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USDOLLAR Fails to Hold 2014 Range- Support Targets to Watch

USDOLLAR Fails to Hold 2014 Range- Support Targets to Watch

2014-02-11 18:40:00
David Song, Strategist
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Talking Points:

- USDOLLAR Pares Decline as Yellen Sees FOMC Staying on Current Path

- British Pound to Eye Fresh Highs on More Hawkish BoE

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10622.72

10643.03

10606.71

-0.21

96.19%

USDOLLAR Daily

Forex_USDOLLAR_Fails_to_Hold_2014_Range-_Support_Targets_to_Watch_body_Picture_3.png, USDOLLAR Fails to Hold 2014 Range- Support Targets to Watch

Chart - Created Using FXCM Marketscope 2.0

  • 2014 Range in Focus Ahead of Humphrey-Hawkins Testimony
  • Bearish RSI Momentum Highlights Risk for Fresh Lows
  • Interim Resistance: 10,753 (23.6 expansion) to 10,759 (61.8 retracement)
  • Interim Support: 10,561 (100.0 extension)- Closing Basis

Release

GMT

Expected

Actual

NFIB Small Business Optimism (JAN)

12:30

93.9

94.1

Fed's Charles Plosser Speaks on U.S. Economy

14:00

Fed Chair Janet Yellen Testifies to House Committee

15:00

Wholesale Inventories (DEC)

15:00

0.5%

0.3%

Wholesale Trade Sales (MoM) (DEC)

15:00

0.7%

0.5%

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) bounced back from a fresh yearly low (10,609), and the greenback may continue to track higher over the remainder of the week as we see a growing number of Fed officials push for a more aggressive approach in normalizing monetary policy.

Indeed, Fed Chair Janet Yellen said the central bank will stick to its current path as it moves away from its easing cycle, while Philadelphia Fed President Charles Plosser, who votes on the Federal Open Market Committee (FOMC) this year, favors speeding up the pace of the taperas he’s ‘worried’ that the board will be late in raising the interest rate.

In light of the fresh batch of central bank rhetoric, it seems as though we will see another $10B reduction at the March 19 meeting, and the policy outlook should continue to limit the downside for the greenback as long as the Fed stays on course to conclude Quantitative Easing (QE) later this year.

Join DailyFX on Demandto Cover Current U.S. Dollar Trade Setups

Forex_USDOLLAR_Fails_to_Hold_2014_Range-_Support_Targets_to_Watch_body_ScreenShot077.png, USDOLLAR Fails to Hold 2014 Range- Support Targets to Watch

AUDUSD Daily

Forex_USDOLLAR_Fails_to_Hold_2014_Range-_Support_Targets_to_Watch_body_Picture_1.png, USDOLLAR Fails to Hold 2014 Range- Support Targets to Watch
  • Remains at Risk For Lower High- Close Above Resistance to Foster Larger Correction
  • Interim Resistance: 0.9050 (23.6 expansion) to 0.9080 (38.2 retracement)
  • Interim Support: 0.8670 (100.0 expansion) to 0.8700 (78.6 expansion)

Three of the four components strengthened against the greenback, led by a 0.88 percent rally in the Australian dollar, and higher-yielding currency may face a larger correction over the near-term as it threatens resistance.

Indeed, rising home prices in the $1T economy dampens the Reserve Bank of Australia’s (RBA) scope to further assist with the rebalancing of the real economy, but Governor Glenn Stevens may keep the door open to implement another rate cut later this year as the central bank head sees higher unemployment along with subdued wage growth.

As a result, we will maintain a long-term bearish view for the AUDUSD as it continues to carve a series of lower highs paired with lower lows, and the deviation in the policy outlook should continue to limit the topside for the aussie-dollar as the Fed anticipates a more robust recovery in 2014.

--- 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.

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