EUR/USD Clears Bearish RSI Momentum- GBP to Face Slowing UK Inflation

Talking Points:
– EUR/USD Threatens Bearish RSI Momentum Despite Dovish ECB Draghi.
– GBP/USD Continues to Underperform; U.K. Inflation to Slow Further.
– USDOLLAR Risks Larger Correction on Dismal CPI Report.

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EUR/USD

Chart – Created Using FXCM Marketscope 2.0
Even though European Central Bank (ECB) President Mario Draghi continues to endorse a dovish tone for monetary policy, EUR/USD may face a larger correction as the Relative Strength Index (RSI) breaks out of the bearish trend.
Euro remains at risk of facing additional headwinds especially as Greece struggles to reach an agreement, while policymakers favor a weaker exchange rate.
Despite the push higher, DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short EUR/USD, with the ratio sliding to -2.00.

GBP/USD

Despite the bullish RSI momentum, failure to push & close above the 1.5000 handle may continue to produce range-bound prices in GBP/USD.
However, a further slowdown in the headline & core U.K. CPI may spark a further decline in the sterling as the Bank of England (BoE) remains in no rush to normalize monetary policy.
Will stay flat on GBP/USD amid the string of closing price above 1.4700-10 (78.6% expansion).

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USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11950.57

12016.04

11939.34

-0.30

91.76%

Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar index remains at risk for a larger pullback as the bearish RSI momentum gathers pace; close below 11,970 (161.8% expansion) to provide conviction/confirmation for a further decline.
Will keep a very close eye on the U.S. Consumer Price Index (CPI) as the core rate of inflation is projected to climb an annualized 1.7% in February after expanding 1.6% the month prior; will it boost interest rate expectations?
Long-term outlook remains bullish as USDOLLAR retains the upward trending channel carried over from the previous year; will continue to watch 11,894 (61.8% retracement) to 11,901 (78.6% expansion) as near-term support.

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Release

GMT

Expected

Actual

Chicago Fed National Activity Index (FEB)