mortgage Approvals (JAN 16) |
12:00 |
-- |
14.2% |
|
Housing Starts (DEC) |
13:30 |
1040K |
1089K |
|
Housing Starts (MoM) (DEC) |
13:30 |
1.2% |
4.4% |
|
Building Permits (DEC) |
13:30 |
1060K |
1032K |
|
Building Permits (MoM) (DEC) |
13:30 |
0.8% |
-1.9% |
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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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