Talking Points:
– USDOLLAR Maintains Bullish Trend Following $10B Taper, 4Q GDP
– Euro at Risk for Further Weakness on Dovish ECB- Lower Low Ahead?
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
10684.31
10701.95
10663.67
0.15
92.67%
USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
Retains Bullish Trend- Higher High on Tap for February?
Relative Strength Index
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
Gross Domestic Product (Annualized) (QoQ) (4Q A)
13:30
3.2%
3.2%
Personal Consumption (4Q A)
13:30
3.7%
3.3%
GDP Price Index (4Q A)
13:30
1.2%
1.3%
Core PCE (QoQ) (4Q A)
13:30
1.1%
1.1%
Initial Jobless Claims (JAN 25)
13:30
330K
348K
Continuing Claims (JAN 18)
13:30
3000K
2991K
ISM Milwaukee (JAN)
14:00
54.50
52.82
Pending Home Sales (MoM) (DEC)
15:00
-0.3%
-8.7%
Pending Home Sales (YoY) (DEC)
15:00
-0.3%
-6.1%
The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) may track higher in February as it retains the bullish trend carried over from the previous year, and the fundamental developments coming out of the world’s largest economy may continue to limit the downside risk for the greenback as the Federal Open Market Committee (FOMC) looks poised to deliver another $10B taper at the March 19 meeting.
With the U.S. economy growing an annualized 3.2 percent in the fourth quarter, the Fed should continue to wind down its asset-purchase program as the central bank sees a stronger recovery in 2014, and the USDOLLAR may probe fresh highs in the coming days as it carves a higher low around trendline support.
As a result, we will eye the topside targets going into the month ahead, and will for opportunities to ‘buy dips’ in the dollar as the Fed moves away from its easing cycle.
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EURUSD Daily
Downtrend Taking Shape After Failure to Close Above 1.38; Accompanied by Bearish RSI
Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
Interim Support: 1.3500 Pivot to 1.3530 (61.8 expansion)
Three of the four components lost ground against the dollar, led by a 0.58 percent decline in the Euro, and the bearish trend in the EURUSD may gather pace in the week ahead should the European Central Bank (ECB) show a greater willingness to further embark on its easing cycle.
The ECB is widely expected to retain its current policy at the February 6 meeting as President Mario Draghi sees a limit risk for deflation, but we may see the central bank implement another dovish twist tdo its forward-guidance amid the underlying weakness in the euro economy.
With that said, the EURUSD may continue to give back the rebound from November should the Governing Council highlight a greater risk to its economic outlook, and we may see a growing rift within the central bank as the region continues to face a protracted recovery.
— 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
