Talking Points:
- USD/JPY Outlook Remains Mired Bearish RSI Formation, Upbeat BoJ.
- GBP/USD Slips Back to Support Ahead of U.K. Jobless Claims Report.
- USDOLLAR Breaks Bearish Pattern Despite Disappointing Retail Sales, Industrial Production.
For more updates, sign up for David's e-mail distribution list.
Chart - Created Using FXCM Marketscope 2.0
- Even though USD/JPY snaps back from a fresh weekly low of 119.39, the bearish sentiment surrounding the Japanese Yen may continue erode as the Bank of Japan (BoJ) talks down bets for a further expansion in the asset-purchase program.
- Will favor approach to sell-bounces in USD/JPY as long as the Relative Strength Index (RSI) preserves the bearish trend carried over from June, with a break/close below 117,90 (38.2% retracement) to 118.30 (78.6% expansion) raising the risk for a test of the 116.07 (August low).
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY since June8, but the ratio appears to be working its way back towards recent extremes as it widens to +2.51, with 71% of traders long.
GBP/USD
- The pullback in GBP/USD may turn into a larger decline following the failed attempt to push back above former support around 1.5460 (23.6% retracement); with U.K. Consumer Price Index (CPI) highlighting subdued price growth, may need upbeat developments to put the pound-dollar on a more bullish course.
- Nevertheless, the U.K. Jobless Claims report may help to limit the downside risk for the British Pound should the data show a further improvement in the labor market accompanied by faster wage growth.
- Break/close below near-term support around 1.5350 (50% retracement) may open up the next downside region of interest coming in around 1.5240 (50% retracement) to 1.5250 (100% expansion).
Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!
Read More:
Price & Time: USD/JPY - Marking Time Until The Fed
Webinar: FOMC Setups We’ll be Trading as Yellen Takes Center Stage
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 12005.22 | 12016.19 | 11964.38 | 0.24 | 92.88% |
Chart - Created Using FXCM Marketscope 2.0
- Despite the ongoing mixed data prints coming out of the U.S. economy, Dow Jones-FXCM U.S. Dollar may mount a larger rebound as it breaks the recent series of lower-highs, with the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) seen as near-term support.
- Nevertheless, with the U.S. Core Consumer Price Index (CPI) expected to increase to an annualized 1.9% from 1.8% the month prior, signs of stronger price growth may boost the appeal of the greenback as it fuels interest rate expectations.
- Ongoing closing prices above 11,951 (38.2% expansion) to 11,965 (23.6% retracement) may spur a run back to 12,049 (78.6% retracement).
Join DailyFX on Demand for Real-Time SSI Updates!
--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
To be added to David's e-mail distribution list, please follow this link.
Trade Alongsidethe DailyFX Team on DailyFX on Demand
Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.
New to FX? Watch this Video
Join us to discuss the outlook for the major currencies on the DailyFXForums
