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EUR/USD Bear Flag in Focus Amid Bets for ECB Corporate-Bond Purchases
DailyFX.com -
Talking Points:
- EUR/USD Weighed by Talks of ECB Corporate Bond Purchases.
- AUD/USD Retains Wedge/Triangle Formation Ahead of 3Q CPI Report.
- USDOLLAR Holds Monthly Low Ahead of CPI; Existing Home Sales Beats Forecast.
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EUR/USD
EUR/USD threatens channel support amid headlines the European Central Bank (ECB) will embark on corporate bond-purchases to further expand its balance sheet; expectations for additional monetary easing continues to build as the monetary union faces a growing risk of slipping back into recession.
Even beyond the fundamentals, the bear flag pattern continues to cast a bearish outlook, especially as the Relative Strength Index (RSI) fails to retain the bullish momentum from earlier this month.
Despite the recent volatility in the DailyFX Speculative Sentiment Index (SSI) retail crowd is currently net-long EUR/USD, with the ratio standing at +1.09.
AUD/USD
Despite the better-than- expected 3Q GDP report out of China, AUD/USD remains stuck in the wedge/triangle formation as the Reserve Bank of Australia (RBA) continues to lay out a neutral tone and retains the verbal intervention on the aussie.
Australia’s Consumer Price Index (CPI) will be in focus as the headline & core rate of inflation are expected to slow in the third-quarter.
Waiting for an RSI break for a more meaningful directional bias; next downside target comes in around the 0.8600 pivot to 0.8610 (38.2% expansion).
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Read More:
Price & Time: When Does the USD Trend Resume?
EURCAD Hits Target- Long Scalps Eye 1.4457 Resistance
USDOLLAR(Ticker: USDollar):
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
DJ-FXCM Dollar Index | 10981.18 | 10986.61 | 10938.06 | 0.12 | 68.08% |
Chart - Created Using FXCM Marketscope 2.0
The Dow Jones-FXCM U.S. Dollar Index pares the decline from earlier this week as U.S. Existing Home Sales climbs 2.4% in September after contracting 1.8% the month prior.
Despite expectations for a faster recovery, the U.S. Consumer Price Index (CPI) may dampen interest rate expectations as the headline reading is expected to slow to an annualized 1.6% in September; need to see sticky core inflation to see a greater argument to normalize monetary policy sooner rather than later.
10,869 (78.6% retracement) to 10,887 (61.8% retracement) remains in focus as the bearish RSI momentum remains in play, but lack of momentum to close below 10,950 (38.2% retracement) may highlight a near-term bottoming process.
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Release | GMT | Expected | Actual |
Existing Home Sales (SEP) | 14:00 | 5.10M | 5.17M |
Existing Home Sales (MoM) (SEP) | 14:00 | 1.0% | 2.4% |
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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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