Talking Points:
- EUR/USD Range in Focus; EU Court Ruling in Favor of ECB’s OMT Program.
- USD/JPY Slips to Fresh Monthly Low as Risk Appetite Continues to Falter.
- USDOLLAR Weighed by Dismal U.S. Retail Sales; Risks Larger Correction on Weak CPI.
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EUR/USD
Chart - Created Using FXCM Marketscope 2.0
- EUR/USD pares decline to 1.1726 even as European Court of Justice rules in favor of the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) program; close above 1.1740 may continue to signal range-bound prices ahead of the January 22 meeting.
- With growing expectations of seeing the ECB announce its quantitative easing (QE) program next week, may see a short-squeeze in EUR/USD should the Governing Council fail to act.
- DailyFX Speculative Sentiment Index (SSI) show retail crowd remains net-long EUR/USD, with the ratio currently standing at +1.18.
USD/JPY
- USD/JPY extends decline as risk appetite continues to wane; downside targets remain favored as the Relative Strength Index (RSI) retains the bearish momentum.
- Need to see a close below 116.10 (61.8% retracement) for conviction/confirmation for a larger pullback in USD/JPY.
- May see a test of the December lows (115.55) followed by 114.55 (78.6% retracement) should the Japanese Yen continue to benefit from the drop in market sentiment.
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Read More:
Price & Time: USD/JPY Topping Out Or Just Consolidating?
Momentum Gathering Pace in EUR-crosses - Watch EUR/USD 5-EMA
USDOLLAR(Ticker: USDollar):
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
DJ-FXCM Dollar Index | 11615.97 | 11665.86 | 11588.21 | -0.27 | 168.06% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar falls to a fresh weekly low of 11,587 following as Retail Sales report disappoints; may face a larger pullback should it fail to close above 11,623 (23.6% retracement).
- May see the dollar face additional headwinds later this week should the U.S. Consumer Price Index (CPI) show a greater risk for disinflation & drag on interest rate expectations.
- Break of the bullish RSI momentum may highlight a larger USDOLLAR decline, with the next downside objective coming in around 11,567 (38.2% retracement).
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Release | GMT | Expected | Actual |
MBA Mortgage Applications (JAN 9) | 12:00 | -- | 49.1% |
Advance Retail Sales (MoM) (DEC) | 13:30 | -0.1% | -0.9% |
Advance Retail Sales ex Auto (MoM) (DEC) | 13:30 | 0.0% | -1.0% |
Advance Retail Sales ex Auto & Gas (MoM) (DEC) | 13:30 | 0.5% | -0.3% |
Advance Retail Sales Control Group (DEC) | 13:30 | 0.4% | -0.4% |
Import Price Index (MoM) (DEC) | 13:30 | -2.7% | -2.5% |
Import Price Index (YoY) (DEC) | 13:30 | -5.2% | -5.5% |
Business Inventories (NOV) | 15:00 | 0.3% | |
Fed Publishes Beige Book Economic Survey | 19:00 |
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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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