We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • RT @LiveSquawk: Fed's Kaplan: US GDP May Shrink 25% To 35% In Second Quarter, Then Grow In Second Half - RTRS - Sees US GDP Shrinking 4% T…
  • For Thursday's trading session we have: the RBA Financial Stability Review; UK GDP; Canadian employment; US consumer confidence (UMich for April) and the OPEC+ meeting. High profile event risk overriding liquidity fade into Good Friday?
  • $EURUSD Daily Pivot Points: S3: 1.0647 S2: 1.0762 S1: 1.0827 R1: 1.0941 R2: 1.0991 R3: 1.1106 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • #Gold prices rallied by more than 7.7% from the April 1st low into yesterday’s. high. Get your $XAUUSD technical analysis from @JStanleyFX here: https://t.co/M9QeP4a5QH https://t.co/xc847ElRxe
  • RT @hmeisler: RUT green 3 straight. Hasn't gone 4 since early Feb.
  • $USDJPY Daily Pivot Points: S3: 107.91 S2: 108.39 S1: 108.58 R1: 109.05 R2: 109.34 R3: 109.81 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • RT @LizAnnSonders: Small- & medium-sized firms constitute 44% of GDP & nearly half of private payrolls; which doesn’t bode well for economy…
  • RT @realDonaldTrump: White House news conference at 5:30 P.M. Eastern. Thank you!
  • Precious Metals Update: #Gold 1646.35 (-0.08%), #Aluminum 1477.50 (+0.37%), and #Copper 5040.00 (+3.19%) [delayed]
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.97% 🇳🇿NZD: 0.54% 🇬🇧GBP: 0.40% 🇨🇦CAD: -0.10% 🇨🇭CHF: -0.29% 🇪🇺EUR: -0.34% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/CwWpE451WZ
USD Index At Critical Juncture, Euro Correction Eyes 1.3100

USD Index At Critical Juncture, Euro Correction Eyes 1.3100

2012-01-19 17:15:00
David Song, Strategist
Share:

DJ FXCM Dollar Index

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

9921.26

9945.57

9909.47

-0.04

54.96%

USD_Index_At_Critical_Juncture_Euro_Correction_Eyes_1.3100__body_ScreenShot012.png, USD Index At Critical Juncture, Euro Correction Eyes 1.3100

Although the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains 0.04 percent lower from the open, the reserve currency should continue to retrace the decline from earlier this week as market sentiment wavers. In turn, the shift away from risk-taking behavior should prop up the greenback over the next 24-hours of trading, and the rebound looks poised to gather pace over the near-term as the more robust recovery in the world’s largest economy dampens the prospects for additional monetary support. However, as price action comes up against the downward trendline, former support around 9,947 may come in as new resistance, and the reserve currency may ultimately give back the advance from earlier this year should market participants continue to ramp up their appetite for risk.

USD_Index_At_Critical_Juncture_Euro_Correction_Eyes_1.3100__body_ScreenShot013.png, USD Index At Critical Juncture, Euro Correction Eyes 1.3100

As the index threatens the upward trend carried over from the previous year, we may see the bearish divergence in the relative strength index spur a sharp decline in the USD, and the dollar may fall back towards the 50.0 percent Fibonacci retracement around 9,828 as it searches for support. In turn, we may see the greenback track within a narrow range over the near-term, but the slew of event risks of tap for the following week could increase the appeal of the reserve currency as the recovery in the world’s largest economy gradually gather space. As we’re expecting to see GDP expand at an annual rate of 3.0% in the fourth-quarter, the Federal Reserve may continue to soften its dovish outlook for monetary policy at the rate decision on tap for January 25, and the central bank may endorse a wait-and-see approach for 2012 as the U.S. skirts a double-dip recession. As a result, the USD looks poised to regain its footing over the following week, and we may see the greenback make a run at the 78.6 percent Fib (10,117) as market participants scale back speculation for another large-scale asset purchase program.

USD_Index_At_Critical_Juncture_Euro_Correction_Eyes_1.3100__body_ScreenShot014.png, USD Index At Critical Juncture, Euro Correction Eyes 1.3100

Two of the four components gained ground against the USD, led by a 0.58 percent rally in the single currency, and the technical developments points to additional Euro strength as the exchange rate breaks out of the downward trending channel carried over from the previous year. As the EUR/USD clears the 20-Day SMA at 1.2868, the rebound from the January low (1.2623) may gather pace over the next 24-hours of trading, and the pair may come up against 38.2 percent Fib from the 2009 high to the 2010 low around 1.3100-20 to test for resistance. However, as the fundamental outlook for the euro-area remains bleak, the recent bounce in the EUR/USD could turn out to be a short-term correction, and the single currency remains poised to face additional headwinds this year as the region braces for a ‘mild recession.’ As the euro-area faces an increased risk of a major economic downturn in 2012, we expect the European Central Bank to ease policy further over the coming months, and speculation for additional monetary support continues to cast a bearish outlook for the EUR/USD as the governments operating under the monetary union struggle to address the sovereign debt crisis.

--- 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, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Join us to discuss the outlook for the major currencies on the DailyFX Forums

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.