Talking Points- EUR/USD Slips to Fresh Monthly Low (1.2820) as ECB President Draghi Reiterates Dovish Tone
- AUD/USD Eyes 78.6% Retracement of 2014 Range Ahead of China PMI, RBA Rhetoric
- Bullish U.S. Dollar Setup Remains in Play Even as Fed’s William Dudley Favors 2015 Rate Hike
- EUR/USD dips to a fresh monthly low of 1.2820 as European Central Bank (ECB) President Mario Draghi sees further expansion in balance sheet and remains prepared to take more action as needed.
- Bearish outlook remains favored as Governing Council plans to provide a more detailed asset-backed securities (ABS) purchase plan at the October 2 meeting; next key region of interest comes in around 1.2710 (78.6% expansion) to 1.2725 (23.6% retracement).
- DailyFX Speculative Sentiment Index (SSI) continues to favor a further decline in the EUR/USD as there appears to be a further buildup of the net-long position, with the ratio currently standing at +1.53.
- Downside targets remain favored for AUD/USD as the Relative Strength Index (RSI) retains bearish momentum & dips back into oversold territory.
- Next key downside objective is 88.30-40, 78.6% Fibonacci retracement of the 2014 range- break & close below raises risk of seeing a full retracement of the rebound from January (0.8659).
- China’s HSBC Purchasing Manager Index (PMI) may heighten the bearish sentiment surrounding the Australian dollar should the data print dampen the outlook for global trade.
U.S. DOLLAR
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
DJ-FXCM Dollar Index | 10945.64 | 10956.01 | 10913.18 | 0.01 | 88.21% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar Index presses to a fresh yearly high of 10,956 despite the slew of dismal data, while New York Fed President William Dudley favors rate hike in 2015.
- Despite the key speeches from the group of central bank doves, the technical outlook continues to favor the topside as long as price & RSI retain the bullish trend.
- Will be watching 10,989 (50.0% expansion) to 11,009 (July 2013 high) ahead of the Fed’s next policy meeting on August 29 amid the pickup in interest rate expectations.
Release | GMT | Expected | Actual |
Chicago Fed National Activity Index (AUG) | 12:30 | 0.33 | -0.21 |
Existing Home Sales (AUG) | 14:00 | 5.20M | 5.05M |
Existing Home Sales (MoM) (AUG) | 14:00 | 1.0% | -1.8% |
Fed's William Dudley Speaks on U.S. Economy | 14:05 | ||
Fed's Narayana Kocherlakota Speaks on Monetary Policy | 23:30 |
--- Written by David Song, Currency Analyst
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