Talking Points:
– EUR/USD Outlook Mired by Weakening Outlook for Growth; 3Q GDP to Expand 0.1%.
– USD/CAD Dip Below 1.1300 Quickly Fizzles as Canada Housing Starts Disappoint.
– USDOLLAR Holds Above 23.6% Fib Retracement Ahead of Fed Rhetoric.

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EUR/USD

Chart – Created Using FXCM Marketscope 2.0
With the ongoing series of lower-highs in EUR/USD, downside targets remain favorable ahead of the Euro-Zone’s advance 3Q Gross Domestic Product (GDP) report, with the next region of interesting coming in around 1.2285 (100% expansion).
Lack of momentum to close above 1.2480 (23.6% retracement) may highlight a near-term topping processespecially as the Relative Strength Index (RSI) retains the bearish momentum.
Seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) as the retail-crowd turns bullish EUR/USD, with the ratio currently standing at +1.03.

USD/CAD

USD/CAD pares losses as Canada Housing Starts unexpectedly slip to an annualized 183.6K in October; close above 1.1310 (38.2% retracement) may highlight a near-term bottoming process as the pair continues to carve higher highs & lows.
Despite the strong Canada Employment print, seems as though the Bank of Canada (BoC) is in no rush to further normalize monetary policy as Governor Stephen Poloz largely retains a neutral tone for monetary policy.
Interest rate expectations also favor a bullish outlook for USD/CAD as market participants are pricing zero rate hikes from the BoC over the next 12-months.

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Read More:
Price & Time: More Room to Run in USD Correction?
GBP/USD to Face Further Losses on Dovish BoE Inflation Report

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11253.63

11258.23

11207.36

0.10

85.09%

Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar Index may stay capped around 11,312 (78.6% retracement) to 11,315 (78.6% expansion) with a slew of Fed officials scheduled to speak later this week (Eric Rosengren, Charles Plosser, Narayana Kocherlakota, Janet Yellen, Stanley Fischer, James Bullard, Jerome Powell and Charles Evans).
Beyond the Fed rhetoric, the economic releases coming out of the U.S. economy may heighten the bullish sentiment surrounding the greenback as market participants look for a rebound in Advance Retail Sales, while the U. of Michigan Confidence survey is projected to uptick for the fourth consecutive month.
Nevertheless, the string of higher-lows may ultimately lead to a more meaningful run at 11,312 (78.6% retracement) to 11,315 (78.6% expansion) especially if we see a growing number of Fed officials show a greater willingness to normalize monetary policy sooner rather than later.

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Release

GMT

Expected

Actual

Labor Market Conditions Index (OCT)

15:00

—

4.0

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— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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Source: Daily fx