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Bearish EUR/USD Outlook Favored Below Former Support on ECB Policy

Bearish EUR/USD Outlook Favored Below Former Support on ECB Policy

David Song, Strategist

Talking Points:

- USDOLLAR Eyes Former Support; Non-Farm Payrolls to Climb 219K

- EUR/USD Coming Up Against Former Support Ahead of ECB Rate Decision

- USD/CAD Fails to Break Out Despite Weak Canada 1Q GDP; BoC Meeting in Focus

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) may continue to work its way back towards former resistance (10,470) ahead of the highly anticipated Non-Farm Payrolls (NFP) report as the bearish break on the Relative Strength Index (RSI) gathers pace.

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10490.82

10506.51

10486

-0.14

70.51%

Indeed, the recent weakness in the dollar may turn into a larger decline as the reserve currency carves a lower-high in May, but a rate cut by the European Central Bank (ECB) paired with another 200+K rise in U.S. NFPs may spur a material shift in the technical outlook should the key event risks deviate from market expectations.

With that said, we will retain a prudent approach going into June as we’ll be watch the monthly opening range take shape, and we may see a sharp rise in market volatility throughout the summer months amid the prospects for a more material shift in the policy outlook.

Bearish EUR/USD Outlook Favored Below Former Support on ECB Policy

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USDOLLAR Daily

Bearish EUR/USD Outlook Favored Below Former Support on ECB Policy

Chart - Created Using FXCM Marketscope 2.0

  • Former Resistance (10,470) in Focus as Bearish RSI Break Gathers Pace
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,354 to 10,375 (50.0 retracement)

Release

GMT

Expected

Actual

Fed's Sandra Pianalto Speaks on U.S. Economy

12:30

Personal Income (APR)

12:30

0.3%

0.3%

Personal Spending (APR)

12:30

0.2%

-0.1%

Personal Consumption Expenditure Deflator (MoM) (APR)

12:30

0.2%

0.2%

Personal Consumption Expenditure Deflator (YoY) (APR)

12:30

1.6%

1.6%

Personal Consumption Expenditure Core (MoM) (APR)

12:30

0.2%

0.2%

Personal Consumption Expenditure Core (YoY) (APR)

12:30

1.4%

1.4%

NAPM-Milwaukee (MAY)

13:00

52.00

63.49

Chicago Purchasing Manager (MAY)

13:45

61.0

65.5

U. of Michigan Confidence (MAY F)

13:55

82.5

81.9

Fed's Jeffrey Lacker Speaks on U.S. Economy

18:00

Fed's Williams, Plosser Speak on U.S. Economy

21:00

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

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