Most of the more exciting price action transpired in Asian and European trade
, with the US markets deferring to some consolidation. A fifth consecutive higher close in US equities
seemed to keep the Euro
and other major currencies somewhat supported, and it now remains to be seen whether we will continue to see currencies lose momentum in favor of a resumption of broader USD
Overall, the general tone is quite cautious, with many now looking ahead to key data releases this week out of the US, China and New Zealand, while also being focused on earnings season and fiscal developments in the Eurozone and UK. All of these are factors that could sway investor sentiment in either direction, and we would expect volatility to pick up substantially over the next 48 hours.
Technically, price action suggests that whatever the results this week, the market will look to interpret the developments as net USD bullish.
The Euro has stalled out by some major trend-line resistance, while currencies like the Yen and Swissie seem to have found some strong resistance against the buck
as well. Meanwhile, the USD Index
confirms, with this market also bouncing off of critical medium-term support. While signs of USD strength against the regional currencies are not as obvious, we favor USD buying against these currencies as well, with prices at attractive levels for USD bulls on a cyclical basis.
Looking ahead to the European session, German wholesale prices (0.2% expected) are due at 6:00GMT, followed by Swiss producer and import prices at 7:15GMT. All eyes then turn to the batch of UK data due at 8:30GMT, in the form of CPI (0.0% expected), retail prices (0.1% expected), and DCLG house prices (10.2% expected). The focus then shifts back to the Eurozone at 9:00GMT, with the release of German and Eurozone ZEW surveys. US equity futures and commodities are tracking moderately higher in early Tuesday trade.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel's reports in a more timely fashion, e-mail firstname.lastname@example.org and you will be added to the "distribution" list.
If you wish to discuss this topic or any other feel free to visit our Forum pag