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Key Levels for EUR Crosses- USD/CAD Inverse H&S Pattern at Risk

Key Levels for EUR Crosses- USD/CAD Inverse H&S Pattern at Risk

2014-09-04 15:25:00
David Song, Currency Strategist
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Talking Points:

- EUR/USD Tumbles to Fresh 2014 Low (1.2954) as ECB Cuts 10bp, Introduces ABS Program

- USD/CAD Inverse Head & Shoulders Pattern at Risk as Bearish RSI Remains Intact

- USDOLLAR Threatens February High (10,724) Ahead of NFPs

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EUR/USD

Key Levels for EUR Crosses- USD/CAD Inverse H&S Pattern at Risk
  • Even as EUR/USD slides to fresh 2014 low (1.2954), pair remains risk at for further declines as the Relative Strength Index (RSI) pushes deeper into oversold territory.
  • Euro-Zone’s preliminary 2Q Gross Domestic Product (GDP) report expected to show zero growth; dismal print may heighten bearish sentiment surrounding the EUR/USD as European Central Bank lowers 2014 & 2015 growth forecast.
  • The DailyFX Speculative Sentiment Index (SSI) suggests a pickup in net-long positioning as ratio climbs to +2.32; favors further decline amid trending market.

USD/CAD

Key Levels for EUR Crosses- USD/CAD Inverse H&S Pattern at Risk
  • Inverse head & shoulders pattern off of trendline support at risk of being invalidated as it continues to threaten near-term support around 1.0820 (61.8% retracement) - 1.0830 (61.8% retracement); need to continue to see closes above this region to stay constructive on USD/CAD.
  • Canada Employment expected to increase another 10.0K in August while jobless rate to hold steady at 7.0%; need strong prints to boost interest rate expectations.
  • Key topside target remains 1.1000 pivot to 1.1020 (23.6% retracement).

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Read More:

Euro Plunges as European Central Bank Cuts Rates, Announces QE

Trade Setups in EUR/JPY, EUR/GBP, EUR/USD Before and After ECB

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10721.15

10727.37

10676

0.40

166.06%

Key Levels for EUR Crosses- USD/CAD Inverse H&S Pattern at RiskKey Levels for EUR Crosses- USD/CAD Inverse H&S Pattern at Risk

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar Index threatens February high (10,724) ahead of Non-Farm Payrolls (NFP); 230K print expected while jobless rate is expected to slip to an annualized 6.1% from 6.2% the month prior.
  • Will also keep a close eye on Average Hourly Earnings as wage growth is projected to climb an annualized 2.1% in August versus 2.0% last month.
  • With RSI holding above 70, next top side objective comes in around 10,756 (2014 high) to 10,759 (61.8% retracement).

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Release

GMT

Expected

Actual

Challenger Job Cuts (YoY) (AUG)

11:30

--

-20.7%

ADP Employment Change (AUG)

12:15

220K

204K

Trade Balance (JUL)

12:30

-$42.5B

-$40.5B

Initial Jobless Claims (AUG 30)

12:30

300K

302K

Continuing Claims (AUG 23)

12:30

2510K

2464K

Non-Farm Productivity (2Q F)

12:30

2.3%

2.3%

Unit Labor Costs (2Q F)

12:30

0.5%

-0.1%

Markit Purchasing Manager Index Services (AUG F)

13:45

58.5

59.5

Markit Purchasing Manager Index Composite (AUG F)

13:45

--

37.7

ISM Non-Manufacturing Composite (AUG)

14:00

57.7

59.6

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--- Written by David Song, Currency Analyst

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

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