Talking Points:
– USDOLLAR Searching for Support as Near-Term Correction Gathers Pace
– EURUSD Eyes Topside Targets as RSI Breaks Out of Bearish Trend
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
10676.26
10721.06
10666.1
-0.25
135.91%
USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
Prefer ‘Selling Bounces’ During Larger Correction-
Bearish RSI Divergence Favors ‘Selling Bounces’
Interim Resistance: 10,753 (23.6 expansion) to 10,759 (61.8 retracement)
Interim Support: 10,561 (100.0 extension)- Closing Basis
Release
GMT
Expected
Actual
Initial Jobless Claims (JAN 18)
13:30
330K
326K
Continuing Claims (JAN 11)
13:30
2925K
3056K
Chicago Fed National Activity Index (DEC)
13:30
0.90
0.16
Markit Purchasing Manager Index (JAN P)
13:58
55.0
53.7
House Price Index (MoM) (NOV)
14:00
0.4%
0.1%
Existing Home Sales (DEC)
15:00
4.93M
4.87M
Existing Home Sales (MoM) (DEC)
15:00
0.6%
1.0%
Leading Indicators (DEC)
15:00
0.2%
0.1%
Kansas City Fed Manufacturing Activity (JAN)
16:00
2
5
The technical outlook continues to cast a bearish forecast for the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) as the greenback struggles to find support.
As mentioned in DailyFX on Demand, the near-term correction is likely to prompt further declines as the bearish RSI divergence gathers pace, and we favor ‘selling bounces’ ahead of the Federal Open Market Committee (FOMC) meeting on tap for next week as the greenback carves a top around interim resistance.
However, the FOMC interest rate decision may spur a material shift in the USD forecast should the central bank reduce its asset-purchase program by another $10B, and the greenback may carve out a higher low in February should we see a growing number of Fed officials adopt a more hawkish tone for monetary policy.
EURUSD Daily
RSI Breaks Out of Bearish Trend- Looking for Lower High as 2008 Trend Holds
Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
Interim Support: 1.3500 Pivot to 1.3530 (61.8 expansion)
The greenback weakened across the board, led by a 0.98 percent rally in the Euro and Japanese Yen, and the single currency may appreciate further in the days ahead as the EURUSD appears to be searching for a lower-high.
Indeed, the bullish break in the RSI highlights a more meaningful rebound for the Euro, but the topside should remain limited as the pair preserves the downward trend dating back to 2008.
With that said, the fundamentals surrounding the euro-area may present further headwinds for the single currency as market participants see the European Central Bank (ECB) implementing more non-standard measures in 2014, and the EURUSD may have set an important top for the year giving the slew of failed attempts to close above the 1.3800.
— 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
